Wednesday, 6 June 2012

Returning to Spread Betting

After a long hiatus I have decided to tentatively dip my toe back into the spread betting / day trading arena. Basically my story is this. I first started spreadbetting during the crash of 2008 wanting to take advantage of the falling market by going short. Within the space of about a year I had succeeded in turning my initial stake of 1000 pounds into just over three grand. This is the truth - no outright lies or embellishments, I actually did acheive this. I told a few people and was very pleased with myself. I treated some of my friends to dinner at a restaurant. One friend even suggested I take out a grand and spend it on a new PC or something. I said "No - that's my stake. I'm going to build that into a personal fortune!"

Unfortunately, in one horrifying day I lost nearly one thousand pounds trying to be too clever. When the Bank of England first announced their QE policy I noticed that bond prices jumped and kept on rising without retreating at all. I thought I would try to take advantage of this when the second round of QE was announced by the US Treasury. Basically, I thought - "Wow! This is a sure thing. Set up my deals correctly and make easy money!" So I set up my deals accordingly, one below the bond price to sell if it was hit (ie a short) if no more QE was to be implemented, and one above to buy if that one was reached if the US Treasury was going to go ahead with more QE. What actually happened was that the market became incredibly volatile. Both deals were activated (I had implemented them without a "one deal cancels the other" setting and not given myself any outs ... any insurance), both deals were stopped out and in total both cost me about a grand.

I remember that horrifying day all too well. All that profit, all that work destroyed in an instant. After that I went a little mad trying to recoup my losses and bet all sorts of things. The result was I pretty much lost it all right back to my starting 1K. Then I stopped and decided this wasn't for me. But now I'm back. Older - maybe a little wiser (probably not) but willing to have another go. This time I will stick to indices, commodities and the odd share that I am familiar with.

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