Spread betting - how to manage risk

shinokamparos

Hi,
I have capital of € 1900 invested in my Spread
Trading acc . I would like some advice on how to
manage risk. I know the rule of thumb is to risk
2 % or 3 % per trade. That would enable me to
risk say € 38 per trade which clearly is not
enough as I don 't do short term trades and a 38
point swing doesn't give me enough of a
cushion , even if I was to increase that to say
5 %. My account is worth around € 5000 and I
have been trading since last April .
I have 7 bets on at € 1 or € 2 per point , and I put
a stop loss of 10 % loss on each bet. My total risk
is around € 3500 .
My main concern is that I have too much risked ,
given the norm of risking only 2 % of capital. I
would be interested in any advice anyone might
have.

arrowloopboy

Quit trading till you've more capital,or be happy trading 2%,3% might be classed on the high side.

Simples.

65bl

I believe Market Spreads allow 0.20c per pip on forex trades.

drdoon

I'm like you. I spread bet. Made good profit then lost it all by not having stop losses in place and hoping market would swing in other direction. Why no stop losses you might ask. Well I was trading Gold and with large swings in the price I would sit in front of the pc so I could close position if I was losing too much. As Gold had such large swings and 99% swung back I didn't want to get constantly stopped out. It could swing 100 pips in a couple minutes no problem. Only thing is when it kept going I was praying it would swing back, but no. Oh well. I have to find way to manage my stop losses. Otherwise it's just gambling. So many people say day trading is a waste of time. Which essentially what spread betting is, but with leverage. Which can be a complete disaster. Fun though

mickman

drdoon wrote: »

I'm like you. I spread bet. Made good profit then lost it all by not having stop losses in place and hoping market would swing in other direction. Why no stop losses you might ask. Well I was trading Gold and with large swings in the price I would sit in front of the pc so I could close position if I was losing too much. As Gold had such large swings and 99% swung back I didn't want to get constantly stopped out. It could swing 100 pips in a couple minutes no problem. Only thing is when it kept going I was praying it would swing back, but no. Oh well. I have to find way to manage my stop losses. Otherwise it's just gambling. So many people say day trading is a waste of time. Which essentially what spread betting is, but with leverage. Which can be a complete disaster. Fun though

spread betting allows you to have positions open for up to 9 months - how is that day trading ?

drdoon

mickman wrote: »

spread betting allows you to have positions open for up to 9 months - how is that day trading ?

Ok so it's not specifically Day trading. It's more of a hybrid. I rarely had a position open for more than a day as the gold Market is so volatile. I would make some money then get out. The idea of having a position open for months scares me in the current market conditions.

royaler83

drdoon wrote: »

I'm like you. I spread bet. Made good profit then lost it all by not having stop losses in place and hoping market would swing in other direction. Why no stop losses you might ask. Well I was trading Gold and with large swings in the price I would sit in front of the pc so I could close position if I was losing too much. As Gold had such large swings and 99% swung back I didn't want to get constantly stopped out. It could swing 100 pips in a couple minutes no problem. Only thing is when it kept going I was praying it would swing back, but no. Oh well. I have to find way to manage my stop losses. Otherwise it's just gambling. So many people say day trading is a waste of time. Which essentially what spread betting is, but with leverage. Which can be a complete disaster. Fun though

Can i ask how much profit you were taking at a time with that strategy and how much per point were you putting on when trading gold?!

drdoon

royaler83 wrote: »

Can i ask how much profit you were taking at a time with that strategy and how much per point were you putting on when trading gold?!

Initially I was betting €1 a point taking €30 - €50 when I was very wary of losing. I then got cocky as the Gold Market kept going up. Started putting on €4 a point. I placed a bet overnight and woke up the next day to €700+ profit. I was unstoppable I went from Starting with €500 to €2400 in about two weeks. But I was spending way too much time staring at screen waiting for signals. Then the market tanked and I went back down to €350 in about two hours, unbelievable. I really need to discipline myself. I am pretty confident I can make money. I just have to curb my stupidity and get better educated. That's why I want to do the Diploma at the Financial Institute of Trading. Not sure if it's any good or if IO can learn alot from the internet, blogs , YouTube, investopedia etc. I'm really not sure

neris

if your getting big profits you really need to use stops. At least loose stops that you can loose a bit not a huge amount. better €500 profit then been wiped out coz of greed. You can always exit and reenter a trade when the signals go right again. If you close a bet or get shut out and youve been screen watching just leave the room get a coffee have a break for a while and go back later check whats been happening and then see if your indicators allow you back in.

drdoon

I lost another €228 last night. Now I don't have enough capital to cover my margin. So I won't be spread betting for some time. Thing is I would have been ok if I had more capital in my account. But I ended up going into the red so had to close position. It later went on to swing back into profit. This is my main problem. Knowing when to stop out without consistently losing small amounts of capital which all add up when I am confident what direction the market is headed. My main indicators are Momentum, Stochastic's & moving average convergence divergence (MACD).
What I would really appreciate, like you guys is spending time with professional traders in trading environment. Not in lectures.

alejandro1977

drdoon wrote: »

I lost another €228 last night. Now I don't have enough capital to cover my margin. So I won't be spread betting for some time. Thing is I would have been ok if I had more capital in my account. But I ended up going into the red so had to close position. It later went on to swing back into profit. This is my main problem. Knowing when to stop out without consistently losing small amounts of capital which all add up when I am confident what direction the market is headed. My main indicators are Momentum, Stochastic's & moving average convergence divergence (MACD).
What I would really appreciate, like you guys is spending time with professional traders in trading environment. Not in lectures.

