My Love Affair With High Risk Trading

I started trading in March 2012 and within five months had managed to lose £2500 (£500 a month).

If this wasn’t a big enough kick in the teeth on its own, it was far worse when my wife got hold of our bank statements. Not only did I feel like a dick for wasting money trading instead of putting it away for our newborn son, I also felt like a total failure.

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The Only Good Thing About Losing All Your Capital In Your First 6 Weeks Trading Is…

…the knowledge that things can’t really get any worse for you, can they? If this statement were actually true, there’d be a heck of a lot more people like you and me trading for a living. The reality for a trader seems to be that no matter how bad things are; they can always get worse.

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Taking Profits to Give Margin Room

I’ve held CHW for a couple of weeks now and it’s had a high of £150 paper profit for me. Today the price dropped a few points and reduced my paper profit to £90. I decided to ‘double down’ at this point after reading p.165 chapter VII of ‘Reminiscences of a Stock Operator‘ last night. In the chapter, Jesse Livermore suggests somwthing he describes as ‘pyramiding’. The gist seemed to be that when you are in a positive swing in your direction, buy more, “stocks are never too high for you to begin buying or too low to begin selling”…

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6th August 2012

Opened Positions

Spread Bet Longs:

  • SPOT GOLD (DFB) 1606.31
    • I said I’d have another look at this today in Friday’s diary because I still think the trading signals and general market sentiment here looks like it’ll push gold up. When I say ‘trading signals’, I really mean my simple tramlines – and they still suggest this is going back up to 1615.  I’m combining that guess with the daily news where “The dollar fell to a one-month low against a basket of currencies <.DXY>, helping gold to gain slightly, although the overall sentiment for bullion remained mixed amid a lack of clarity on the macroeconomic policy front. U.S. employers hired the most workers in five months in July, but an increase in the jobless rate to 8.3 percent kept the prospect of further monetary stimulus from the Federal Reserveon the table.”To my laymans way of thinking, this suggests to me that people with money who like to grow their capital and traders will keep buying up gold as an ‘insurance’ against lower productivity/weaker currencies.
    • £2 @ 1606.31
    • STOP LOSS: 1600
  • SPOT GOLD 1608
    • In the back of my head, I was sure I was in the right trend with the gold price so decided to take a punt when the price started to climb. Somewhere I remember reading something about doubling up your gains, and I think this affected this trade. I have to say, looking back, perhaps it wasn’t a wise thing to do? Where’s my system? Am I just guessing here or what?
    • £5 @ 1608
    • STOP LOSS: 1600

Spread Bet Shorts:

None

Closed Positions

  • SPOT GOLD (opened earlier today)
    • £2 @ 1606.31 closed at 1615 = +£17.38
  • SPOT GOLD (opened earlier today)
    • £5 @ 1608 closed at 1615 = +£35.00

     

Profit for Day

+£52.38

3rd August 2012

Opened Positions

Spread Bet Longs:

  • SPOT GOLD (DFB)
    • Gold been trading within a tight range this last week and even though I know I shouldn’t trade on impulse, I’m going to give this one a punt at 1595 and hope to catch an upward trend to around 1615.
    • £3 @ 1595.74
    • STOP LOSS: 1590

Spread Bet Shorts:

None

Closed Positions

  • SPOT GOLD (DFB)
    • This was my punt that I made earlier this morning. Hit my stop for a brief moment in the afternoon before heading back to 1600. Still looks like it will head up from here – might have another look on Monday.
    • Opened long £3 per point @ 1595.74, stop loss hit at 1589.03 (actually almost a point less than my stop loss) = -£20.13

Loss for Day

-£20.13