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Finance Blog: Is There Any Science in Financial Trading?
Financial spread betting has potential for high gains, but why are people generally so unsuccessful at it?

Trading Diary October 2015

16/10/15:I was somewhat surprised by the rise in the market after yesterday's closing. It seemed to have been stimulated by the rise in the US market during their afternoon. Thinking that the market had reached its peak, I thought there were opportunities to go short. I sold at 6366 and 6370 once the main market had opened, but the fall was shortlived and I closed with losses of £11 and £14. In the market turmoil during the first half hour I was unable to spot the trend. Finally, it looked as if the market had made a significant move upwards, so I went long at 6398. I left it too late opening this trade and ended up buying near the peak. As I have become quite confused as to the market direction now, I closed for a loss of £19. So, these latest trades for both yesterday and today have resulted in a loss of £80 in total. I think I may call it a day, before things get any worse!

I made one more trade, going short in late morning at 6373. Again, the decline was shortlived and I did not time the exit very well. I just about broke even. Loss for the week was £72 but I expect to do better next week!

19/10/15:In the multi-day FTSE chart, the MACD histograms are decreasing slowly, but with an overall upward moving average. This probably means that the market direction is somewhat uncertain. That seems to have been been the case so far this morning.

Just after 7 am, the FTSE looked to be on its way down, so I went short at 6364.5. that was shortlived and I ended up closing for a small loss of £8.60. Once the main market opened there was a surge in the FTSE, and I went long at 6378. I might have gone long a bit earlier... In view of recent losses, I thought I would play it safe and close once a decent profit was built up, so I closed at 6389 for a gain of £22. Once the market turned around and showed signs of heading up again, I went long again at 6370.5 at about 9.35 am. I should have held on longer but I was afraid that my modest profit would disappear, so I closed for a profit of £7 and a total of £20 for the morning so far.

I made no further trades as I was busy in the afternoon, but the market did not move much anyway.

20/10/15:The direction of the FTSE remains uncertain, although I think it will likely go down a bit, at least until it reaches the 20-day trend of 6275. However, the markets may get there by going through some variations still, so I am reluctant to place a blanket short.

By early morning, the FTSE did indeed look as if it was going down, so I went short at 6343 just after 7 am. Unfortunately, the fall did not last long so I closed near break even. Once the main market opened, it surged upwards and after the early froth started to calm down, I shorted again at 6361, but I wasn't all that confident of the trade, I closed once I had a couple points. Once things had calmed down again, it seemed like the FTSE was heading up, despite my previous remarks. So I went long at 6338 just before 10 am. This turned out to be a mistake and I closed quickly with a £20 loss and within a few minutes reversed the trade going short at 6326. However, the market seemed to have settled there, so I closed after about half an hour of no progress. Loss for the morning was about £11.

The market was slowly moving for the rest of the day. In any case I was busy elsewhere for a large chunk of the afternoon. By late afternoon I started to become more and more convinced of my previous argument that the FTSE was likely to drop a bit further over the next few days, at least some time during the day. Accordingly at about 3.30 pm I went short at 6342.7. The FTSE drifted downwards for a while and at one point I was a few points in profit but the FTSE then increased almost touching 6360. Although it put me significantly in the red, it was significant that previous highs were not exceeded. This happened in the evening as well and looking now at the charts at 10 pm, the presence of a double peak seems clear. This usually indicates a future drop in the market and having gone slightly in and out of profit, I am sitting on a slight loss of £5. That's not too bad bearing in mind that the current spread is 5 points until 7 am tomorrow. The above loss for the day excludes the current running position.

