One of my mates from Twitter, James @traderdiarycouk, has written the following piece to introduce himself back to the world and give a simple explanation of how he does his Short Term Trading stuff - he is very good at it and even Long Term Investors can learn a lot from the kind of methods successful Traders use.
James used to run his own website as you can see from the text, but time constraints forced him to stop doing it on a regular basis but he still likes putting Fingers to Keyboard and bashing out some thoughts - I hope we will get more stuff from him for the WD Website in coming months. If you follow him on Twitter then you can see the Trades he does and get a better feel for his approach.
Many thanks to James for providing this input and I hope Readers find it useful and interesting.
Would like to thank WD for allowing me to share his awesome site and quality trading thoughts.
Some may know me from a website I ran for a couple of years called Traderdiary.co.uk which I enjoyed and interacted with a lot of great people.
It was created to log trades and learning points and build up funds for a new kitchen via trading. Made an average of £1500 a month and we have a lovely kitchen from the township it use to be when we moved in. I packed up running the website since our son was born as value time spent with family rather than the website. I also started working for myself and time was limited in all areas. I do miss writing and sharing thoughts on trading with others.
I do really love trading, it keeps the mind occupied, searching for opportunities and it never stops. It's the connection between economics and people’s behaviours, politics. I love that the world is an ever changing place and nothing is safe or lasts, that's what makes life so awesome. An independent mind is one of the most important things I feel and trading really embellishes that.
I've been trading since 2008 as stock market crash news got me interested in the markets. Been a expensive education as I undertook all the common faults and learned the hard way.
Never been on any course, seminars or have any financial qualifications. I've done most things wrong in trading and some stupid things. Everything from following LSE bulletin boards for the next tip, buying penny shares, buying small cap miners, spread betting large positions on Oil companies such as Rockhopper, Desire etc. - all going south by end of year. This lasted about 2 years and circa £8k loss.
Then I thought this has to change and started mainly buying shares of performing companies who have a history of growth. This was positive but very steady and when one company had a bad quarter, a dip would erode the overall gain across the portfolio. This lasted a year and thought a change is needed as I'm at the other end of the spectrum.
So, started to search for change in sentiment of companies and taking trades, this was successful and continued to be. Either selecting weak companies who suddenly had a good quarter and buying in, or pedigree companies experiencing a slow down. This really was what the website blogged - this phase of trading as I felt I had consistency.
Over the last couple of years I've continued to swing trade and incorporate charts into decision marking when to buy or sell mainly using RSI and Moving averages. I try to trade accordingly to the opportunity which depends on the weighting of position.
The type of trading looks for surprises from a company shock slowdown or exceed expectations or large opportunity, i.e. Brexit or Terror attack in which large positions up to £50 per point [WD Edit - this is via Spreadbets] are placed immediately and closed when a large movement is seen. If no movement with a time frame or in opposite directions, the trade is closed out. This approach is the largest contributor to the portfolio balance.
Other approach in trading is reading daily RNS, viewing the performance, finances and most importantly the sentiment/outlook. Often take a position at decent size and close at 10% to 15% gain. This is normally within 24hrs of the news.
I look to trade 10% of portfolio per trade. Don't really have more than 5 positions open at any one time. I try to compound the 10% to 15% gains from each trade over the year.
The portfolio is circa £30k in size. The gains earned are not re invested or stockpiled. The gains are spent. They are enjoyed as trading draws emotional energy and the cash earned is to be enjoyed as life is short. The money is spent on holidays, trips, betting, meals out, house renovations and family fun. I believe the markets are unsafe and insecure. I believe in keeping money on the sidelines and trading opportunities and cashing out.
My approach to trading is very unconventional. I don't have desk monitors, I don't trade from a desk/laptop and I don't read the broadsheets. All I use is an iPhone with all my favourite news sources, applications which automatically notify me of an event, spreadbet app which notify of price moves and Twitter which auto notify from market news sources. I read RNS most mornings and in the evening with a coffee review charts/check for any news I've missed on my phone.
There are negatives with my approach. I may receive 15% gain in 24hr to 72hrs and the share may rally a further 30% over the year which I don't capitalise on. There are periods when I don't trade or look at the market as there is limited RNS or opportunity. I may sit on sidelines with no positions as others are ticking up 1% a week across a large number of positions and enjoying those gains. I feel comfortable with cash in bank and not needing to watch my positions for any news indirectly or directly affecting my positions.
I am tailoring my trading to suit building positions post an RNS and holding whilst the price runs above the 25 day MA. I found this the best indicator of change in a bullish or bearish sentiment.
I hope to provide thoughts and opinions of the markets once a month to WD site to hopefully provide a view on the markets, help others and add value to WD blog.
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