GlesgaKiss

This week is dire! My strategy is a short term one, I don't hold stocks for any longer than a month or two at the most(usually between days and weeks) and I've been caught out big time this week. Should have sold my shares and started shorting, I could have made a fortune!

Hindsight is a wonderful thing though.

What have you been doing this week? What are your views on what seems to be an overdue correction?

PaulC72

I purchased 100kg of smash and got mashed.

GlesgaKiss

You've done well then.

mamoon2

Do you trade CFD's then?

TelBoy

You've made some back today though, right? Or did you bail on the lows?!

GlesgaKiss

Spread bet.

No, I held my nerve. Try to avoid getting into a state of panic like the masses seem to. It's paid off today: caught AFR at 82p.

Also kept my spread bet on the price of Gold open, which is now heading north again, although I feel it may have some time trading at a lower level yet.

Watched Warren Buffett the other night on iplayer and he makes some good points(as he would!). Even short term, if you have capital free, then while people are panicking is an ideal time to buy. The problem is knowing if the panic is justified and how long any correction is going to last.

FlightMan

Tipex is good for corrections.

GlesgaKiss

Also, can anyone recommend a good financial forum? Not for chat about stocks, but for general discussion about all things related to the stock market.

Deep Singh

I think gold has further upside. I'm buying in the dips. I was hoping it would head a little lower today but it didn't. For metals and mining stocks chat www.kitco.com is quite good, but beware there are some people on there, who lets just say are a little obsessed by gold

GlesgaKiss

Thanks

I've been trading it since it was in the 1050 - 1070 range. I was going long in the dips, thinking that would be the safe way as thought the Dollar would only get weaker and if there was going to be any breakout, it would be a rise. Wish I had closed my bet quickly at the start of the week at a slight loss...I could have made a fortune on the way back up, like you no doubt will.

TopBanana

Sounds like you're day trading using fundamentals. You're going to get burned big time sooner or later. The market will stay irrational longer than you can stay solvent, as the saying goes. This is especially true with gold which is manipulated an awful lot. Technical analysis doesn't work either, other than support / resistance which is nothing more than self fulfilling. I tried day trading but couldn't do better than break even. I'm convinced you need inside knowledge to do well.

In the last few years I've only made a couple of dozen trades, but taken small enough positions so that I don't worry unduly if it goes the wrong way for a few months. I just let the fundamentals work their way through. It's much less stressful, and it's been quite successful for me. Just my $.02.

GlesgaKiss

Thanks for the advice. I have traded the price of Gold, but wouldn't say I dedicate a lot of time to 'day trading'. Occasionally when opportunities arise I will do momentum trades, but I mostly look at oversold companies, or well sorted ones to hold anywhere between a few days to a month or so. I don't trade as often as you might think either. Topping up with Afren shares today was a good move, but I am there for the medium term and if you take even a quick look at the company you will see why.

I just use all the chances to make profit that I come across. I think various types of trading and investing can be combined. For e.g., some people might know how to spread bet commodities and just choose not to, but going long on the price of Gold today was a no brainer at one point, so a perfect opportunity to make a quick profit.

You have been doing this longer than me though, so I'll take your advice on board. Cheers.

Spoon

I traded a 5 figure sum daily and did OK from real time prices to my home so it can be done. Ironically when I stopped and handed it to others to manage, while I played elsewhere, it was stolen.

bluenosewrx

iTrader: (2)

I satrted getting a few shares together when the money in my ISA was doing nothing, bought £1,000 of RBS at 14p bought some LLoyds shares and also some taylor wimpey after speaking to someone on here.

They have took a wee hit in the last week or two but rallied slightly today, however i am in for the long run and i can afford to lose the initial outlay, i top all three up by £50 a month each.

Still in a good profit so not really worried, quite exciting checking prices, even the guys at work are sick of me taliking about them and its worse now i can get live updates on my Nokis N97,LOL

Mac

GlesgaKiss

You've done well on RBS. One of my friends also bought in at around 18p with around £1k too. He has no interest in the stock market, but someone suggested he take a punt. He's happy with that punt.

