Trading financials for a living

[superfrank]

I seem to remember reading somewhere that if you buy pork bellies options you risk having a ton of pork bellies delivered to your door unless you sell them in time!

Yeah if you have a position when the contract expires then you have to deliver/take delivery of the commodity. And I used to think letting a race go in-play was really bad!

There's an overlap between contracts for each market and the volume moves over many days before the contract expires.

[hgodden]

[quote="superfrank"]
Yeah if you have a position when the contract expires then you have to deliver/take delivery of the commodity. And I used to think letting a race go in-play was really bad!

quote]

[andyfuller]

I didn't really think about that lol.

I can just see this happening one day:

http://www.cartoonstock.com/lowres/jmo1587l.jpg

[RafterP]

Just took a look at the forex website. Thought learning to trade horses was difficult!

[superfrank]

http://www.forexblog.org/

[andyfuller]

This is an area that interests me too.
I noticed another of your posts yesterday where you said that you were intended to move on to new things and I wondered what it might be..

Financials is one of a few things I am looking at. I have learnt from this whole PC fiasco the importance of having more than one income stream. But looking at financials is something I have always wanted to do as my father used to do quite a bit of share trading when I was a child and I always took a keen interest in what he was doing and why (most of which I have now forgotten ) and when at school we had a few assignments which involved share trading on paper, teaching school children to gamble, tut tut tut!

Also going down the 'City' route was my other career path, it was a toss up between horses and the City. Looks like I will end up doing both though think I would have been better doing it the other way around and having those lovely bonuses in my pocket now and own the racehorses rather than looking after them

I did dabbled with forex earlier this year and Jeff provided me with some good info. I traded a dummy account for a couple of weeks using a system that monitored various currency pairs and then sounded an audible alarm when 'activity' was happening. This worked fine for me as I set the threshold high (ie less alarms but higher quality) as I am at my system each day anyway doing my day job, so this just run in the background..The system Is tested was the "Black Dog"

I setup a dummy account with alpari and did quite well over a few weeks (Think I posted my results on here somewhere), but ultimately I lost it on one trade! This one trade may have been lack of focus, or the fact that I was being less vigilant as it wasn't real money..who knows. Ether way I do think it is possible to do. (Betfair is much easier in my opinion). On betfair like many others on here I can enter almost any market and start trading confidently; it's a different kettle of fish on the financials imo. The markets turn much faster and travel further. I never use stop losses on betfair...you cant do that on the financials

I think you mentioned Black Dog to me once before. It is something I will have a look at. I am sure financials are much harder than Betfair but I guess the rewards can be much higher. He who dares Rodders

There is so much info on Financials and so many different areas to it that I am finding it hard to decide where to start and trying to figure if it is best to specialise in one area rather than trying to cover several areas. But then which area should you concentrate on without looking at all the different areas first? It does take me back to my early Betfair days where for every answer you found you found 10 more questions!

You may want to read this book. I've read this and it is excellent:-

http://www.amazon.co.uk/Financial-Sprea ... 1897597932

It takes you through the basics and "a day/week in the life of a trader'" which I found interesting

I also had a subscription to sharescope :-

http://www.sharescope.co.uk/

which enables you to filter opportunities (the book will explain more)

Cheers for those links, I will add the book to my ever growing list of books to read - just need to find the time at some stage!

I decided that I just didn't have enough time to do this as well as my day job and betfair trading too. You cant do this half heartedly, if you get involved you have to live and breath this stuff

I agree I think you have to go in to it with a view that you are going to have to work very hard for a very long time. But I also do hope that it can free up some time and give me better working hours. I am getting a bit fed up with the hours you 'have' to work on the horse racing trading, especially during the summer. It doesn't do your social life much good at all and this is one area that has suffered for me in the past few years and I need to address.

PS unlike Betfair; because this market is huge, I think it would be possible to share successful strategies. On betfair if you get a edge you have to keep it to yourself as the market is so small; not so with the financials

Yes I agree with this - unless we have some hidden billionaire amongst us I don't think we have too much to worry by sharing ideas and trades. Only thing we can lose I guess is some face when they go wrong!

[andyfuller]

Be very careful.

I don't doubt that Peter is successful, but IMHO for most people, 'buy and hold' is gambling, plain and simple.

You might take the view that, in the long-term, you'll recover any losses your equities might sustain. However, you might be in for quite a wait. As Keynes pointed out, in the long term, we are all dead...

Surely it is all gambling no matter if it is short term or long term. People say the same about trading on Betfair, but there are still those that make money from it. I think it comes down to putting in the work and thought behind your decisions and if you are good at it you will come out on top be it in the short term or the long term.

[Iron]

I look at it this way.

If I offer you 2.0 on the toss of a coin, you'll probably more or less break even over 1,000 bets. If I offer you 2.5, I won't last to the thousandth bet!

If you're confident that you're doing the equivalent of betting above 2.0 on the toss of a coin, then long-term you'll make money, and it's not gambling. If you're not, you'll probably lose money, and it is gambling!

"If you've been playing poker for half an hour and you still don't know who the patsy is, you're the patsy." — Warren Buffett

Jeff

Surely it is all gambling no matter if it is short term or long term. People say the same about trading on Betfair, but there are still those that make money from it.

[Iron]

BTW, I'd recommend you read this book - http://www.amazon.co.uk/Trading-Chaos-T ... 0471463086

Jeff

[PeterLe]

Andy
I think you've hit the nail on the head; it's all down to hard work in my opinion. There is no shortcut. You can dabble, but even what we have learned from betfair is that to be successful you need to be better than average.
I read a book many moons ago - "The Zulu Principle" and the base principle (as I recall!) is that you can become an "expert" if you focus on virtually any topic, very quickly.
A friend of mine moved from a finance role in my last company and took a massive gamble to work for Barclays (trading) ..for the first year he was working 12 hour days and then studying in the evening, until he literally fell asleep. He asked his wife is she could bear with him for 12 months on the promise of riches and she agreed...two years on he is making plenty!
Some of his stories about husband and wife's who work together and have joint incomes of £800K a year makes me wish I had gone down that route too!

regards
Peter

[Euler]

You should make a decision early on as to what market you are going to trade. Equities are very different from commodities, which are very different from forex. I would think commodities would suit Betfair traders. Forex is OK but subject to sudden shocks in either direction.

[Iron]

If you're trading using fundamentals, I'd agree.

But if you're trading based on market movements, then surely any market with plenty of movement and low transaction costs is fine.

Jeff

You should make a decision early on as to what market you are going to trade.

[Euler]

No, they all have biases in them. Forex is the least biased but a loose mouthed central banker can send the market flying all over the place.

[Iron]

Perhaps.

But as all markets have the same underlying psychological dynamics IMHO - gold traders experience the same greed and fear as Forex traders - I'd trade any market providing it met my entry criteria.

BTW, what do you mean by 'least biased'?

Jeff

No, they all have biases in them. Forex is the least biased but a loose mouthed central banker can send the market flying all over the place.

[andyfuller]

You should make a decision early on as to what market you are going to trade. Equities are very different from commodities, which are very different from forex. I would think commodities would suit Betfair traders. Forex is OK but subject to sudden shocks in either direction.

Cheers for the advice Peter, can you expand on why you say that Commodities would suit Betfair traders as opposed to other markets?