How I lost £35000 Spread Betting

Guest contribution by Michael Platt as he embarks on his spread betting journey to become a millionaire!

What? You lost £35000 spread betting? You must be a moron. Hmmm… well I can’t really disagree with you there. However I’m sure there are plenty of others out there who have similar stories (hopefully for lesser amounts).

So how did I lose so much? Easy. I was gambling. All down to poor thinking. I was blind to the downside. Undisciplined also. I would take a large position, hoping the price would move a certain way for me. Then I would watch it like a hawk, panic and close the position. Either at a very small gain or a very large loss. So say I was getting things right half of the time, I was still making big losses as I was overexposed and the times I made a gain, I cut them short (nervous to take the profit before it disappeared) and on the times when I made a loss, they went a bit long – therefore the average with overexposing myself was a consistant loss. The other way I’ve lost my money is through day trading. Prices move around a lot and have unexpected jumps and falls. Unless you are able to spend the whole day in front of the pc and have instant access to news/events that the big traders have then don’t day trade. You’ll get caught out time and time again.

A fool and his money are easily parted. That’s me.

Two particularly bad trades cost me 10000 each in short succession.

The first, I was sitting at 33000. I placed a 4000 per point sell bet on Lloyds Banking Group. Way, way too much exposure. I thought the price might be heading in a downwards direction as results had just come out a couple of days before and were not great. If it went down 2.5 pence, then that’s a 10000 profit. No, it went up 2.5 pence. I panicked and closed the bet at a 10k loss. Ouch. Worst thing was a couple of days later it was 5 pence down again. So if I had held then I would have been in profit (although it might have also gone the other way also). The key point here was I had too much at stake and panicked.

The second time I lost 10k was again with Lloyds and shortly after the first. The price had moved up to 60p and over a few days had moved down to 56. I thought this trend was going to continue so completely ignoring the lessons from the previous bet, I put 2000 a point to sell on LBG. This will be good as it will make up some of the loss (don’t chase losses!!!!) . Next morning, I’m watching my mobile phone (I have spread betting on my phone). Market opens at 8:00 and I’m watching the banks. Lloyds starts swelling, in an upwards direction. I want to sell but I can’t. The market is blue (meaning my spread betting company is not taking trades on it). Nooooooo I watch it go up to 2 pence, then up to 4, then up to 5. Eventually the market goes green and I can trade (a few minutes after market opening – be aware of this, sometimes you can’t open/close trades during market hours). I don’t want to lose any more and close at another 10k loss. Turns out there had been an announcement. The results weren’t entirely accurate, it turns out they are likely to make a profit this year, which was the reason for the massive rise in price (and loss for me).

So the markets rallied and lloyds kept going up. They got to a point where people were saying they were quite high and due for a correction. So I put some more shorts on Lloyds. Then I started messing about and day trading and closed the shorts and made them longs. Then the maket did fall. I missed a massive opportunity and managed to make a loss when I should have made a gain. So angry at myself.

The good thing was this led me to rock bottom. I can’t lose any more. I have to pay this money back. I have to get serious. I have to stop gambling and start making sensible trades at sensible volumes. No more day trades.

I want to first get back to 45000. This isn’t going to happen in one trade. This is going to happen in hundreds of trades. Some winning, some losing. Always with appropriate exposure, stop losses and fall back strategies. Become a trader and not a gambler.

So watch this site, and watch me become a spread betting millionaire.

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