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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 December 2015

1/12/15:The pain continued as my confidence has gradually been eroded. I made three trades but I closed them all early with two modest losses and one near break even. My heart wasn't in it and I ended £30 down on the day.

2/12/15:Today was scarcely better. I made four trades, two of which were near enough break-even and the other two were modest losses so my account ended another £24 down. As it happens, just before the close of the market, I went long at 6424.5 with two thoughts in mind. Firstly, most of the recent movements have happened overnight leaving the market slowly moving during the daytime and difficult to predict. Secondly, in the multi-day charts, an upward tilt in the 20 day moving average was starting to occur, and the MACD histograms had not changed much for several days. So I thought that the market could bounce up and head towards the upper Bollinger band near 6495. In fact the FTSE went the other way after the market close, but this is not included in the daily profit figures as I have left the position running.

3/12/15:The long position that I had running was well under water at one point last night by over £100. Fortunately, by this morning the FTSE had increased again. After some anxious moments around the market opening time, the rise continued and I was able to close near the peak for a modest gain of £17. By 12 pm the market had risen a little further by about 12 points, but at that stage I was contemplating calling it a day.

The FTSE started drifting down and shortly before 1 pm it looked as if the downward slide had become established so I went short at 6414. At the time, I was pleased to be able to close at 6400 for a nice profit of £28, making it £45 for the day so far. I then went off for a run. I was surprised to find a further large drop in the market when I returned and I really thought that would be it for a while. Indeed, the market rose but once the price approached the 100 minute moving average, at 6385 or so, the fall started in earnest. Unfortunately, I didn't take much advantage. My lack of confidence due to recent losses was a considerable impediment and so I decided just to dip in and out, picking up £4 or £5 every now and again going short each time. Of course these can add up so I ended up a further £18 up for a total profit of £63. This was a creditable outcome, but with the market having ranged by over 150 points, there was a lot more available, if I had not lost confidence in my trading in November.

4/12/15:After yesterday's large fall in the FTSE, some sort of recovery was to be expected, but it was difficult knowing from what level. The day started with a losing trade of £22 and I ended up spending the rest of the day trying to catch up, in what turned out to be quite a volatile market. By the afternoon, the rise had definitely reversed, but I missed the large drop soon after 1.45 pm. Once the main market closed, the FTSE rose substantially by over 50 points, but by then I had already stopped watching the markets for the day. I finished £7 down on the day.

7/12/15:The day started quite well with two winning trades going alternately short, then long soon after the market opened. However, I expected the market to drop again and went short twice losing a total of £31 to break even on the four trades. I was somewhat dispirited for the rest of the day and in a slow moving market picked up the odd point here and there. Unfortunately, in my final two trades, I went short and then long wiping out all my gains and leaving me down on the day. The main problem was closing my losing positions too early instead of having wider stops. This is often a problem. You might think that a low risk strategy is to close positions before the loss builds up, but often it backfires.

8/12/15:In view of my recent poor trading performance I thought I would have a go at Forex, in particular the pound/dollar exchange rate. When I was first learning the rules of TA, I was trading that with some success (although not a lot obviously, or I would have stayed with it and my account would look a lot healthier than it does now!). Unfortunately, I had forgotten that a specific market takes a bit of practice to get right, and my two trades lost £28 in total! Somewhat chastised by this, I then returned to the FTSE.

It should have been an easy trading day, as the market continued to drop. Indeed, I made up a little of my loss by shorting three times during the day. However, I closed my positions too early, and one in particular was closed at a loss of £14 instead of me grinning and bearing it for another ten minutes. I gave up in the end, but the market continued to drop. Thinking that the fall was overdone, as by then the price was well below the multi-day lower Bollinger band, I looked for opportunities to go long. I picked up the odd point here and there. When I closed it had become clear that the fall had resumed. In late afternoon, I made one last trade going long at 6155. There was a reasonable surge upwards and I was quite happy to close for a gain of £27, which turned out to be quite optimal in the end as the market has now dropped 50 points again. The last trade put me back in profit for the day (and month). It would have been a bit more respectable but for my foray into forex!

9/12/15:I made several trades in the morning, all short. the market overall did indeed drop, but unfortunately I didn't have the stomach for the volatility: essentially, I kept my stops too tight. As a result, only one of my trades was successful and that for a modest £11. The net loss on the morning was £52. I seem to have a policy now of leaving the markets alone for the rest of the day if the loss exceeds £50, so I went off and did something else for a while.

I didn't quite stick to my guns. The FTSE seemed to be recovering for most of the afternoon, and so I made some quick trades from time to time, closing in 5 minutes or so. I was able to make back half of my losses. Then in late afternoon, the FTSE started dropping. I missed this initially but it still continued after the main market closed driven by the US markets. Eventually I went short at 6085 at about 5 pm, but it was a bonus and I was happy to pick up another £13 in 5 minutes to reduce my loss for the day to £10.

10/12/15:In the multi-day chart, the FTSE is close to the lower Bollinger band, and the MACD histograms look to be close to their current minimum. I am therefore expecting an upwards move in the markets within the next few days. Once the main market oened this morning it looked to be heading up, so I went long at 6102.7. Unfortunately, it quickly went sour and at one point my position was almost £30 down. I was contemplating bailing when the market turned back up and my position eventually went well into profit. I closed for a profit of £20, although if I could have stomached the volatility I could have got another £20. However, the market quickly went into reverse again so I am happy not to have taken the risk. At the time of writing, the FTSE is at 6110 and it is not clear whether it will go up or down. This may well be a day with a slow-moving market.