Quite a bit more than you would get in interest in any savings account.

GlesgaKiss

When did you do that? I'm just wondering as it wasn't so long ago you would have to spend a fortune on equipment to get real time prices in your house.

Spoon

96'ish to 2001. From memory it cost thousands and there was an annual fee, but one trade could pay for it. As far as set-up costs go though it wasn't dear.

ScoTTyB

I daytrade forex using TA. Sometimes yooz win, sometimes yooz lose. As long as you apply correct money management you should win more than lose.

Simon K

This thread must be a true contender for "How many buzz words / phrases can you get in one thread " Just get Micheal Douglas / Charlie Sheen in here and we've got the script for Wall Street.

Im sure you dont have to use all those terms / phrases, if so perhaps the rest of us could understand what you guys are saying. :-)

SBK

GlesgaKiss

Haha. That wasn't my intention but I see what you mean! Possibly because I'm doing a lot of reading at the moment and most of the other people in this thread would know exactly what I mean.

Think I remember reading that you worked for Goldman Sachs?

Simon K

I did, and many other IB but on the IT side. I used to have MarketSheet on most days, watching the shares and a Bloomberg terminal, but never really knew what I was looking at. It was interesting drilling down into each company, reading about what they are doing, selling, and any information around it. Never got involved with trading, probably explains why I buy high, sell low :-)

Im a simple man, and prefer simple terms. Always wanted to learn more about trading, but the phases and words just blow me away :-)

Love to know the relationship with the £/$, how it effects gold, share prices etc. The only thing Ive done lately is whilst the banks were low, I brought a load of Barclays, Hbos, and other banks shares. Thinking long term, aka for my son when he's 18, they should be worth something.

So, any tips, advice, explanations would be gratefully recieved :-)

SBK

alloy

I head up a desk in the city, short term trading advising and managing client positions accross all forms of derivative in equity (Spreads, CFDs, Options, Futures etc.) we've had a fruitful week, the joy of these tools is how diverse they are and the capacity to short. Always remember be prudent with risk.

Anyone wants cheap rates or a little advice send me a PM!

Simon K

Alloy, can you explain what short's are ? Different between spreads, CFDS, options, Futures ?? What sort of things should we look for in buying a good stock that will go up ?

Also, out of interest, do you guys still use Marketsheet ? Bloomberg terminals ? Not around Liverpool St are you ?? Was wondering if the Pitcher and Piano bar is still there :-)

SBK

GlesgaKiss

http://en.wikipedia.org/wiki/Short_(finance)

alloy

Short positions are the reverse of a long position. Where you usually buy low and sell high, with a short we position yourself to gain from a fall in the share price/index so the mechanism is to sell high and then buy back low. This on an intraday/intraweek basis is vital tool in such a volatile market. From this you can then set up risk mitigating trades, for example Long BA..L and Short RR..L is a classic pairs trade. Similar Long BARC.L and Short LLOY.L has made my clients a lot of money over the past few weeks. By doing this you Net off your risk in the sector and look to see the two companies trade in alignment with one another.

Spread betting is tax free, the clue is in the title it is a bet, this can only be done on an execution basis from a legal perspective and the commission is wrapped up in the spread. e.g. VOD.L is trading at 129.1-129.2 in the market, on a spread you may see the price be 128.7-129.6 so the spread is what costs you. Also when positions are placed you have no physical impact on the share price and as this is not regulated you are subject to the unscrupulous nature of the "bookie" you do your business through!

