The success and losses in the spread betting markets will determine your future in the trading industry. However, if you would like to join the privileged group of elite spread betting users who actually make money trading the financial markets, then you need to take time to learn the mechanics of how markets move.
I had a few small trades on the FTSE and Dow to start. Started with 3 winners and then got stopped out on the next 4. I am not really interested in the indices but they did allow me to learn how stops and limits…etc work. Only 10 and 20p per point bets anyway so losses were small.
Have had a couple of decent wins betting on stocks that I own shares in. I went long at the bottom of a shake where I wouldn’t look to trade my shares and got a few points at £5/pt. It has given me a bit of confidence to do that with bigger stakes more often. A long on Affers would’ve been a good call today (not traded AFR yet – just bought and held). Am long on LLOY as of yesterday from 52.5p which is going ok got stopped out on a WOS short (only 30p per point) due to picking a bad entry. Am learning with a few mistakes but not doing too bad (am about £40 down so far). Got a couple of other longs which are hanging around breakeven.
The Stock Market is not a Cash Machine
The thing is that you can’t treat the stock market like a cash machine, it just doesn’t work like that for most of us. The best thing in my opinion is to seek consistency and forget the 1% a week and the Million in x years brigade.
Investing in the market must deliver far more than you could get from the money elsewhere. Typically people say that you should aim for 3x to offset the greater risk. On that basis we know a one year bond can get about 3%, so the question you need to ask is “will the market deliver me about 3x”. Well, Goldman Sachs went into this year saying we were likely to see a 25% gain….but that was before the troubles in the ME.
But let’s say they are right. Our 9% is certainly possible. Then you have to look at your ability. I now have the benefit of 5 year’s worth of data. That data tells me that I outperform a weaker market more than a stronger one, which is why 2010 was a better year for me than 2009. It also tells me that over 5 years I show that I only need 31-36% of my trades to win to make money. Typically I run at 55-58%, so lots of little losses but the winners are greater than the losses so I make money.
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