Chapter 6 - Diary of a trader

Don't worry, Mike. I live in a basement.

And while you are partially correct I've started playing for higher stakes the good news is that not only am I alive and well, I am winning!

In fact, I've made a net profit of £138.45 since placing my first trade. This equates to a 2.7% return on my £5,000 starting bank, and is infinitely superior to the interest I'd have received if the money had remained tucked away in a savings account for another month.

And while I know I should be reporting that I've achieved this after careful study of double tops (isn't that darts?), head and shoulders (nothing to do with dandruff, apparently) and pivot points (the moment Heskey came onto the pitch for what, I pray, was his final England appearance), the truth is that my successes are down to common sense, pure and simple.

First of all, Marks and Spencer. OK, so I missed the quantum leap when Philip Green made his move. But the following morning, I was glued to his coat-tails. It seemed like the right moment to play for a meaningful stake, so I bought for £5.

Watched the price go up. Watched the price go down. Placed a stop loss, and ended up with £15.50 enough for a pair of Per Uno bloomers. Like most beginners, I was taking my winners too soon. So back I went again, and this time I stayed in until Friday afternoon, when suddenly the price began ticking up. I cashed in for £31, feeling extremely smug. Not only did the price go right back down within seconds, but now I have enough for the matching bra, as well.

My other common sense trade was even more profitable. While my friends were getting agitated about the price of petrol, I was hitting the Buy button on Brent Crude Oil. Caution here, since this is a more volatile market, so I was in for 50p. This resulted in an £18.50 gain in the time it took me to receive two identical email circulars suggesting we all boycott Shell and BP, and another that wanted me to write to Gordon Brown about fuel duty.

Instead, I watched the news and saw an item about OLPEC meeting to discuss their output figures. The tone of the item was reassuring, so I placed a £1 sell bet. Sure enough, the market behaved as I hoped, and I scooped another £67 out of cyberspace.

So now, not only do I have clean underwear to celebrate my first decent winning trade, I can also afford to fill my tank twice over.

While all this was going on, I received two interesting tips from my fellow Finspread traders.

First came J.C. "My indicators tell me the 100 Index will close up at 4547 to 4552 in the next 48 hours," he reported. Trustingly, I bought for £1.

Forty-eight hours came and went. By which time the Index had plummeted to around 4440, and I assume J.C. was cursing his indicators.

Fortunately, I was trading the June index, so I'd decided to hang on in there. A good decision, as today, FTSE recovered to above 4500, and I escaped £10 in profit

My second tip was altogether more exotic.

"Hi Sally," said Richard H. "Have you looked at the Sep £/yen?"

Um, no.

"The Japanese economy is just coming out of a period of deflation the BoJ is not going to put up interest rates their recovery is largely export-led they will not want the yen to appreciate much so if the spot price does not change you make a tidy profit."

I understood most of this, and it seemed seriously authoritative, so I leaped in and bought for £1.

Next time I checked the market, I was losing £144.

Was Richard H having a laugh? I took another look at his message. "The other good thing about this market is the high volatility good for trades with quite a big bid/offer spread."

"Um, where should I place the stop-loss?" I asked him.

"I don't use stops. My Finspreads trades are small compared to my overall investment portfolio," came the reply.

Fair enough. And when I checked again, I was only losing £110.

"Would you be worried if you were losing 110p?" I asked myself. And remembering how sanguine I'd been when my penny trades were down 110 points, I left well alone.

A good move, since £/yen is clearly as volatile as a hornets nest. Having bought six days ago at 198.94, the price has been up and down like the zip on a pair of Marks and Spencer trousers. At one point I was £40 or so ahead, currently I'm £5 down. I'm planning to take profits if and when I get at least £60 ahead; then I'll wait for the price to fall and go back in.

You'll remember I was planning to find some equities that I could trade longer-term, with September contracts?

Well, after flicking through Shares and Investors Chronicle and a few newspapers, I placed the following trades:

• £5 BUY Smith & Nephew at 583.6. I was stopped out with a £15 profit and am back in at 589.6.

• £1 BUY Astrazeneca at 2604.7 (seems too volatile to risk £5)

• £5 BUY JJB Sports at 271.4

• £5 SELL Berkeley Group at 888.5

• £5 SELL EasyJet at 162.7

You can follow my progress by monitoring Finspread prices.

Meanwhile, I'm going to get myself clued up on currency trading. Which reminds me, thanks to Paul D, who tells me the £/$ exchange rate is called Cable simply because the rate was originally sent over here via the transatlantic cable. Another mystery solved!

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.
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