A frusutrating first few weeks

WOW

It's been a pretty exciting roller coaster for the past few weeks, especially in terms of trading - let's leave the terrible private life out of this, eh?

First trade, long on HOIL, delivered nicely - 150% profit...I could get used to this!

The next batch of trades - all long - were riding high in the market. My account was 8% up in the space of 5 days!!! "This is tremendous", I thought to myself, "where else can I make this kind of return?"

However, those thoughts were quickly wiped out by the panic of Swine Flu. My gut feel on the Sunday was to 'break the rules' and move my stops - but my head ruled the heart and I left them where the TU Powerplay strategy said that I should. Unfortunately, the market doesn't give a toss about the TU Powerplay rules, and my gains were cut by 50% in one days trading (Monday). I was aghast in horror, but it did push me to react.

I moved my stops on Monday night, accompanied by the rhythmic repitition of "I told you so" from my wife, who (rightly) thought that I should have moved them on Sunday. However, the panic in the market continued on Tuesday and completely wiped out my profits. I did manage to preserve my capital, but that's scant consolation when you see your 8% gain slaughtered within 2 days trading!

We then made a huge, fundamental, mistake! We traded on the 'fundamentals' i.e. we guessed that the market would react badly to more Swine Flu news and went long on Pharmaceuticals and short on Travel & Leisure. Oh, and how that backfired on us...wiped about 4% off our account.

The key here is simple - and it re-emphasises what the TU coaches teach - trade on the rules, and keep emotions out of your decision making process. It has also taught me that, no matter what I think might happen in the markets, the resulting reaction to any given piece of news isn't always the 'expected'. Don't trade on news, is the message that I've taken from this.

Following this, we're back to the analysis.

However, up popped another leprechaun within the system. The spreadbetting company themselves. I could not believe why I was being entered into trades significantly above and below the 'entry' point I selected.

Perhaps I'm just naive, but I thought that by selecting 'market' price in the placing of the trade, that I would actually enter the trade at the market price. Apparently not...it looks like we enter the trades CLOSE TO the market price, and totally dependent upon the spread that the company is offering and how quickly the market reacts vs how quickly the trader can place your order.

This totally burned us on a single trade, which spectacularly rose in the early AM - exactly as the pattern indicated it should - meaning that we only entered the trade at a higher level than planned once the trader placed the order. Add to that, the share took a horrendous downturn later in the day, crashing through our stop loss and costing us nearly 2% for a 1% placed risk.

This sparked the investigation...and it's pretty clear that a stop loss (especially in extremely volatile markets) is really only a guideline - if the market moves slowly, you'll get out on your stop, but when it's fast, furious and falling, you'll get out only as soon as your spread betting company's dealer can place the close. Again, in my naivety, I thought that this was all 'automatic'.

However, despite MF Global being the 'recommended' platform for TU (if ever anything screamed 'affiliate program' then this is it - perhaps this is another stream of income for the TU owners) I investigated others and have decided that IG Index looks much better. They offer a guaranteed stop loss account...each trade is guaranteed to close at your placement point...but you have to pay one or two points either side on your spread. Given that I was able to turn a 1% risk into a 2% hit on MF Global - I'm getting ready to move my account to IGI.

Sorry MF - you're just not good enough!

Anyway - I started reading Malcolm Pryors book on spreadbetting. If you're interested in this (and many other related reads) you can visit www.stocktradingdealer.com where you can find helpful books, videos etc on trading. His book is helping me expand on the initial rules laid down by TU.

TU motivated me to enter this as a career - I'm going to develop my own approach to risk acceptability and what indicators are best for my trading style myself. My TU coach pretty much said the same thing - they give you the 'basics' and you take it from there.

So far, my trading is a little bit flat - I'm about 5% down - but I've got a good few longs sitting pending (if I've chosen them correctly).

In terms of a tip for this week, I'd say to everyone stick to the chart patterns (Technical Analysis) but don't rule out trades that are 2:1. Manage each and every trade daily - move your stops (if appropriate) each day to control your loss potential, and bank those profits.

Good luck, keep trading, and feel free to ask any questions - I'm here to (try to) help!