Trading.

brendon

I don't think the program was very balanced. It seemed to focus on trading in foreign exchange markets and CFDs. At least the guys who were buying stocks were actually buying something of value, i.e. income producing companies. Focusing on highly leveraged CFDs where you can lose more than you put in I think gives people the wrong idea about what trading is.

As a rule of thumb, if people want to trade, they should trade in things they need. An an individual, you do not need foreign currency or commodities. You need income, and you can buy that income streams as stock.

I have the feeling there's a huge amount of the public that has seen this programme, gone onto the Internet, looked up 'trading' and clicked on the first Google advert and now has £1,000's of pounds gambled on the stochastic movement of some currency pair or commodity.

Masomnia

cepheus wrote: »

...Be aware that it's a zero sum game...

I think you could say it's often a negative sum game. If the pound loses 10% against the dollar, the person who's long is down 10%, the person short on the other side of the trade is up 10%. So zero-sum, but once you consider the spread and the broker getting their cut it's less!

IronWolf

Masomnia wrote: »

I think you could say it's often a negative sum game. If the pound loses 10% against the dollar, the person who's long is down 10%, the person short on the other side of the trade is up 10%. So zero-sum, but once you consider the spread and the broker getting their cut it's less!

Forex may be about zero sum (or less) but equities are not zero sum, stock markets increase over time i.e. the average person who is net long should get positive returns regardless of skill.

gkerr4

kangoora wrote: »

Whenever I see this I shudder, obviously when markets are constantly rising then you can practically throw a dart at the FT, buy some shares and make money. What can't really be predicted is when the markets will start constantly falling.

I remember all the American day traders when the crash of 2008/9 happened or the crash (correction?) of the dot-com boom in early 2000 and people losing virtually all their retirement savings because they assumed the good times would go on forever and the shares would 'bounce back'.

I was over in USA in early 2000's and met a few 70+ year olds still working, some packing groceries in Publix, because they'd lost virtually all their savings. I talked to a VP in my company who went from being a multi-millionaire (well $2m) to having a few hundred $k because he didn't cash in his options and kept thinking they'd recover to the dot com peaks.

I guess even well balanced portfolios will struggle from going into another global recession but someone who is 'playing' the stock market, who may not have a well balanced portfolio including 'safer' investment options and possibly isn't fully aware of risk could face some calamitous losses if unlucky.

That's why I'm going to pay for an IFA initially, especially being hopefully only 6-8 years from retiring. It might not happen for 1, 2 or even 5 years but it will happen - it could also happen next week. Maybe I'm just a natural pessimist

Maybe in a couple of years if I keep up studying (and reading these boards) I may have a go with some 'spare' cash, provided I have some and the aforementioned crash hasn't happened

I totally agree! - i shudder also - its why so many people are "anti-shares" - the days of "Buy and hold" are long long gone!

Jim cramer, in his book 'real money' talks about a new mantra - "buy and homework" - and recommends at least an hour a week to research each holding in your portfolio - + additional time for researching potential new buys. I subscribe to this completely. the days of just buying something and forgetting about it and hoping it will have risen when you come to sell it are over and the "road to the poor house" (as jim also says)

gkerr4

Masomnia wrote: »

I think you could say it's often a negative sum game. If the pound loses 10% against the dollar, the person who's long is down 10%, the person short on the other side of the trade is up 10%. So zero-sum, but once you consider the spread and the broker getting their cut it's less!

indeed - its much much worse than zero sum by the time trading fees and slippage are taken into account.

pinpin

LannieDuck wrote: »

It was really interesting.

I quite fancy having a go on one of the dummy accounts the nurse was using at the start. Did anyone recognise the website she was using, or know of a good place to find a dummy account?

They only showed it breifly, but having used them before, it looked like she was using the CMC platform.

ChristopherM87

It was very interesting. I have always wanted to go into trading to suppliment my income and as a hobby. I have narrowed down a few brokers, which ones do you use?

• https://openbook.etoro.com
• http://uk.saxomarkets.com
• http://www.forex.com/uk
• http://www.fxcm.com/uk/
• http://www.cmcmarkets.co.uk/en
• http://www.ig.com/uk/

Etoro looks excellent because I can copy popular traders! I only plan to deposit £10k and have a max loss of around a few £100.

bowlhead99

ChristopherM87 wrote: »

Etoro looks excellent because I can copy popular traders! I only plan to deposit £10k and have a max loss of around a few £100.

Fundamentally that is a flawed idea because let's say you can afford to lose 2% of your capital (£200) and you follow a trader that places a series of trades... and at one point he places another one or increases his stop loss or limit so he is exposed 2.2%, or 3%, or 5% of his deposit? What do you do then with all your open trades?

Also if you are only willing to lose £2-300 and will take steps to ensure you can't lose more than that, there doesn't seem to be any point depositing £10000 of margin.

FWIW the happy-go-lucky part time nurse making her bets on pure chance on the TV show was using CMC markets. Another on your list, IG.com, is one I use and am happy with it. It has a decent reputation although I am not a daytrader, just taking the occasional long or short position on a company or index of a currency as part of hedging or supplementing my other investment or cash positions in the 'real world'.

brendon

ChristopherM87 wrote: »

Etoro looks excellent because I can copy popular traders! I only plan to deposit £10k and have a max loss of around a few £100.

If you want a maximum loss of £100, I suggest you don't invest in 2-400 times-leveraged CFDs. Not even UK government bonds could guarantee a max loss of 1% in a year.

Bantex_2

IronWolf wrote: »

Forex may be about zero sum (or less) but equities are not zero sum, stock markets increase over time i.e. the average person who is net long should get positive returns regardless of skill.

Isn't FTSI around the same as it was 10 years ago. Allowing for inflation that is a pretty hefty loss.