Why I started spreadbetting
I would open positions when there were signs of a potential trend forming and I would ride that trend until exit signals started showing up. It was such a simple method that in back-testing, it seemed rather profitable. It also complemented my personality. I had just come out of a stressful job. I didn’t like the seemingly stressful rollercoaster ride of day-trading. It seemed full of false signals and, whilst I understood that the markets were a naturally unpredictable place, I was hoping to find something with a little more consistency. Long term trend following was a lot closer to that ideal, so it fitted nicely with what I was looking for.
The ultimate goal
Learning the lessons the hard way
My risk amount per trade is small and I am pinning my hat on the law of compounding profits, achieving a consistent 40% return per year would see me in a financial position to go full time. Is 40% likely? I doubt it’s that simple. I could hit 100% one year. I know a trader who achieved 300% return in his first few years using the same system I use. Other years I could perhaps make a small loss. So it’s difficult, but I have a financial goal that, once reached, should allow me to finish the day job and stay at home whilst spread betting my end of day system and still having enough left to re-invest each year therefore growing my available capital. This will hopefully allow me the freedom to spend the days of my life doing what I want to do with my time. I could reach that in 10 years. I could get there sooner.
So, I put some money into an account with Capital Spreads and I was off and trading! I followed the rules and started to see some profits come in. However, what I didn’t realise was just how hard it would be to stick to the rules. My training had taught me the dos and don’ts, but putting these into practice took a lot of failed trades. You see, I discovered that the chink in my armour was meddling with the positions. A price would rise and I’d panic for fear of losing the profit again, so I’d take my profit. Equally, I’d let losing trades run in the hope they would come back to me. Yet my training told me to do the opposite. I’d open positions based on expert opinions, emails and newsletters. Man, sometimes I even bought off the back of a tweet I read about a stock! I was trigger-happy, wanting to open positions all over the place and looking for any reason to trade. Of course, I was also taught not to do this. But I still did it. Sometimes you have to learn the hard way. It’s the way I learnt. I am of the school of thought that mistakes are fine as long as you learn from them. I hate making the same mistake twice in anything I do, be that work, parenting, social interactions or trading. I analysed every failed trade and made sure I worked out what I should have done. Each and every time I came back to the rules. If I had followed the rules, I wouldn’t have made these losses. It’s been costly from a financial perspective making these mistakes, however I often wonder whether everyone needs to make mistakes to learn the benefits of rules?
I now have a goal. A goal to spread bet full time. I’m a long way away yet as I started with just a relatively small account in 2011. However, with only 1 year’s experience behind me I am confident that I have now turned a corner. I am not making the mistakes I made in the past. I am following my trainer’s rules accurately for the first time. And what’s more, I am currently sitting on a 33% return in the last 4 months having risked only a small percentage of my capital per trade as per my new strict money management rules.
I’ll leave you with something that has probably changed my life quite dramatically since reading it originally. In 2011 an Australian nurse named Bronnie Ware interviewed dying patients at a care home during the last 12 weeks of their lives and recorded their top 5 regrets. The top answers was “I wish I had the courage to live a life true to myself, not the life others expected of me.” The second? “I wish I hadn’t worked so hard.” I struggle with the thought of lying on my death bed thinking “What a waste of a life spent doing something I didn’t really want to do.” Of course, we all have to make sacrifices. We go to work to pay the bills so our kids can have a good education, so we can afford the things we need/want in life, but if there is a way to do the things we enjoy, and still have those other important responsibilities covered, then I’m certainly going to try, and spread betting and trading are currently my platform to achieving this. Until next month, when I’ll update you with my spread betting journey. Chris
You can follow my journey on my blog where I post all my trades, warts and all, winners and losers at www.spreadbetbeginner.co.uk and you can follow me on Twitter @traderchilli
November 2012
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