If you read my blog entry last week ‘Spread Betting: Buying Dips‘ then you will already know that I attempted a pyramid into my Amlin position. Suffice to say that the position closed out on Friday as my stop level at 333 was hit. On reflection I definitely attempted to pyramided too soon, hence the title for today ‘Spread Betting: Buying Dips too soon’. I could have waited longer before attempting the pyramid but ultimately my stop would have been hit and I would have only saved myself a few pounds. Still a few pounds is better in my pocket than someone elses. I guess I was too eager to add to this position so that’s certainly something that I need to work on.

And then there were three.

I still have three positions open at the moment and I will be looking for new positions again very shortly. It’s been a funny journey over the past few months for me. I’ve been reading more trading books again and I don’t know if it’s been a good or a bad thing. It’s good in that I have learnt some new things and brushed up on others but I don’t know if it has ended up confusing me again or not. For instance in come into my trading room there is analysis of moving averages, force index, elder ray and Moving Average Convergence Divergence (MACD) which is all great but now I’m thinking I should trade using these. The problem as always is knowing what to do for the best. If I knew that then I’d be a rich man. However I cannot know that, no one can, so I have to do what I think is right. At the moment I think an assessment of my current trading strategy is in order before deciding to add new ones. It’s actually a good thing to do an annual review once a year. I mean we have them at work, we service our car once a year(or at least we should) so why not do review of my trading strategy and it’s performance. It may be the case that I don’t need to reassess, or it could be that I need to make a few tweaks and it will be fine or it could be that the strategy is useless and it’s time to move on. The only way I’ll find out is to review my trades. Now I know why I log them all down.

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

I hate shamelessly self promote my own website but hey If I don’t do it no one else will. If you enjoy reading my blog or news entries but find it a pain having check each day to see if I’ve updated then fear not. I have created a Spread betting beginner tool bar for you to download and install. The toolbar includes links to my latest blog entries and news stories so you’ll be able to see when there is a new story without having to visit the site every time. Not that I want you to stay away if you’re happy to visit and check every day then that’s excellent. If, however, your like me then visiting everyday feels like hard work and it’s easier to just visit when there is something new. That’s where the toolbar comes in. You can see at a glance if there are any new stories and click the link to go straight to them, what could be simpler. All you need to do is click the Download out toolbar picture and you’ll be taken to the install page.

Anyway that’s enough self promotion for now. Lets get to what you really read this blog for, Spread Betting. Well I hate to disappoint but I’m still in waiting mode. My pyramided position in Amlin is just about holding it’s head above water. I think I was maybe a bit trigger happy with the pyramid and could’ve waited until the price was closer to the 22day EMA before buying but hey, what’s done is done. If Amlin should stop out I’ve still made over £20 profit and if it continues higher then who knows where it will get to. Hopefully about £50 a share but I think that might be wishful thinking.

While I’m still reassessing things and attempting to re-educate myself I’ve not really been looking for new trades. I suspect I will be looking again shortly so things might start to get a bit livelier on here in the coming weeks. I can’t promise anything as it all depends on the markets but we’ll wait and see what happens.

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

I still have no new spread bets to declare but I have pyramided an existing one. At the moment I am quite happy to be in waiting mode. As you know I’m re-assessing my spread betting situation while I try to hone my approach.

The new trade was in Amlin. The price has retraced from it’s most recent high of 365 and I deemed that 345 would be a good place to pyramid my position. Amlin has started to trend quite nicely and I keep moving my stop inline with my super trend strategy. Hopefully the trend continues for some time yet and I can ride the trend until the ‘bend at the end’.

Pyramiding when price retraces from a previous high is also known as buying dips which is a strategy that Malcolm Pryor suggests in his Financial Spread Betting handbook. It’s a part of my strategy that I have yet to perfect but Alexander Elders book, come into my trading room has given me an idea. One of the indicators that he analyses in his book is the 22 period EMA(Exponential moving average). He also analyses a channel of that moving average and suggest that if the moving average is pointing up and we buy at the moving average price that represents good value and when it reaches the top of the channel it represents poor value to buy. When Amlin hit 365 this penetrated my 2xATR 22 period channel and therefore has sparked a round of selling for people taking profits. I did not take this as an exit signal as that is covered by my stop. It did however alert to me a potential pyramiding opportunity. I decided to wait until the price fell to near the 22 day EMA (currently 338) and placed a buy order for 345. My stop level is set to the super trend price 333 so I have a new 12 point risk on this position. Where the price will go from here, well that’s anyones guess but I am happy that I may have brought the dip. We just need to wait and see if it’s actually a dip.

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

If you read this blog on a regular or semi-regular basis you will be well aware that my own spread betting has slowed down a lot recently. It’s mainly while I re-asses my own trading activity to determine where I have been going wrong and what I need to work on.

