David Fuller's view

My additional China H-Shares (HSCEI) Index (weekly & daily) long purchased via the April contract at 13801.2 on 8^th April raced higher, initially, causing me to protect it with a slightly in-the-money stop which was triggered at 23825 early morning on the 9^th.  Before that, I had also purchased an additional long at 14050 on the 9^th, which was also protected with a slightly in-the-money stop when the strong rally occurred.  This was triggered at 14070, paying for a decent meal as these prices include all spread-bet dealing costs, but with hindsight I should have grabbed the significant early gains.  I later repurchased this trade at 14041.5 as the market appeared to be stabilising before I finally went to bed.   

One can second guess these tactics all day long.  However, with highly leveraged trading my emphasis is on risk control, while also aiming to participate in trending markets.  In other words, I am not rolling dice for hopefully more big profits than big losses, relative to my capital for this exercise.  Instead, I am using my Baby Steps tactic for trading, only leveraging up behind protected initial positions which are virtually risk free.  This tactic is not for everyone but those of us who trade all have our different methodologies, developed through trial and error over the decades.  I do not want to worry about my trades and I do not want to waste much time over them, although last night was a one-off exception as it was very exciting.

My other open positions in April HSCEI are the purchases made at 12647, 12582 and 12960, all protected with slightly in-the-money stops.  I also hold FTSE 100 Index longs in the June contract, purchased at 6964.3 and 6806.5, partially protected.  In the German DAX Index I currently have a June long purchased at 12172.5.  I also have Taiwan Index longs purchased at 349.65 in the rollover to the April contract.

Bottom line: Trading is much riskier and more time consuming than strategic long-term investing.  The only advantage with spread-betting is that it is tax free in the UK and perhaps a handful of other countries. Most traders start young, when they have very little money, and quickly learn that leverage is the sharpest of double-edged swords.  A good discipline is to siphon off most of the net profits from trading, recognising that it is more luck than brains, and a matter of being in the right place at the right time.  Successful traders that do not remove most of their profits from the game, too often become overconfident.  This erodes their risk perceptions, often with disastrous consequences.  High stress levels are a clear sign of overtrading.  This is hazardous for one’s wealth, and more importantly, one’s health.