Starting Again With a £500 Opening Account Balance

So it’s been an eventful couple of weeks. I deposited £500 at the end of July into my spreadbetting account with Ig Index and in the space of two weeks, managed to trade and make a profit of £470, only to trade some more and lose all the profits to take me back to my original starting amount (+/- a few quid). I think I’ve learned a little bit, and will now try trading again, this time with a more disciplined approach.

Money Management

I am now determined to trade to strict money management rules. These rules will be as follows:

  • Only ever risk 10% of total capital per trade (I’d like to go smaller but my starting balance isn’t so big)
  • Always set a stop loss to match total risk
  • Always aim to make a 100% return on every trade eg. if I am risking £50 per trade (10% of £500), I need to make a £100 profit.
  • Only trade where 100% return is possible – eg. If there is not enough upside potential to meet my trading criteria, do not trade.

Do Proper Research and Trade within a Strict System

I can no longer afford to place impulse trades, so every trade must follow a trading system. The system I am going to use is this:

  • Share prices must show a directional trend for at least 1 month
  • I must read all news/reports published through RNS for the last two months before trading
  • A google news search for the company should reveal no nasty surprises
  • The share price should be experienceing a price reaction against the trend
  • Open my position with my designated stop loss in place and my price limit set. I must not ‘follow the trade’ every hour but instead, open my position then do nothing with it until I am either right or wrong.

Take My Time

It’s ok if it takes a share a month to hit my targets. In the past, I’ve been guilty of wanting to make money too quickly, ‘£100 a day’ was the thought running through my head. Now it’s just going to be 100% return on my capital every month, and this could be in 1 trade or it could be in 10 trades.

I have made my first trade within the laws of this new system, and I’ve done a full write up in a blog post of it’s own.

I’d appreciate any comments if anyone comes across this and sees any holes in my system. I need all the help I can get.

never miss another post! subscribe now
Subscribe to my private mailing list to get access to all of my latest posts, personal insights and my entire trade history that are all just too awesome to be made public on my blog!

Leave a Reply

Your email address will not be published. Required fields are marked *