Financial spread betting update for 6th September 2010
This week’s financial spread betting update is now available and can be read by clicking here.
Toady is Labour Day holiday in the US and US markets are closed. We can therefore expect a quiet trading day today both in terms of lower volatility and lower trading volumes.
This week’s financial spread betting update begins with:
Stocks markets saw a large turnaround as the S&P 500 found strong support and helped push stocks higher. Commodity markets also rallied with a few markets making multi year highs as the US dollar fell..….continue reading by clicking here
Good trading
Phil Seaton
PS. You can sign up for a risk free trial of our proprietary financial spread betting system by clicking here. The system comes with a 30 day no questions asked money back guarantee and covers each of the stock, commodity and forex markets discussed above.
Financial spread betting newsletter September 2010
The September financial spread betting newsletter is now available. If you are already on our list the newsletter will be sent to you automatically by email. If you are not already on our list (if not, why not?) please enter your email address in the box at the top right hand corner of this page and we will send you the newsletter instantly by email.
In this month’s issue we take a look at the markets that have been moving of late with particular focus on interest rate futures, stock indexes, currencies and some commodities.
We’re now entering what is seasonally the weakest month of the year and September is on a percentage basis the biggest losing month for the S&P 500, Nasdaq 100 and Dow 30. Considering that the markets are up for this month already there could be some good opportunities for going short stocks and making money from the downside if stocks do once again break lower later this month.
The long term trend for stock indexes is very much down and there is plenty of good upside resistance so although we may see some strength in the short term the odds favour lower prices for stocks in the medium to long term.
Good trading
Phil Seaton
P.S. To receive each month’s financial spread betting newsletter by email simply enter your name and email address in the box provided in the top right hand corner of this page for instant access.
P.P.S. Find out more about our financial spread betting system for stocks, commodities and forex by clicking here.
Using spread betting systems to catch the big winning trades
Today we’re going to look at the importance of having and following a spread betting system in order to ensure that we catch the big winning trades. We’re going to look at a real world example to illustrate the importance on this and how not following a system negatively affected one of the world’s top traders. In our last post on Stanley Druckenmiller, we commented that Druckenmiller had decided to close his hedge fund due his inability to make outsized returns over the past 3 years which he put down to very unfavourable market conditions.
One of the factors that have negatively impacted his performance this year is that, by his own admission, he missed the move in treasuries. Since treasuries have been the biggest and best trending markets this year that has been a fatal mistake. This does highlight a very important lesson for traders and that is that you must have a trading system, or in our case a spread betting system with specific trading rules and the discipline to follow it consistently.
A good spread betting system should include each of the following:
- Which markets to trade
- When to enter a trade
- When to exit a trade
- How much to stake on each trade
- How to know when to stay out of a market
Once you have a spread betting system that incorporates the above rules, all you have to do is follow it consistently. My guess is that either Druckenmiller was relying on discretionary reasons for entering trades rather than specific rules, or his system indicated an entry but he chose to skip the trades because he did not like them for some reason.
This is in fact where many traders fall down and the mistake can be fatal, as seen by the negative impact that skipping these trades has had not just on Druckenmiller’s performance, but on him emotionally as well and these factors may have led to him calling it a day.
In reality, nobody can be sure when entering a trade whether it will be successful or not and this is why once you have a spread betting system it is important that it is followed consistently. One can never tell in advance when the big moves are going to come and if you skip a trade for any reason and it goes on to be a big trend and a big winner you are in trouble.
One of the underlying principles of successful trading is that it is always better to risk taking a small loss than it is to risk missing a big winning trade. If the spread betting system used is good then only a small percentage of trading capital should be used for each trade, for example 2%.
If one is only risking 2% equity per trade then taking a loss of that amount is not too painful. Conversely, if a trader misses a trade that goes on to be for example a 10 to 1 winner, as may be the case in the current treasury trades then that equates to 10 x 2% of missed opportunity. That is far worse than risking the initial 2% loss. It is compounded if there are a handful of correlated markets such as in the case of treasuries, the 5 year note, 10 year note and 30 year T bond. Missing out on one trade is bad but missing out on all three is fatal. That is why we say it is always better to risk a small loss than it is to risk missing a big winning trade.
