You might remember that I had been trying to specialise in
trading just a single market: £/$. What happened? Well, despite
some early successes, I came to the conclusion that when you put
all your eggs into a single basket of currencies, you're most
likely to get boiled, scrambled, poached and fried.
While I was reviewing the way I intend to trade from now on,
Finspreads were making some changes of their own. Remember the
Welshman? I've sent him a few emails asking how he's getting on
with his new duties'. But no reply...
It appears my new boss' so far as these cyber-scribbles are
concerned is a bloke I've nicknamed the Matinee Idol. He is
good-looking in a rugged sort of way, has nice teeth and a bit of a
wolfish smile. The bad news is that I think he's going to be a lot
tougher with me than his predecessor.
My evidence? No sooner had he got his feet under the table than
he sent me not as I was hoping an invitation to lunch, but
Finspreads' freshly updated Trading Academy course notes. Cryptic
or what?
Anyway, I read them diligently from cover to cover, and was
surprised to realise how much I've actually learned since I began
trading. In theory, at least.
"If I could have my time again, there's plenty I'd do
differently," I told the MI, while simultaneously abandoning plans
to renegotiate my Diary contract.
Like make more winning trades. I could hear him
thinking.
"For example, I wish I'd made more of the trade for as little as
1p when you're a complete beginner' offer," I continued.
Which is how I come to be able to offer one
fortunate reader the opportunity to enjoy some low-risk
experimental trades. Here's the deal: Send me your trading story
(good or bad) and/or compelling reasons for wanting to revert to
trading at only 1p a point for four weeks, and whoever send the
best email wins. Simple!
Anyway. My new strategy for 2006.
- I've decided that I want to become a position
trader : i.e. hang on to my trades for at least a few days
and hopefully longer. In other words, I want to become less gambler
and more investor, I've made money out of buying stocks and shares
in the past. No reason why I shouldn't do so again.
- I'm not going to use charting software. Thanks
for all the emails about the various packages you use. My
conclusion: they seem like an expensive way to line the pockets of
others. I quit agonising when I heard from P.B., a portfolio
manager who's in charge of $2billion worth of assets. "Don't
believe in charts and software," he emailed me. "Instead,
I stick to fundamentals and behavioural finance. BF recognises
emotions like regret, pride, overconfidence, snakebite (once bitten
twice shy), fear of loss and greed affect and often lead to poor
investment decisions. BF concludes that investors are irrational
and are loss averse rather than risk averse. This can lead them to
trade or not to trade, in order to avoid losses - hold a losing
position at all costs and with disregard to whether their original
justification for putting on the trade still exists." If you
want to investigate BF, there's plenty more info on the web.
- I'm going to take it all more seriously. Do my
homework. Scope out markets that offer the best chance of success,
only enter trades when I have a good reason, and, er, stop holding
losing positions at all costs when my only justification is that I
am a foolishly optimistic Type A personality.
So. The paper trading. Naturally, I've been making plenty of
make-believe profits. Mostly out of one particular share: a mid-cap
stock that I read about in the Sunday papers. They're based in
Cambridge, and according to their web site world leaders in
Bluetooth connectivity'.
I've written a few websites in my time, so I decided to
investigate further. CSR, it turns out, do business with the likes
of Nokia, Dell, Motorola, IBM, Sony and more. Right then...
I built an imaginary position of £5 a point (five separate
hypothetical trades @ 50p, £2, 50p, £1, £1 respectively) and
watched the share climb from 900 to 1100 during December.
My buying strategy? Yes, I had one! Nothing complicated,
either. I'd sit smugly watching the price go up.... then up some
more. Eventually, of course, there'd be a pullback. No panic. No
selling of my winning trade. I'd sit smugly watching the price go
down. Eventually, of course, the price would start to rise again.
And THAT's when I'd (smugly) buy some more.
So could I make this work with real
money? With my Finspreads account £1800 in credit, it was certainly
time to try. Last week, I started stalking CSR for real, and on
Thursday, I decided it was time to buy. Not because any charting
software issued a BUY signal. But because I read (via Google News)
that CSR is now producing some gizmo that lets you Bluetooth your
iPod to a home stereo. Without further ado, I placed my trade: 50p
BUY of the March contract @ 1088.7.
