Watching stocks and waiting for the right time to enter is the key to successful spread betting(at least that’s my opinion anyway). In the past I have fallen foul to rushing in but there really is no need. When you find a trade that meets your strategy criteria, unless you have entry signals included in your strategy then it doesn’t always mean you should enter right away. For example, I’ve recently switched back to finding trends and trading them. (In my view I think it one of the only ways to make any money spread betting and so far it seems like it might be paying off). Anyway back to the topic at hand, I rushed the last few trades I made when I should’ve watched them for a few days to see what happened. When using a trend following strategy it’s all well and good finding a stock that is trending well but if you enter at the wrong time then you may as well just pick a stock at random and flip a coin.

 

A good trending stock will have a series of higher highs and higher lows for an uptrend(reverse for a down trend) and so it’s best to wait until the stock hits a new higher high, falls back a little and then enter. This is a very common strategy know as buying dips and Malcolm Pryor has some excellent ways to achieve buying dips in his enormously popular financial spread betting handbook. If you don’t have a copy I suggest you get one and read it cover to cover. It’s one of the first spread betting books I ever read and I always seem to end up coming back to it.

 

So back to the point of todays topic. I had a look yesterday for some new trades and there are a few stocks that are trending nicely and are most certainly potential trades. I was tempted to rush in and just buy each of them straight away but I managed to hold myself back and wait for the dips in price. Then I’ll look to enter with a fairly close stop in case things don’t go to plan. The biggest issue I have is how to know when price has dipped enough. The honest answer is there is no way of knowing when price has dropped back enough and I’m using a bit of gut instinct here that I seem to have developed over my three years of on again off again spread betting. Hopefully my gut is helping me out and before too long it will just be on again spread betting but we’ll wait and see on that front. I am starting to feel a little more confident in my own abilities as a trader but if there’s on thing I know for sure it’s a little confidence can turn in to a big disaster. Get overconfident and cocky, thinking you can’t go wrong, and believe me you could lose the shirt off your back in the blink of an eye. Best for now to keep thinking I’m no good at spread betting.

 

The new trades that I found yesterday are on my watch list and I will keep an eye on price over the next few days. If and when feel the time is right I’ll look to enter. If that time never comes then so be it, there’s always tomorrows trades.

 

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

May 3, 2012 by Harry
Category: blog