As I mentioned in my last post I’m reading Alexander Elders book, come into my trading room and I just can’t get enough of it. It’s full of useful information and ideas for trading strategies. The ideas that Dr Elder presents make so much sense. Now I can’t write about them too much for obvious copyright reasons but if you haven’t already read the book and are looking for a good read about trading then I recommend it already and I’m not even half way through.

In there he’s constantly referring to beginners mistakes. Which is what I am a spread betting beginner. The book shares a common theme with SBB [Spread Betting Beginner] as I aim to serve up all my mistakes for public viewing so that other beginners can avoid making the same ones. Dr Elder does a similar thing in his book and highlights what professionals do that beginners don’t and vice versa. Now I said I cannot offer you tips from the book as you will have to read these for yourself but what I can do is summarise some of the things I have learned so far on my own spread betting journey. So here are my top 5 tips for new spread bettors.

So there you have my top 5 tips. Most of these require you to work on yourself which from my point of view is probably one of the hardest parts of trading to master. Keeping your emotions in check is tough at times and you will be tested in ways that you cannot imagine until you’ve experienced them. Still as the saying goes “Whatever doesn’t kill us only makes us stronger” and I believe that I am a stronger trader for my past experiences in spread betting.

Obviously these tips are aimed at beginners but they are things that any more experienced spread bettors out there must also follow if they don’t already.

“Hey Harry how is your trading going?” I hear you ask. Well as you know I’ve re-entered a learning phase and that is where I am up to at the moment. I still have 4 open positions and each are In various stages of profit. None of them have violated my super trend strategy so I’m leaving them open until I get a signal to close them. So to summarise I have not been looking for new trades while I am still educating myself. I aim to take some of Dr. Elders ideas and test them out for myself before I start to put them into practice, it shouldn’t be too much longer and I’ll be back looking for trades again.

As regular readers may or may not know I started spread betting back in February 2009. I started blogging about spread betting in February 2010 as a way of keeping a trading diary and spreadbettingbeginner.com was born in October 2010 when I decided to move my journal and add more and more information that I thought might be useful to others. So you might think after nearly three years that I would be some kind of expert by now, wrong! I’m still learning and I don’t think I will ever stop.

For instance I have just started reading Alexander Elders book: Come into my Trading room(on my new Kindle which Santa delivered to me for Christmas). I’m roughly a third of the way through it and I have to say I’ve very impressed. I like his idea of the three M’s Mind, Method and Money. If you can master all three of these then you are surely on the path to trading success. To be honest I think I’m not too far off. I think I’ve made enough mistakes that now that I do not want to repeat them. Money wise I always try to keep my risk low. I have let my hard and fast rule of 1% max creep up to 3% recently as trading with a £1000 bank (even lower now after losses) is hard to find trades that only risk £10 per trade. Finding ones that only have a £30 risk is still hard enough but not has hard as £10. We’ll see how it goes, I may reduce my risk back to 1% but never more than 3% maximum.

Keeping risk low is a lesson that I, fortunately, learned very early on in my spread betting career. In fact its probably the only reason that I still have funds available from my initial £1000 that I can trade with. My plan was (and still is) to learn the ropes with this £1000 and hopefully achieve a winning way that is consistent. That remains to be seen.

On the Mind side of things I think I still need work and I don’t think I’ll ever be able to say I’ve mastered my emotions when it comes to trading. Still I think as long as I can control them enough and follow the rules I should be ok.

Then it comes to Method. This is probably the part where I have fell down the most and still struggle today. We all know that the Holy Grail of trading does not exist. It’s a myth and if your new to spread betting then stop looking for it right now. If it did exist I would’ve found it by now, I’ve been looking long enough. I think the problem with me is when my method doesn’t perform I think something is wrong and that I need another. Take my current super trend method for example. This works well in trending markets but when markets don’t trend (such as now) it’s subject to a lot of whipsaws which then casts doubt over the system. Since markets spend most of their time not trending a trend following strategy is pointless when markets are not trading. Therefore I think I need to add more strategies to my arsenal. As I mentioned a while ago I was re-reading Robbie Burns book: The Naked Trader. This has some good strategies in it and ones that analyse the fundamentals of stocks such as market capitalisation, profits, debt levels etc. I’ve decided to try and include this into my stock selection process. The idea being to look for trades based on Robbies fundamentals suggestions. Once I have a stock that I think looks good I then use Technical Analysis to find entry, stop and profit target positions. Of course this will see me looking for only long positions as the fundamental analysis is only for companies that are performing well. Anyway as the title suggests spread betting is a never ending learning curve. For all those newbies to spread betting take it from me it’s not easy. Ok so it might not take you three years but don’t forget I also work full time so I think for spread betting part time I’m going ok. I’m certainly not ready to give up just yet.

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