This was going to be a witty piece that
described how I only just failed to make £900 in three hours. But
then I was sucked into my first major disaster.
Remember I had decided to sell £5 of Berkeley Group at 888.5?
Seemed like an entirely sensible trade: rising interest rates more
expensive mortgages doom and gloom in the housing market bad times
for builders and Berkeley trending down, with an annual profits
statement due.
The week unfolded and the Berkeley price climbed steadily, but
not significantly I was about 30 points down by Thursday night and
I confidently expected to get myself back into profit.
Then came Friday. I logged on just before lunchtime, later than
usual. (This turned out to be a good idea as it spared me several
additional hours of pain.)
Like you, I'm sure, the first thing I always notice is the Open
P&L figure on the A/C Summary page.
When I saw a minus sign next to £1,463, I thought there must
be something wrong with the system. As if.
Evidently, Berkeley Group has also decided the
property market looks dodgy. They'd issued a statement saying they
plan to abandon house building and focus on urban regeneration
instead. It was this tragic piece of news that ignited the share
price the company value increased by a whopping 28% in a matter of
minutes and left me in big, big, trouble.
"But what about your stop-loss?" I hear you seasoned, sensible
traders cry.
The simple truth is that I didn't have one. Hadn't seen the
need, because the UK equities market is nowhere near as volatile,
as, say, my old adversary the MIP index. And even if I had taken
the precaution, I wouldn't have guaranteed it (not my style perhaps
you can profit from my error on this occasion), so I'd still have
taken the hit.
I don't mind admitting I was gutted for the rest of that day.
That was 15% of my initial bank, lost in cyberspace.
Since then, however, I have become more philosophical. At
the risk of sounding like David Beckham, I reckon I was simply a
bit unlucky, and I'm still up to the job of spread
betting.
It's extremely rare for a UK share to leap 267
points in a single session. There was a clear reason why it
happened, and I couldn't possibly have known in advance. So I'm
putting it down to experience, as an Act of God, and continuing my
merry way just a little more cautiously.
Besides, as well as disaster, there have also been triumphs. My
long trade on Smith & Nephew made me £48. The JJB Sport punt
ended in a £20 profit (I sold with thanks to Marcus H, who told me
the Balham High Rd branch was deserted) and EasyJet's decline made
me enough to fly to Paris with Ryanair.
Small, steady profits like this will do me fine. And you didn't
hear me complain when Cain Energy (tipped by the Mail on Sunday as
a momentum stock) made me £295 a £2 long bet in the space of 48
hours. Or when I noticed on Yahoo Losers that Filtronic was taking
a beating; I sold for £2 and emerged £58 better off over three
days.
But what about the £900 I didn't win? Well, one of the
things I've learned is to think twice before accepting tips from
strangers however well intentioned they might be.
Acting on information received, as they say, I'd gone long on
£/yen at 198.94 (you can read the full details in Chapter Six).
Over the ten days or so that followed, I watched my £1 stake nudge
into profit and then sink like a stone. Until I finally gritted my
teeth, having come up with a new plan
instead of watching my losses mount, I'd become a seller instead
of a buyer change horses in mid-stream, as it were, and head off in
the right direction.
So I hit the sell button. And then a funny thing happened. (N.B.
it did not seem funny at the time.) I discovered I was now selling
£9 of the £/yen, instead of £1. My mistake, entirely. Not only had
I just lost £490 on my original dud trade I now had a huge for me
position going the other way.
What would you have done?
After I'd finished panicking, I managed to buy £6 worth for a
net profit of £18. That took me about 20 minutes. So I was left
with a £3 trade that seemed to be heading in the right
direction.
For the first time in days I watched happily as the Finspreads
intraday chart headed north. When it had fallen 100 points, I
pocketed £300. Which, of course, would have been £900, had I kept
my nerve instead of correcting my mistake.
C'est la guerre.
Anyway, out of all this (and after I had binned Berkeley from my
watch screen) I realised I've learned something valuable.
I can play the £/yen both ways riding it up and down,
now that I've come to understand its rhythms. Over the past week,
I've closed eight trades: I've lost a total of £521.50 on three and
won £538.5 on five putting me £17 ahead.
Overall, I need to recover about £1,000 before I'm back to
break-even on my starting capital if it weren't for Berkeley I'd be
ahead.
So the way I see it: my trading education has cost me £1,400 so
far. Money well spent, as I'm starting to get a proper feel for the
slings and arrows of outrageous fortune that may yet be coming my
way.
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.