£20,000 down ALREADY!

Ok so it’s not quite as alarming as it sounds. It’s funny money, courtesy of a Barclays’ Spread Trading demo account.

But it so very easily could have been. I completely misconstrued the nature of placing orders. All this talk of margins and leverage — I thought I had it covered. But when the Ryanair Rolling blew up in my face big time after I chanced (yes, I say chanced because that’s where I’m at presently in my unknowing state) £10 a point after hearing the company was on the cusp of announcing Transatlantic routes.

Anyway it turns out my liabilities for this and a couple of other duff orders including a random trade on Yahoo! Rolling totted up to about £20,000. Or possibly £30k because I see I’m actually £20k+ in debt despite a starting balance of £10k.

I think it’s time to go back to the books.

To be completely honest, this has been a great learning lesson:

• Don’t rush in. There’s a reason a phrase rallying around this heading also mentions ‘fools’. I’m giving myself at least three months of intensive learning before I waste even a solitary penny on the market. Because waste it would be. I’m starting this from scratch. In many ways I’m more green than Nicoll when she began. I haven’t attended a single trading seminar (save for the 60 minutes I mentioned right at the outset) and I intent to be 90% self taught. Foolish in itself?
• Master the markets — don’t let the markets master you. It’s all glitz, glamour and rock and roll when you first set your eyes on the flashing numbers. I got sucked in. I wanted to test it, trade it because it looked so exciting. But the fact of the matter is you need to be totally in control, with caution in moderation. Hoping the markets to be a metaphor for the fruit machines of my childhood, I rattled the coins into the slot with scant consideration for the big league of gambling/trading/speculating I was letting myself in for.

Sharp, short shock.

Andy, my mentor (he doesn’t know it yet) runs a site called Financial Spread Betting — A Trader’s Guide and I plan to squat there for quite some time to soak up his knowledge. It’s quite staggering how one man can accumulate so many smarts.

He’s one of few internet characters who wears his heart on his sleeve and doesn’t go out of his way to make you pay for stuff. There’s another guy out there that does the same — some radio creature I’ll try and find more details out about and pass on to you.

I’m quite aware there’s an abundant collection of trading-focused blogs that all aim to recruit paid newsletter subscribers in exchange for a mighty stash of bucks (the number of UK blogs offering premium services seems to be rather low).

I think free resources will have to be a focus of a dedicated post or podcast in the future. For there are many out there; maybe not of great use to the intermediate/experienced investor but for someone of my lowly level, they offer sound advice.

My partner in crime (of the entirely legitimate ‘not-crime’ type) has started her blog on financial trading too. Unlike me she’s snagged a Wall Street tour next week which I am obviously hugely jealous of since I think aside from YouTube the only way you can really get a feel for what it’s like down on the floor is to be there.

Talking YouTube, I’ve come across a bit of a star. DayTraderRockStar to be precise. He’s making a great fist of deciphering the charts and letting us into his secrets. I really admire and appreciate the work of people like this. It’s hard enough making a living but to demonstrate fiscal altruism on this level recruits firm praise from this corner.

As a n00b it’s the chart side of things that befuddles me most, and I’m looking at a book investment right now costing the sort of money you’d expect to spend on a house next year (if Ron Coby is to be believed!).

Thomas Bulkowski’s Encyclopedia of Chart Patterns (2nd edition) is a magnum opus, apparently. Five star reviews all round. I’ve checked out a few pages and it looks fantastic — with loads of real-world examples of the charts at play — and players using the charts.

Someone with a great deal more experience than me wrote: “[This is] An absolutely outstanding book that covers the whole breadth of chart formations. It is a rarity amongst trading books in that whilst most other books are content to give you a view as to whether something is ‘bearish’ or ‘bullish’, this book actually tells you what percentage of formations are likely to be successful.”

£63.99 is small potatoes in the world of trading and I guess technical analysis has to be part of the investor’s armoury. I think this is a Christmas present. Probably for myself!

I’m saving a chart-related post for later in the week since I’ve noticed I’m rambling on already. You can sense my excitement for spread trading, right? I’m enthralled!

Discover the Upside of Down seems an overly pessimistic start to my spread trading career, but I’m ploughing on regardless.

In a few days I’m meeting with a woman who has already seen pretty good gains resulting from her entrance into the world of spread betting. I’m curious to see whether it’s all hot air or there’s genuine substance. Whether it’s speculation, or investment, on her part.

Hey, enough from me: now it’s your turn…

• Have you got any YouTube stock trading video recommendations?
• Any insightful free resources you use in the course of preparing to make a trade/place an order?
• Stock trading software — can the open source/free applications really offer an alternative to the hugely expensive variety?