21/10/15:Things did not go well for me overnight. The short that I had running showed a slight profit at various times last night and even by 3 am showed only a relatively small loss of about £15. However, soon afterwards there was a surge on the Japanese market which took everything up with it. When I checked my position, soon after 6.30 am I was over £70 down. When the European market opened, my loss increased still further and at one point touched almost £100. Fortunately, the market started dropping, which continued consistently until about 7.40 am. Thinking that that was it for the day I foolishly closed for a loss of £40. In fact the market dropped a little further after a brief increase, so I went short a couple more times. The first time I went short at 6351 and closed too early for a gain of £11.60. The second time I went short at 6330, but this was close to the what has so far turned out to be the minimum. I ended closing for a loss of £25. Once the market rise seemed assured, I went long at 6348. However, a lack of confidence due to recent losses meant that I closed for a tiny profit. So, with a more committed approach I could easily have reversed the earlier losses which stand at £47 for the day, including overnight short interest.

With the FTSE now at 6375 or so, and an increasing multi-day mean, it now looks like yesterday's expected reduction in the FTSE to 6275 will be wide of the mark.

In mid afternoon, the FTSE started drifted downwards, so once the American market had opened, and I was sure there was not likely to be a rebound, I went short at 6359. I let the position run and the profit increased to over £20 before reversing completely. When the FTSE started decreasing again, I was too impatient to bank a profit and closed for £14. In retrospect I should have held on because the market continued further down.

22/10/15:The early morning market was slow moving, which meant in practice that market movements are more strongly affected by noise. I tried trading in the first hour of business, but I found it difficult seeing any coherent behaviour. I opened and closed 5 positions, which was obviously too many. None of them resulted in a large gain or large loss, and for my pains I managed a profit of £3.60 (!!), even less than the spread betting company.

The FTSE was fairly steady until about 1.30 pm. It looked as if there was a surge upwards, so I went long at 6349. However, the FTSE was very noisy at that time and even fell to 6340 or so. I closed with a loss of £13.40. Eventually, the FTSE picked up again and on three occasions I went long, picking up £39 in total. Each time, the market seemed uncertain in direction, so I was happy to close for a modest profit and wait. It is only at the end of the day that we see that an overall rising trend has occurred. I am writing at 5 pm, and the main market has closed, but the FTSE will be continually influenced by any further movements in the US markets. For the moment, the FTSE seems to have peaked in the 6390 area. For all the uncertainty in market direction I eventually made a profit of £29.

23/10/15:Late yesterday afternoon, the FTSE rose with the US market but by the opening of the European market this morning, it had dropped to about 6405. It looked as if it had stabilised at that level, so on signs of movement, I went long at 6406.6 just after 7 am. However, the variance wasn't there and I closed some time later for a 2 point profit. Once the UK market opened, there was an upward surge so I went long at 6416. Unfortunately, I got caught on a spike, and the FTSE dropped back from there. It dropped to just above 6400 (my mental stop level) before reversing entirely. Once I saw a significant profit of £20 I didn't ask questions and closed! The market looks now to have peaked near 6425, and this being Friday, it may be a quiet day. Profit so far is £24.60.

Just after 12 pm, it looked as if the market had reached a temporary low, so I went long at 6444. Movements were very slow at first and the FTSE started to tick up a little. I was expecting a calm movement, but suddenly, the FTSE shot up! I thought this was a spike so I closed quickly for a £10 gain. This was really silly, as it was a significant move and I could have made £50 in 10 minutes. Eventually, the market dropped and I took an opportunity to go long in mid afternoon but I only made £5. Finally, in late afternoon, the FTSE showed evidence of a clear drift downwards. I went short at 6446.5, but there wasn't much momentum left in the market and I closed with just a tiny profit. All the little bits, though, add up. Total profit for the day was about £43.

26/10/15:Today was not a good day for me. It started reasonably with a short on the FTSE, but the downward movement was limited and so I was happy to close for a modest profit of £9. Once the main market opened, I tried to follow the usual technical analaysis principles but I came unstuck a few times. With no overall trend, my tendency was in retrospect, to overinterpret moves that did occur. The result was a sequence of losing trades, but I don't see it as being productive to go over them in detail. It is not uncommon for me to overinterpret market moves during days when the market is calm. However, it is only with the benefit of hindsight that one realises that the market has been quiet. Thus it seems inevitable that days like today will occur from time to time and I should learn to trade less on those days. Loss for the day was £39.