Fast forward to the following morning. I logged on, and
CSR had gapped up and was already 100 points higher. Given my old
strategy, I'd have taken my profits at once. But not any more! I
sat back and watched the price continue to soar... It added a
further 50 points, before dropping back in the final hour of
trading.
Today, exactly as I expected, CSR has pulled back. My trade
which was worth more than £70 at one point is currently £39.30 in
profit. Am I disappointed? Put it this way: I gleefully bought
another £1 of the March contract @ 1178.4. Right this moment, the
trade is £11 down. Bothered? Do I look bothered?
And you haven't heard the half of it, yet!
You'll remember that about ten days ago, what's now emerging as
the Livedoor Scandal' rocked the markets in Japan. Sensing an
opportunity, I checked out the chart for the NIKKEI Dow 225. Rather
like CSR, it had been doing one of those beautiful Up-and-up-and-up
lines, falling six per cent in two days.
"Which means," I said to myself, "There's scope for it to gain a
thousand points or so, when it recovers. I'll have some of
that!"
Given the collective online financial wisdom that Livedoor was
more Martha Stewart than Enron, I placed a trade: 50p BUY at
15,413. Having done so, I began to wish I'd done a bit more
research: my news sources were predicting a third day of heavy
falls.
So there I sat at midnight our time, flicking between Bloomberg
and Celebrity Big Brother Live, waiting for Tokyo to open. A
Japanese commentator was busily talking up the market: I could only
hope he was correct.
By the following morning my trade had soared faster than
a bullet train. I lost my nerve at 15,645, and cashed in with a
profit of £116. No pause in the rally, so I bought back in 15,730.
Another huge rise the following morning which means I have finally
discovered the secret of making money when I sleep - and this time
I let my profits continue to run until teatime, when they reached a
rather magnificent £350. I came out because I didn't want to risk
losing if something bad happened over the weekend.
Today, the NIKKEI has fallen back by 100 points or so, but
Japanese economic news continues to be good. I'm waiting to see how
the DOW fares (if it falls, Japan's likely to drop some more) and
looking to get back in some time soon.
And I still have a number of open trades:
- £1 BUY FTSE100 March @ 5665: This was, in
fact, my first trade of the year, back in mid-January. I'm hoping
we'll pass the 6000 mark, and I'm currently showing a profit of
£108
- 50p BUY Brent Crude March @ 65.86: I went into
this trade a day too late, once a big leap had already happened on
worries about Iran and Nigeria, and it's been yo-yoing up and down
for a week, Since OPEC output is now expected to remain unchanged,
I've just this minute cut and run for a loss of £4.50.
- TWO £1 trades on the WIG MARCH @ 2970 and
2965. Thank you, Mike K, for pointing out the
merits of Poland's equivalent of the FTSE. Poland's economy is
booming, and the WIG has gone from 1800 to 3000 in a year, without
any major reversals. So I have high hopes of this one. That's why I
increased my stake, buying some more at a better price. Strongly
tempted to buy some more. But as the WIG's been pulling back for
three days, I'm biding my time, and waiting until both trades show
a clear profit.
So here's the score:
I have banked two winning trades and my modest
oil loser for a total profit of £461.50. So there is now £2,146.48
in my Finspreads account. And my open P&L is currently
£91.55.
I reported my progress to SuperMum, with as you will understand
particular emphasis on my Japanese exploits.
She gave me a long, level look. "So you've been dreaming about
villas in the South of France and a yacht, have you?"
That woman's a mind reader!
Remember to get in touch if you'd like the chance to trade
with Finspreads for as little as 1p again! I look forward to
hearing about your experiences good and not-so-good!
Sally Nicoll is a writer and a Finspreads customer
whose career to date has embraced journalism, broadcasting, and
advertising copywriting She lives in London and
is currently writing her second novel. Feel free to contact her
at veryluckymoney@hotmail.com.
Copyright 2004-2008 Finspreads.