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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 November 2015

2/11/15:It was a quiet start to the day, but the FTSE looked to be heading downwards in the 100 min moving average. Accordingly, soon after 8 am, I went short at 6317. after a while, however, it became apparent that the downward trend had ceased and I ended up closing my short at 6337 for a £40 loss. I might have closed earlier but I was half expecting a reversal. By 9 am the upward trend seemed to getting established, so I went long at 6342. after a period of sweating when the FTSE went down again, there was an upward surge and I closed for a £27.40 profit. This has left me £12.60 down on the morning so far.

In a slow moving market, I made several trades in the afternoon, two successful with profits of £15 and £3.60. The third trade was too late in the day and I felt obliged to close at a loss of £9. So the net loss for the day was just £3.

3/11/15:The FTSE rose with the American market last night and by this morning had settled near 6390. After the European markets opened, the FTSE strated to head downwards, so I went short at 6385. Progress was slow, and so rather than risk not knowing what the market would do when it officially opened I closed for a small profit. When the market did open, the fall continued but it occurred quickly and I lacked the confidence to reopen a position. By 8.30 am the market settled near 6360 so I went long at 6363. With the overall trend downwards, I was wary of waiting too long, so I closed for another small profit, totalling £13 for the morning.

Once the US market opened an upward trend became reestablished. It was slow at first, so I made two quick trades picking up a total of £17.40. More patience would, as usual, have resulted in a much larger profit. No matter, the profit for the day was £30.

4/11/15:The FTSE rose after the official market opened and I made two trades going long at 6407 soon after 8 am and 6435 shortly before 9 am. Although I might have waited for a larger profit in both cases, I was somewhat put off by the volatility and was happy to pick up £27 in total. The FTSE continued to rise most of the day but started to fall once the US market opened. I went short at 6446, and closed shortly afterward for a profit of £22.40 and £49.40 for the day.

I also opened up a position on Kenmare shares (KMR). The company produces titanium feedstocks for pigments. I have been a fan of the company for some time and have a few shares in my ISA. They have taken a bit of a bashing since the summer, primarily due to the softening of commodity prices. At one point I was thinking of selling all my ISA shares and taking out equivalent spread betting positions instead. However, over the months I have sold out of individual stocks in favour of index trackers. The only ones I have left are Aviva and Kenmare. I expect I'll sell Aviva some time, but we'll see. In the meantime I went long in my spread betting account at £100 per point for KMR. It sounds impressive but that is currently worth only about £150. Rather than give my accounts with KMR removed (which is not really part of the usual investment strategy) I'll leave it there for the moment. So some slight profit adjustments over the next few weeks and months will arise probably without any comments.

5/11/15:The FTSE dropped after the official market closed yesterday and looked to have stabilised near 6400. My reading of the multi-day chart suggested that it would be up again later, so when it started showing signs of rising, I went long at 6405. The market then promptly dropped leaving me contemplating whether to close at a loss. The loss on my position exceeded £30 at one stage, but I held on and in due course the market reversed without quite making it to 6410. So I decided to close last night for a minuscule 1 point profit: tiny but better than a loss!

By this morning, the market had not moved much and after 7 am looked to be starting to nudge upwards again. So, just before the main market opened, I went long at 6412. This turned out to be a terrible mistake, as the market went into a rapid stall. I closed for a £25.40 loss once the price had dropped below the lower Bollinger band on the 5 min chart. The drop continued, and in two trades I made £30 going short at 6402 and 6397. I should have been more adventurous, as the FTSE continued to drop below 6370, but the volatility was off putting.

I was busy for the rest of the morning, and returned to the trading in early afternoon. Once the US market opened it became clear that the FTSE was in decline, so I shorted twice picking up £9.80. I should have made a lot more, but I was feeling tired and I did not have the needed patience. In these circumstances it is best not to trade at all. Total profit for the day was £23 after including a few pounds from Kenmare: not a bad performance for the day bearing in mind one poor trade which halved the net profits.

6/11/15:Just after 7 am, the FTSE appeared to be rising. I went long but it turned out to be a spike. The price then started drifting lower so I closed with a loss of £17.60. I should have waited a bit longer, but the move down was sudden at first. By the time the official market had opened, the FTSE downward trend was more established, but the trend was slow. I made 4 short trades in the first hour but progress was slow, and it became apparent that I was trading the noise rather than the signal. I made a total of £15 in the 4 trades, but small trades like that can easily go awry, so I stopped before I came a cropper! My KMR trade gave back a few pounds so my net loss on the morning was £5.60. I suspect that the slow movement of the markets is due to investors awaiting the jobs report from the US.

