My Spread Betting Story

My foray into spread betting (via CFDs) was about three years ago, as I got bored of buying shares (usually AIM penny shares where I was going to make my fortune for very little effort), doing nothing and then selling them quite often for far less than I paid for them.

So I started afresh with a modest pot of money and traded FTSE350 stocks via CFDs. It started like a train (particularly with the new concept of being able to short) and within days I had made enough to put me in the CGT category. This was mainly due to one trade first thing in the morning when a company had issued a profits warning and I hit the “short” button precisely as the price spiked 90 points and then immediately retreated. That made me about £9000 in 30 seconds! Easy, I thought!

So I switched to spread bets to avoid CGT and my luck continued so much so that I made a return of about 10,000% in 12 months. Of course, it did not last and the next 12 months saw a decline where a large percentage was lost. However, I did take about 4000% of my original stake out of my spread betting account to make sure I couldn’t squander it all, and I started again.

Things haven’t been as easy the second time around and I started dabbling in forex and indices with an unerringly consistent record of failure!

I still consider myself quite new to investing and many times I feel like a small fish in a big pond full of sharks but I think everyone has to have a bit of trader and a bit of investor in their approach. To me pure trader would look for quick profit based on techincal analysis and irrespective of fundamentals while investor would look at long term fundamentals and only look at techincals briefly to determine entry point. However in a volatile market environment with possibility of recession or further quantitative easing it is impossible to determine what is going to be general direction for equities so portion of the portfolio need to be traded in and out of equities for safety. I generally am a value investor and don’t mind waiting even if sitting on paper losses but current environment is more beneficial for trading than long-term investment so I have been doing some trades recently if only to increase my equity position.

For my part I think I will continue trading equities and again dabble in forex and indices just for fun (all my trading is done with spare cash – I could never rely on it for income) until I have more understanding if how it all works.

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