With the news of that the Eurozone recession has deepened most of the market fell slightly but BUMI dropped significantly from around 440p to as low as 378p during the day. My first reaction was boy am I glad that I got out yesterday at 430p saving myself a tidy sum in lost profits. As the day wore on I could only see that BUMI would return to form as the stock has started to trend nicely over the last few months. So I decided to set an limit order to get in £1 pre point at 383p with a stop set at 340p. This is a 43 point risk so that’s 4.3% of my original £1k bank. Will the stock return to form? Well that remains to be seen but the fact that the stock jumped from 390p to around 400p at the close is a good sign that people think the price will rebound tomorrow. Only time will tell but I think the risk is worth the potential reward.
BUMI Chart
Buy at 383p Stop at 340p
Well as always seems to be the way these days I think I’m going to get time to get back to some spread betting but then other things crop up and my plans fall by the wayside. Anyway I’m still here and I am still planning on getting back to my old ways but it’s just one of those things that will happen when it happens.
I have been doing a bit of trading again recently. More of a trial than anything else but never the less trading all the same. I’ve been keeping an eye on the spread bet magazine blog over the last few months and I’ve made a couple of trades that have worked out well for me after reading some of their articles. The most notable is BUMI. Back in November last year I placed a £1 per point trade on BUMI at 270p with an initial stop set at 232. This is a little bit more risk than I like to take at 3.8% of my initial £1000 funds but still I decided to take the trade never the less. Over the few weeks after the trade it didn’t do much but I kept my eye on it. It carried on this way until the beginning of January when the stock really started to take off. I bought in again on 22nd January at 325p with an initial stop at 305 and moved my stop on my existing position to the same level, therefore locking in £35 from my first trade with a £20 risk on my new trade and therefore securing £15 profit overall but now at £2 per point. Over the last few days it’s rocketed again and has hit highs of around 445p today. I bought in again at 399p yesterday with an initial stop of 370p therefore locking in £150 from my first two trades and a new £29 risk, so £121 profit but with £3 per point. I decided to take profits today at 430p as I think the move may have had it’s day and in total made a £290 profit from this one trade.
Making such a good profit from one trade has certainly renewed my enthusiasm for spread betting but it is at times like this that I must be at my most cautious. I need to take a little time to digest the profit otherwise I will probably go making a stupid trade and work my way back to where I was before. While this one trade has made me a good profit I am still slightly down on my original trading funds. The plan now is to try and replicate this success my taking a much longer term view of my trades than I have done previously. I also thing that having the extra wiggle room in my stop position has helped as trying to stick to 1% on a £1000 bank has had the opposite affect in that I have been stopped out prematurely of trades because of a stop that’s too close.
I still believe that doing more research into companies is the key to a good trade. My last BUMI trade is a good example in that it was the guys at spread bet magazine that done the research I just copied them and made money off the back of it. All I need to do now is learn how to do good company research like the guys at SBM and I’ll be laughing all the way to the bank. Or at least that’s the theory.
I hope to be back blogging on a regular basis again soon so please do keep checking back.
Now this is a very good question when you are considering fundamental analysis. Where do you look for ideas for trades? Well Robbie Burns suggests the following four places in his naked trader book: Newspaper roundups, Investment magazines, And then two places on ADVFN. Their news wire and top lists. The top lists are basically things like % movers, breakouts etc. These can also be found else where such as yahoo finance for example so signing up to ADVFN is not essential. Newspaper round ups, well I don’t know about you but I don’t get a daily news paper these days and I’m sure you can most likely access this sort of thing for free on the internet so when I find a good source I’ll be sure to let you know. Investment magazines such as shares magazine and the investors chronicle. Well again I’m probably not going to pay for a subscription so I’m going to be using spread bet magazine and the blogs at
spreadbetmagazine.com. They have some great articles and are certainly worth a look when looking for potential trades.
This is by no means an exhaustive list I would say that a potential trade can come from anywhere and everywhere. There are some sources that you do need to be weary of however and indeed, Robbie mentions internet tipsters/tip sheets, bulletin boards and column gurus as places to avoid if you can. That said I don’t see that there is any harm in looking in these places but just be weary of what you are actually reading. I don’t think you should ever trade on the basis of what someone else has told you without being happy in your own mind that the trade is the right thing to do. Not only does it give you an excuse if the trade goes against you “Well it’s not my fault, he said this and that” but it could also mean you becoming dependent on others for your trades. Again this is a bad idea because what happens when that person disappears?
So there we have some sources of potential trades. Next up is researching those potential trades to see if they have potential or not. I think that will be a job for tomorrow. If you’re interested in reading The Naked Trader: How Anyone Can Make Money Trading Shares
grab a copy.
If you read my last post you will be aware that I am planning to get back to spread betting and this time the plan is to make a success of it. Other people can do it and so can I. The thing I didn’t mention last time is that I was on Jury duty and basically had no time to do anything as I was also trying to keep a breast of work while also on Jury duty. Anyway that all ended last Friday and now I have some time to start along my new path.
The plan is to spend more time researching companies and when I a am convinced by the fundamentals of the company then look at the chart to check out the technicals. In all of my previous trades I have purely been looking at the technical side of things and it just isn’t working for me. While I agree that a strong technical picture is a must for a potential trade it alone is not enough to make a trade. This is only my opinion and I suspect there are plenty of other people out there that would disagree.
Un until now I have been constantly trying to develop a purely technical strategy that would give me my setup, entry and exit points without ever knowing what the company in question actually does. My opinion is that this has been my downfall and something needs to change. I don’t know about you but I’m a strong believer in finding someone that has done the same thing and all you need to do is just copy them. Well none other than Robbie burns has done exactly that and therefore the plan is to try and copy him. Now when I say copy him I don’t mean I will be copying his trades but what I plan to do is use his books as a guide for developing my own techniques for picking trades.
Anyway that’s all from me for now. I’m going to start looking for trading opportunities over the next few days so watch this space for any updates.
Ok so it’s 2013 a new year and it marks my return to spread betting and hopefully to winning ways. I’ve been doing a lot of thinking while I’ve been away with the main focus being on my approach to trading and how I am picking my trades. If you’ve read this blog over the last few years you will know that I’ve only ever traded using technical analysis and nothing else. I was never interested in what a company did or the financials of the company I looked at a chart and if I though it matched my criteria then I made the trade. I think I have successfully proved that this just does not work, at least not for me, so a change of tact is in order.
I’ve decided to try and do more fundamental research into companies and if I think the fundamentals look/sound good then I will take a look at the chart and see what the price is doing. In essence I’m looking to try and mimic Robbie Burns aka the naked trader. I have a couple of his books and although I’ve read them I’ve never really put any of his advice into practice. Therefore I have chosen this as my place to start with fundamental analysis. He has many great techniques which I aim to use and as before I will try and document my progress here on this blog.
While on the subject of the blog there are going to be some changes happening soon. Personally I think they are all quite exciting and when they are fully functional I’ll be sure to let you know. Some will require your participation to make them work but I wont reveal much more until I’m happy they are ready(or almost).
So there you have it 2013 the year the spread betting beginner becomes a millionaire, nice idea huh. It’s going to take a while for me to find my feet with fundamental analysis so for the foreseeable future I will be paper trading as I’ve already lost too much money trying to find my way with this spread betting lark.
Here’s to a happy and prosperous 2013 to you all.