CFDs are not subject to stamp duty but are subject to CGT. Here you get the exact price they trade at in the market so therefore no discrepancy between what you can access and the market dictates, when you trade the corresponding position is placed in the market so you actually have an impact on the asset you trade. There is commission to be charged on these transactions but it is nominal from 0.1% each side for ex-only up to 0.35% for advisory and managed services. You can go long and short, and on these transactions you can scalp dividend payments as well. This is my chosen method of trading as the leverage is there and they are not only an economical use of your risk capital they are also a relatively affordable means of trading. One word of caution though clearly risk is high as leverage is there, however because there is a chance to use up to 20x leverage IMO doesn't mean you have to use it!!!!

Options are kind of like an insurance policy against volatility. They are a sophisticated investor tool. However with patience and knowledge again are a very effective means of locking in profits and avoiding the volatility in the market having as much of an effect on some of your medium to long term holds. Also can be used for speculating.

Futures again are sophisticated tool.

I look at fundamentals as well as Technical’s. As most of my trades are short term, i.e. 30 mins to max a week in their duration technicals are a very good indicator towards this level of movement. Moving averages are a great aid, as too are Bollinger bands, i use Fib levels, MACD, RSI, Stochastic, Pitchfork ADX DI+/-.....really are an endless amount of indicators and oscillators to use. I would suggest that you find 2 or 3 that you understand because you can over complicate things very easily. I think this market will present many an chance of entry and exit for decent moves, but like everything in life, reward comes from taking on risk and whatever you do make sure it is disposable capital you play!

GlesgaKiss

Alloy - Very in-depth post!

The obvious risk for me, as you say, is the amount of leverage you could use. When I was spread betting RBS a while ago I think there was a margin requirment of 30%.

So that would mean with little more than £15k you could have had a market exposure of £50k? So say you had a long position on RBS and there was some unexpected bad news, for some reason you couldn't keep an eye on things and RBS shares fell by 20%. So you could potentially lose 20% of £50k, or £10k! Two thirds of your £15k layout! Am I right in saying that?

alloy

In your example if you had exposure of £50k in RBS then you would require £15k on account to warrant that position. However in doing this you would be instantly on a margin call as soon as the position moved against you! So if RBS shares went down 20% you would lose £9k so your deposit of £15k would now only be £6k.

I can trade RBS on a 10% margin so for that trade of 50K you would only need £5k on account to trade it. Again FAR TOO HIGH RISK, it gives you NO room for being diverse. I only trade FTSE100 because liquidity is as deep as the ocean and i'm trading in block orders of £2m size per stock so i need that liquidity there to get in and out of the market. Now for example a client who has £100k on account can in theory trade a £2m position with 5% deposit i.e. 20x leverage. Again FAR TOO HIGH RISK!! I advise clients to lev up to 4x, so for his £100k i would grant him access to £400k worth of stock, but again i would spread that risk over 3/4 constituents to mitigate his exposure to unsystematic risk and again give the client a hedge to his exposure to cover any adverse movements.

GlesgaKiss

That 10% margin stuff is scary.

It's all about discipline at the end of the day, but I guess for some people with 100k, the temptation would be too much. I think trading is all psychological. The greedy or impatient will lose huge amounts of money!

How did you get to where you are just now? You can tell me to mind my own business, but I'm just curious what you did at uni etc, or how you worked your way up?

Must be a lot of stress involved in your job!

alloy

Human nature is greed orientated so you are right a lot of people do get sucked in, hence why they come to people in the industry to help guide them and advise them.

I studied Actuarial Science at Uni, then came to the city 3 weeks after graduating as a broker, got into the trading side of things and then became a rare commodity as i actually made clients money. Then left my old firm to go alone and am operating in an arcade at the moment with advisory permissions and enjoying a good run of things this year lots of organic growth in money i have under management both profits and also clients introducing friends/family etc.

Stress isn't something i endure. IMO stress comes from being emotionally attached to stocks, and that's the worst thing you could ever do. The only guarantee in this business is at some stage you will lose that’s a fact of trading, however if you have prudent risk management good flow of info and an understanding of market psychology you can have it off!!

GlesgaKiss

Thanks for that. Good to hear advice from someone like yourself. Sounds like you have a good career!