Since I have no new spread bets to report I thought I would so some analysis of my spread bet in Amlin. The goal of this analysis is to try and determine where I went wrong or right with my trade and if I should be doing anything differently in the future to enhance my chances of success. Feel free to comment or add a post in the spread betting forum. I’ve started a new topic purely for the discussion of this analysis. If you would like to join you will need to drop me an e-mail and I will add you as a member.

 

Amlin Spread Bet Analysis

If you take a look at the Amlin Chart below you will see I’ve marked it up with my buy prices and my final stop out price. It also has the super trend indicator added to price. The settings I have used for the indicator are the default 10 periods with a 3 multiplier. You will see how the indicator tracks prices upwards as they move higher. The interesting thing to note here is that the super trend indicator is still in bull mode and did not change to bear mode when my exit price was hit. This is because the indicator is calculated on the median price for the day. Therefore since this price never fell below the super trend value the indicator was not reversed. (Not the best news for me as I could still be in the trade but hey ho, we live an learn.)

 

So my first buy was at 305.11 on 21st November 2011. I then decided to pyramid on 6th December and brought again at 329.27. Now I wish I could tell you that there was some clever reason for doing so but unfortunately there wasn’t. My excuse(if you like) is the price had retreated from it’s previous high and could be a dip in the recent up move before continuing upwards. Anyway with hindsight it wasn’t a bad move but it wasn’t a great on either. If I had waited a little longer I would’ve seen price drop further before starting upwards again. Then as prices rose again I decided to pyramid again on 30th January 2012 after a dip in price. Again I rushed into this as if I had waited I could’ve got a better price. This time however my reason for pyramiding was more sound. At the time I was reading Alexander Elders come into my trading room and in there he discusses the use of the 22day EMA (Exponential Moving Average). So I waited until the price was just above the 22day EMA and then decided to buy. With hindsight I should’ve waited for price to fall just below the 22day EMA as I would’ve got a better price.

 


Click the Image to see larger version

 

My stop levels were at, or just below the super trend price(the green line on the chart). As you can see price spiked through the super trend value which was enough to stop me out of my trade but not enough to reverse the super trend into bull mode. If I could’ve avoided this spike I would still be in the trade and the price is just about reaching it’s previous highs of 365 made at the end of January.

 

You will notice that I used the phrase ‘With Hindsight’ quite a lot in my analysis. Obviously I can look back now and say what went wrong and what I should’ve done differently. It’s knowing what to do at the time of making the decisions that’s the hard part. Still no one ever said spread betting was easy.

 

Summary of my Spread Bet

In conclusion I think I still have some work to do. I was thinking of abandoning my super trend strategy all together but I’ve decided to persevere. I have a reasonably good understanding of how the indicator works and I’ve been using it for a while so I think it would be wrong to abandon it completely. I think I need to make a few tweaks to the strategy though. I’m not sure exactly what those tweaks will be, maybe set a stop some % of price below the super trend to avoid the price spikes, maybe alter the settings of the indicator to a longer period or larger multiplier or both. It’s going to require some consideration on my part but I’ll figure something out. In the mean time if you want to have your say why not leave me a comment or post on the spread betting forum.

 

Until next time,
“May the markets be with you!”
Harry,
The Spread Betting Beginner

  • I trade with SpreadCo for some of the tightest spreads around.

     

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  • February 20, 2012 by Harry
    Category: blog