Don't take this the wrong way but you you seem to think there's some holy grail there and that a professional trader will just give away magic secrets if you pay a few grand. If you are trading FOREX you're dealing with highly liquid markets, if there's a system than can figure it out then immediately it would be exploited and fall apart.

You seem to be overly relying on technicals and you don't have a trading plan re. what you realistically can gain vs what your are prepared to lose.I can tell you now that professional traders won't rely on the technicals you mentioned. there's always something else, and the technicals are an aid.

I recall in another post you said you didn't wan to spend more time researching. Maybe you should think again.

(AFAIK part of the Independent Diploma is about preparing a trading plan, but not sue if paying for that will solve your issues)

Best of Luck

drdoon

alejandro1977 wrote: »

You seem to be overly relying on technicals and you don't have a trading plan re. what you realistically can gain vs what your are prepared to lose.I can tell you now that professional traders won't rely on the technicals you mentioned. there's always something else, and the technicals are an aid.

I recall in another post you said you didn't wan to spend more time researching. Maybe you should think again.

(AFAIK part of the Independent Diploma is about preparing a trading plan, but not sue if paying for that will solve your issues)

Best of Luck

No no, I won't take any help the wrong way. You have to understand I am trading my hard earned cash from a position of knowing nothing except market sentiment and a few technical's which I THOUGHT worked in the beginning ,but now do not. I mean I want to learn how to trade properly, risk management, stop losses etc. But I do not honestly feel you can really get a good feel for trading by reading books. Trust me I have 10 years third level education and I know all about over educated but under experienced. It's so hard to create concrete trading plans when there is no one to bounce ideas off of and only a book for your knowledge base. Who is to say that book or website or persons is wrong or right. I want to see this stuff in action so I can make an informed decision. By nature I am an impulsive, irrational person. I need a dose of reality to show me the ropes. Not a hardback book. Thanks 4 your help

alejandro1977

drdoon wrote: »

By nature I am an impulsive, irrational person. I need a dose of reality to show me the ropes. Not a hardback book. Thanks 4 your help

Well this book won't teach you how to yet rich quick but I'd still recommend it
The Disciplined Trader: Developing Winning Attitudes (Hardcover)
Douglas
 

http://www.amazon.co.uk/gp/aw/d/0132157578/

arrowloopboy

arrowloopboy wrote: »

Quit trading till you've more capital,or be happy trading 2%,3% might be classed on the high side.

Simples.

This is how to manage risk,simples.

Anyone thinking of trading with 2 or 3k ,don't bodder,just buy yourself something nice,or someone else will be buying themselves something nice on you.

Plan a trade,trade your plan ,2% risk,this might sound like a mantra,thats because it is.

Happy trading.

drdoon

alejandro1977 wrote: »

Well this book won't teach you how to yet rich quick but I'd still recommend it
The Disciplined Trader: Developing Winning Attitudes (Hardcover)
Douglas
 

http://www.amazon.co.uk/gp/aw/d/0132157578/

Thanks very much for the book recommendation. The one issues I have, well it's a multiple issues really is that there is so much information. It's more of a question of who is offering the best education/advice. If I knew that I was learning from someone who really knows their stuff and makes good money from it then great. About doing the Diploma in Financial trading at IIFT.ie, will I just get taught the basic stuff then sent on my merry way a grand worse off. I see that the Advanced Diploma has a mentoring process, but that course costs €2750. At this rate I won't have any money to invest!!! I want someone with a proven track record to show me the ropes. Anyone ever heard of Vince Stanzione. He seems to be a spread betting guru, self proclaimed I'm not sure. I have looked high and low to discover if he's running a scam. But he seems to be legit. Although on several blogs about him, new members who just joined left positive comments. Is he out there searching for blogs and putting those positive comments on himself? Who knows. But I cannot find much negative things about his system. Plus it's about €300. Wonder if there are any groups of private traders who get together to trade aside from chatrooms. Be cool to work with some people in the flesh. Cheers people, any help greatly appreciated

cusker

I am not that really moved with spreading your stocks across different shares as that defeats a portion of its purpose. With that type of mindset, you do not fully play the game because in a way, you are going with insurance that whatever happens to this share, you have other ones that can make up for it. I think the best way to do it is to pick one you have monitored for a long time and when the time comes that prices have ballooned, do not hesitate.