Because the markets only trend around 40% of the time all trend following systems will have more losing trades than winning trades. Therefore to make money you must have the big winning trades and ensure that you catch them when they come. If you don’t, you have no way to pay for the losing trades. This is why you must have specific rules to enter trades and rules to ensure that you don’t miss any trades.
Our spread betting systems, whether it is our forex system or our primary financial spread betting system for multiple market sectors both include rules to ensure that big trends are not missed and that trades are allowed to run to extract the maximum profit potential of each move. So, the question to ask yourself is “am I using a good system and do I have the discipline to follow it consistently?”. If you can answer yes to both then you are on the road to trading success.
Until next time, good trading
Phil Seaton
PS. You can find out more about our financial spread betting systems by clicking here.
Financial spread betting update for 30th August 2010
This week’s financial spread betting update is now available and can be read by clicking here. There is a raft of economic data coming out this week so we may see some decent moves in the markets. In the US, the latest unemployment figures are due to be released on Friday and that will likely underscore the recent signs of a slowdown for the world’s largest economy.
Today is Bank Holiday in the UK so trading is a little quiet this morning but will pick up later when the US markets open. Already we have seen the bank of Japan ease policy, with little impact being seen on the Yen. If anything traders may have been looking for something more aggressive from the BOJ and the initial small move higher for the Yen this morning has already faded away.
In this week’s spread betting update we take a look at the S&P 500, which fell to new 7 week lows last week before a recovery on Friday. Good support has come in at 1038 and that will be the level to watch this week to the downside. A close below 1038 may trigger further selling. To the upside resistance remains in place at 1100. The trend remains down for stocks.
Last week saw some decent moves in a few commodity markets with energies reversing off the lows in a counter trend move. We also saw gold and the other metals move higher with the biggest gainer being Silver, which advanced 5.73% for the week.
The focus will also be on interest rate futures, which having hit new highs on Wednesday sold off in to the close on Friday. The trend is still bullish for this sector with the markets currently holding above support.
This week’s financial spread betting update begins with:
Stocks continued to drift lower for the week but recovered somewhat on Friday but the trends remain down. Commodity and currency markets remain largely undecided on future direction as the general theme of volatility continues across many markets..….continue reading by clicking here
Good trading
Phil Seaton
PS. You can sign up for a risk free trial of our proprietary financial spread betting system by clicking here. The system comes with a 30 day no questions asked money back guarantee and covers our spread betting strategies for each of the stock, commodity and forex markets discussed above and many more.
Spread betting strategies update for gold and the S&P 500
There’s been a fair amount of activity in the markets since our last post of spread betting strategies for stocks and commodities. Today we’re going to have a look at both gold and the S&P 500 as interesting things have been happening in both markets.
In our last post of spread betting strategies we referred to last Friday’s close at 1070.3 (September contract) and suggested that the S&P 500 was headed lower and would likely test support at 1061.8 before moving lower still towards 1000. We only had to wait until Tuesday for 1061.8 support to be taken out and ended up with a decent down day which also took out 1050, and reached new multi-week lows at 1044.3 before a minor recovery.
Yesterday we saw new 7 week lows at 1038 before the lows were rejected and the market recovered to close at 1054.6, which is roughly where the market is now at the time of writing. Clearly there is some support in the market around the 1040-1050 area as the long lower shadows of the last 2 days candles show the lows are being rejected. However, the long and short term trends are still very much down and if short term support can be cleared then a move down to test 1000 will likely follow. Therefore we’re still only using short spread betting strategies in this market and will continue to reject longs.
Gold cleared the resistance level at $1222 last week that we have been writing about for some time and the market pushed up to $1239.5 before we saw a big move lower intraday on Tuesday down to $1211.70. We had seen prior resistance at this level so a change of polarity came in to effect and we saw rejection of the lows and buying came in all the way back to a close at $1237.5. This was a bullish candle on Tuesday and that momentum continued higher on Wednesday to $1243.3. That was the highest price for Gold since the 1st July.
Therefore the short and long term trends are both bullish for gold and we may see a push further towards new all time highs. Any weakness should be met with buying around the $1211 support area. We’re therefore only using spread betting strategies from the long side in this market.
Until next time, good trading
Phil Seaton
PS. You can find out more about our financial spread betting systems and spread betting strategies by clicking here. Our system comes with a full 30 day money back guarantee.