I think with the losses I have incurred I have to have a sit down with myself and ask some basic questions. I think this is a good exercise in honesty and akin to a business plan. So here we go.

Do I think I can make money from spread betting?
Yes, I think it is very possible and consistency seems to be the key to staying in this for the long run. I need to consistently take money from the table and stop giving so much back.

What is my edge?
After one year of trading where I’m back at where I started it’s hard to identify if my edge works but dissecting it a little more I do believe most of my trades were good. The direction of my trades was for the most part good.

My edge is taking a longer term view of the market and scaling into the trade. Say for example I think we are headed downward on the FTSE. I would wait till a good rally occurs and fix entry points where I would start shorting the market using a contract for 3 – 6 months i.e. FTSE 100 March 09. The intention is to ride the momentum till the market has reached my exit point.

Does my edge work?
My trades for the most part have been correct in their outcome. However I have various failings that have led to heavy losses. When I have executed a good trade and left it alone to follow the plan it has worked. When I start interfering and adjusting based on current news I lose the big picture and get stopped out, close or otherwise destroy the trade. I think I need to formulate and write down my trade plan for trades and wait to execute and then leave them alone. I have taken profits too early on most occasions and left losses run. This strategy will lose me everything.

Going forward I will publish my trade plan with exit and entry strategy. This should keep me from changing it as current news should not affect my longer term trade objective.

Where have I been successful?
On the few occasions where I have left my trades to work they have been very successful. My last trade on the FTSE of buying at 3750 was a great trade and if I hadn’t messed around with the stop loss I would be sitting on nice profits. I generally spend weeks building up to a trade then execute well but close way too quick.

Where have I failed?
I leave bad trades get out of control and good ones get closed out for small profits. I execute well and seem to have a necessity to have open trades. I need to master sitting out and watching, the art of Zen trading. When my trades are read I don’t worry because my conviction is sound but once they go into positive territory I start moving stops which always get triggered leaving weeks of work gone. This is an ongoing trend.

What changes will I make?
At this stage its clear my current methods don’t work as I’m over exposed to risk and don’t manage risk well. I need to take more control of managing risk and take a hands off approach once a trade has been executed. I also need to stop opening trades on a whim because I have nothing open. Having no trades open is often a good thing and will save me money. Quick trades just make me a gambler.

That would have been a 1200+ profit if the stop hadn’t been hit. The stop was hit at the day low of 3825.

After the 900 points on the DOW it looks like I’m the last to the party after all the beer is gone.

Total Profit Week: -12.50
Account Total : 7,090.05

Friday marked one year of trading and I thought I should mark the occasion some way but unfortunately I have been very busy at work and haven’t had much time to blog. To surmise the year it was a tough and hard experience that showed me there is no such thing as a free meal. After increasing my balance by 50% I end the year up about 20% with some appalling recent trades.

The bright side is I’m up by 20% and haven’t run my account into the ground. My predictions for the year ahead are a Christmas rally back to 4500 on the FTSE 100 and a test of 3300 in the New Year (I’m feeling March). So my current game plan is to offload the last of my bad trades on a decent rally and keep a long position open till Christmas. I will close down everything and take some time off over the Christmas period then back in January to start it all again.

Lesson of the year: Stop Loss is your best friend, you mightn’t like him for telling you some home truths whilst you raging drunk, singing on the bar but he will get you home safe.

Total Profit Week: -4039.00
Account Total : 7,102.55

However having looked at my recent trades it is apparent that my calls were good and overtrading caused losses which should have been profits. Stop losses were also way to close. It’s all part of the learning curve, this is just the painful part.

Well I for one am putting my neck on the line by stating that this could be one of the lows if not the low before the year end. Whilst we may test these lows again I don’t see us going lower than 3500 on the FTSE 100. So how does this affect my trading, well I’m still long.

The Trend Continues
Putting my money where my mouth is I placed a 3 Euro buy on the FTSE last night at the US close. However as I had two positions already open I had my finger on the trigger and was watching the close as I pushed the button. As I turned to the screen I realised to my horror that I had sold thus closing my existing positions for a very large loss. It’s still too raw to fully discuss but it will be in my trades next week. This is a diary after all documenting the ups and downs.

I went on to place a 3 Euro buy which is now in profit and to reinforce my conviction I think I will leave this alone and stop pressing buttons. I am now down 35% from my high which will give you an indication of the losses I have been taking recently. I hope you are all trading safely, although that brings me to another point. I had a sell on the DOW but due to my recent follies I placed a stop. This was just triggered even though I has 80 points margin and then it sold off. I was 800 Euro out and was stopped out for 0. Stops in this market are so hard to call with swings of 5%.

Just as an aside is it time to dip back into banks?
Bank Of Ireland 1.80 Euro
Allied Irish Bank 2.70 Euro.

How low is low and do you think it’s worth a few quid, interested in any comments.

I seem to have developed the market jinx a rare but powerful affliction that gives me the power to incorrectly predict market movements. As readers will have seen I was caught badly wrong on FTSE positions which have cost me dearly. Yesterday as markets rallied I took a positing out on the DOW as it had rallied 600 as I thought it would fall a hundred at the close. I left the monitor on with CNBC in the background and went off to cook a horrendous meal, my version of the India Nargisi Kofta. When I left I was 80 Euro up and quite relaxed with only 30 minutes to go to the close. When I came back I was down badly and had destroyed good food. My only saving grace was I bought DOW March futures which will allow the rally to peak and drop getting me out with hopefully little impact.

Not a good few days for me but it has shown I lack the experience to deal in volatile markets but with 10% moves how do you trade with a tight stop? I have relatively maintained my capital and over the next few days that’s my key goal. The temptation to make quick gains like last night has proven costly at best.

Hope you are all fairing better than I am and happy and safe trading.

I made some nice money while away which leaves me hope that one day I could trade and travel. The downside however was my arrival home where I opened four buy positions on the FTSE which have been trading at varying degrees of abysmal. At one stage yesterday I was down severely. Where is your stop? Well as I have stated before I use stops at different times and stops did get me out of one of the four with a small profit. Whilst I am a little concerned I have March futures 2009 so the positions have a little time to run. If we get closer the scary 4000 mark I will add to the positions hoping for a Christmas rally.

Whilst idealistic I think drops of 5% a day can’t be sustained for too long (Of course I could be wrong). I would be hopeful of a rally back to 4800 – 4900 on the FTSE. As for a bottom I really couldn’t tell you. I would have guessed 4500 but it seems we are over shooting all over the place and 3700 would not surprise me.

With coordinated action underway having little effect it will be interesting to see where we close tonight in the US session. Happy Trading.