27/10/15:The FTSE drifted only slowly overnight and by the time the official market opened it was slightly lower than yesterday's close. After a few minutes, it looked like the downward trend had resumed, so I went short at 6406.5. At this time, the markets are always volatile, but the position went into profit and increased to almost £17. I didn't close there, but waited and the advantage almost completely reversed. On the downward trend for the second time, I decided to protect my gains at £13.40. I should have waited a bit longer, as the profit would have been much larger, but I was mindful of yesterday's losses. The market has stayed mostly below the 6400 level, and seems to have settled down near 6395. This could well be another quiet day, but the multi-day chart suggests that overall, the FTSE is about to head downwards.

It seems that my prediction of a downward slide in the FTSE is being realised. I went short at 6388 just after noon, but nothing much seemed to be happening, so I closed at near enough break-even. A little time later, the FTSE went back up to almost 6400. by about 2 pm or so, a downward trend had set in and I went short at 6387 but it turned out to be a little early as the market bounced back up. After about half an hour, the market was down again and so I closed at 6380 for a profit of £14.40. By that time the trend still had not become established, but shortly before 4 pm, the market dropped substantially, although by then I didn't have a position running. The after market trading seems to have bottomed out for the moment at 6360 and may well be on its way up for a little while. As usual, the performance by tomorrow morning will be driven by this afternoon's US market. It might actually be worth trading if I can get a high enough price to short from.....

28/10/15:On the basis of my previous thoughts, the rise of the FTSE today caught me by surprise. Last night the FTSE went up, and looked to be starting downwards, so I went short at about 9.30 pm at 6375. The FTSE dropped and come bed time, I had a reasonable profit of £18. So rather than risk that, I closed. By this morning the market had not moved much and was slow moving. Shortly after the main market opened I shorted again at 6364.5, but I was clearly too much influenced by my preconceived notions. I made a rooky mistake of closing on a spike upwards and ended up £37 down. The market then retreated and with a better constitution I could have got out with a reasonable profit. Still thinking that the market would fall, I went short at 6390 just after 12 pm, when the rise of the morning seemed to have halted. Alas, this was only temporary and I closed at 6400 with a £20 damage. Having misunderstood the market today, I walked away. Loss for the day was £42.

29/10/15:The FTSE dropped a little overnight but its direction was still somewhat unclear. Once the main market opened, it started to go down. However, it was typically erratic, and although I went short at 6413, I was happy to close for a relatively stress-free profit. I closed long before the serious action, and once more I could have made a lot more money. After that, my heart wasn't in it, so I retired for the day. It is interesting how a couple bad trades yesterday have undermined my confidence and encouraged me to close my positions eary rather than run with my profits.

30/10/15:By 6.45 am it looked as if the FTSE had started a down trend, so once the market spread had reduced after 7 am, I opened a short at 6401. For a while, that was the limit in the down direction and I ended up closing for a minuscule profit. After the market surged over 6410 it started going down again, and so I went short at 6399. However, the market stubbornly stayed there, so I closed at break even. Finally, the market seemed to start dropping, and I went short at 6382. That turned out to be a spike and I closed with a £15 loss. I should have been more relaxed as the FTSE turned back down. In my final trade for the morning, I went short again, at 6371, but it was all over by then, and I could only scrape a slight profit. Loss for the morning was £12.

Not for the first time, I made the right initial decision to go short but instead of just leaving my position alone, I interfered too much. Instead of what would have been a profit of over £50, based on my short from 6401, I end up with a loss of £12. Why am I not learning from my mistakes?

I made another trade in the early afternoon, going short and picking up a point. The market was slowly moving and didn't seem to be going anywhere. It appears that in a downward moving market, I should be opening my positions as the price reaches the resistance level, which would be at the 100 min. moving average. Then profits would have come very reasonably quickly and I would probably have closed for a much larger profit. This is something to bear in mind for the future. But for the moment the loss for the day was about £9.

As this is the last trading day of the month, it is an appropriate time to review my numbers. Total gain for the month was about £87 but in the last three weeks my account has stood still.

Previous Months' Accounts

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