The US nonfarm payrolls had a substantial effect on the markets. Right at 1.30 pm, the FTSE oscillated between 6340 and 6380. I wasn't watching at the time, but it looked as if prices had settled up, so I went long at 6367. Unfortunately, the FTSE promptly crashed over 20 points at one stage and in the space of 5 minutes my position was considerably in the red. I closed a little later with a loss of £39 but I should have held on, as the market gradually reversed over the next 20 minutes or so. The wild gyrations continued through most of the afternoon and I made a number of trades mostly long, playing catch up all day. The FTSE was just too wild to trade really, so as soon as I got a profit of 10 pounds or so, sometimes less, I closed. This was not the most effective way to proceed but did have the benefit of relatively low stress while trying to make up for the major losing position. For the day as a whole, I made 12 trades, 9 successful with a mean profit of £7.62 while the 3 losing trades had an average loss of £24.13. It is not ideal that the losing trades exceed the winning trades, but in volatile markets this can work as long as the vast majority are winning. Today, though, I was hampered by the large loss in the early afternoon.

After all the shouting, the FTSE has closed near enough where it was at yesterday's close! After a few pounds gain on my KMR position, I ended the day at break even. This is the highest my account has been since mid August.

9/11/15:Once the market opened, the FTSE started to increase rapidly so I went long at 6362. Once I had a decent profit, I closed 9 pts and £18 up. After a few minutes watching, the indicators suggested that the rise would continue so I went long again, this time at 6372. Unfortunately, after continuing to rise for a short time, the market went into reverse, so I closed with a loss of £16.40, almost eliminating my profitable trade. With the reducing market continuing, I went short but only picked up a point as the fall seemed to have halted. The FTSE did indeed reverse, and after contemplating the situation for too long, I eventually went long at 6372.7. Again, the move seemed short lived so I closed for a profit of £13.40. Net gain from the 4 trades was £17.60.

I made several short trades in the afternoon, but the market was generally slow moving and I had difficulty getting it right. In the end, I made another £5.40. However, in mid afternoon, the FTSE started dropping and I missed it completely as I was distracted elsewhere. The FTSE finished at 6295 so my early short from 6353 would have made a bit of money if I hadn't been in such a hurry to close it. Total profit from the day's FTSE trades was £23, but the day's profit reduced to £15 after a reduction in paper profit on my continuing KMR spread bet.

10/11/15:The FTSE rose overnight and by this morning had appeared to be on its way down. Accordingly, just after 8 am, I opened up a short at 6316. It seemed to be going nowhere and as there was still a danger of losing money on the trade, I closed for a 1 point profit. By 8.45 am, the FTSE price bounced off the 100 minute (20 periods in the 5 minute chart) moving average, which seems to be a reliable sell signal. I then went short twice at 6308.6 and then 6308 with profits of £10.40 and £14. The second trade was closed at 6301 which was somewhat early, as the price continued to drop after a little delay. Nonetheless, the profit for the morning so far is a reasonable £26.40.

Foolishly, I opened a FTSE sell trade (6257) in late morning just as the market appeared to be heading down again. This is often a mistake and I should have known better, as late morning to early afternoon, the market often drifts with small variance and it is also a challenge to predict its direction. The latter happened this time, as the FTSE reversed and I made the second mistake of closing my losing position too late. The net loss was £31 in the end, which wiped out my earlier profits. Once the American market opened, the FTSE started to show some variability, and at 2.35 pm I went long at 6275 just as the market seemed to be picking up, as indicated by the 100 min moving average. I nearly came a cropper on that trade as well, as the market went into reverse and at one time I was £22 down. I held on, though, and the price rose to the upper Bollinger band where I closed near enough. The gain of £16.40 only made up half the earlier loss, but it made me feel better and my trades for the day ended up about £12. My KMR position slipped back a little, so my net profit for the day was £7. This was very small, yes, but at least I didn't lose.

From March to August, my gains were very erratic. However, since September I have consistently gained about £100 per month. There is still a lot of time left to trade in November and hopefully I won't make any losses from the current situation. This profit is certainly rather modest but my strategy is first to develop a technique of consistent profits based on the minimum trade volume of £2 per point on the FTSE. From there, assuming the profit continues for another few weeks, I need first to demonstrate from a mathematical point of view that my profits have been statistically significant. Second, I can start cranking up the volume of the trades perhaps to as much as £10 per point, over the next year or more, to achieve a more worthwhile profit. We will see. Watch this space!

11/11/15:I made a complete mess of today's trades. In a market without a large overall movement, I made 3 trades, all losing. It seemed that as soon as I made a trade the trend would reverse and I felt compelled to close my losing position. In actual fact it was the first losing trade that put me off my stride. I opened up a short just as the market neared its minimum for the time, only for my position to swing strongly negative. I closed for a loss of £28. The opposite then happened in the other direction: I took too long to buy the FTSE but then my confidence having been undermined persuaded me to close my losing trade at a loss of £11. My third trade went long at the peak and I lost another £18. After this, I walked away for the rest of the day. The losses added to £65 when the performance of Kenmare was included.

12/11/15:Today I seemed to disengage my brain completely from my trading. It started well enough with tentative gains of £16 just after the market opened. As usual I closed far too early and limited my potential profits. By the afternoon, I was convinced that the market would rise so I went long twice losing a total of £50 when the market dropped. As I say, I don't know what I was thinking of. Loss for the day was £36. This means that my profit for the month has almost evaporated, and my little speech on the 10th may have been the "kiss of death".

Previous Months' Accounts

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Website revised by John Austin, 22/11/2015. © Enigma Scientific Publishing, 2015.