I was busy for much of the day and didn't return to the markets until late afternoon. As I suspected, the FTSE hadn't moved much but there were two occasions when it seemed to be heading up. So I went long and on both occasions the price turned around again once it had reached the upper Bollinger band. Those were poorly thought out trades as in both cases I should have opened earlier before the price came close to the Bollinger band. Those mistakes cost me £33.60. I had a further try in the evening going long at 6085. I pulled out after an hour once my profit had reached £13. Just a little more patience would have paid dividends, as the market continued to rise, but at least I closed near enough even on the day.

11/12/15:Soon after the market opened it looked to be heading upwards so I went long at 6074. I almost came a cropper as the market dropped soon afterwards and I was contemplating closing when the market turned and went distinctly positive. Coloured by my earlier paper loss, I was too anxious to close but made £8 on the trade anyway, although with a little more patience, another £15 would have been possible. After this, the market went into reverse and I went short at 6064. In view of the afternoon's prices, it was a pity I didn't hold the position. However, I closed for what seemed at the time like a reasonable profit of £15. I went short again a little later at 6048 and added another £20 to my account. In view of recent losses, I do believe that I am inclined to close my positions too early, once a decent profit has been realised. Profit for the morning was £43.60.

All afternoon I was expecting the FTSE to rise. Accordingly, I went long on a spike (in retrospect) just after 1.30 pm. At one point my position was in profit by £11 but I was waiting for more. Unfortunately, the FTSE dropped down again and once it was clear that it wasn't going up, I ended up losing £22. I clawed the loss back and a little more with two short trades and a long trade late in the afternoon. However at the end of the day it is still not clear whether the FTSE has bottomed out. It is tempting to go long at the end of the day at what seems like a ludicrously low price of about 5965, but the old stock market adage is that cheap stock can always get cheaper! It is always a bit risky having a trade running at the weekend.

Post Script: The market continued to drop during the early evening. As they say, the market can remain irrational longer than one can remain solvent. It seemed to have settled and was starting to trend upwards. I was just too tempted and went long at 5940. I could see me spending most of the evening watching the market, so once the profit had reached £10, I closed the position. The FTSE went up for a bit longer matching the US market, but after a while it dropped again to around the 5910 mark. So exiting was the right thing to do for the short term. The profit for the day including this little interlude was £55.

14/12/15:The FTSE generally rose over the weekend and was still heading up by the time that the European markets opened. With the spread on the index now somewhat smaller I decided to go long at 5969. The rise gradually continued but then the market reversed leaving me nursing a small loss. Once the main market opened there was a tremendous surge and my position went well into profit, so I closed for a £35.40 gain. The market stabilised near 5990 for a while before heading up again. So I had another bite at the cherry, going long at 6002 and closing at 6010 for a £16 profit. The market dropped again to below 5985 and is now at 6003 and looks to be heading upwards. However, the momentum has declined, so I don't know if I will trade again for a while. Profit for the morning was a healthy £51. I seem to have got my confidence back.....

the afternoon did not going well and instead of giving up once it was clear that I didn't understand the market, I persisted, only to keep losing my trades. I made 6 trades, 4 long thinking that the market was about to go up, but the fall continued. By the time I had realised the market was indeed dropping significantly, I went short, only to be scared into closing my positions at a loss due to the volatility. I ended up losing over £30 on the day which was annoying considering the good start.

15/12/15:The pre-market trading suggested that the FTSE was starting to increase so I went long at 5940 at about 7.30 am. The position went slightly positive, but the FTSE dropped even before the main market opened. I should have closed earlier, but left the position running and ended up closing for a £35 loss. I should also have watched the 8 am start, as after falling significantly the FTSE then surged upwards and the rise continued on and off during most of the morning. I tried to take advantage twice. On the first occasion I went long at 5963 and the position was doing nicely at one point, with a running profit of almost £30. However, the FTSE dropped significantly and I closed on one of the downward spikes for a small loss. I am somewhat annoyed with myself for not picking up at least a little profit, or alternately for not letting the position to run on.

I went long again later in the morning but by then the prices had moved forwards. Opening at 5972, I closed about half an hour later for a profit of £22, which was near enough optimal, although it did leave me nursing a loss of £18.60 on the morning. I am looking for more opportunities to go long, but significant movements probably won't happen until the US market opens later today.

In the early afternoon I spotted an opportunity to go long and picked up £15, thereby reducing the loss for the day to just under £4. However, I missed all the major moves and for the trades I did make, I made the mistake every time of opening my position just as the peak had been reached. The losses mounted up and I ended up down £56 on the day. It should have been a relatively easy trading decision: all I had to have done was stick with my first trade of the day. Unfortunately, I do have a tendency to interfere unnecessarily when the trade is running and this has led to a loss for the day and my net profit going almost to zero over 9 months. I need to hold on to my positions for much longer and accept that they may sometimes be significantly under water. Today, though, was a classic case of FOMO (fear of missing out). Once moves take place there is often a small reversal before the trend resumes. Unless I can catch the beginning of the move I need to be better prepared for the reversals, in particular by having wider stops (which are in any case manually applied). The trouble with this approach is that I find myself watching the markets all the time and missing out on the major profit situations. If, however, I can't avoid watching the market, then a strategy of getting in and out quickly is perfectly fine, providing it produces a profit and providing I don't get drawn into the market frenzy that seems to occur from time to time. Today I was too emotionally involved and paid the price.

Previous Months' Accounts

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