The only way to lose the game is to get knocked out. But there are many ways of making a profit, as long as you have preserved some capital to do it with. You need to develop a plan, back-test it, modify it, back-test it more, then maybe paper-trade it to either destruction or profit: if it's profitable, trade the plan with tiny stakes (because the game changes when you put real money in), then ramp up your stakes until you're making a decent income.
Your analysis method is not useless. The important thing is you have a method and although it is not working it's a question of tweaking it and trying to improve on it which I am sure you will do in time. I would suggest tweaking your method on a demo account. After 10 years of trading I still use a demo account to try out different methods first to see how effective it is.
In a nutshell -:
- Did you backtest the method over a period of time to see if it was profitable?
- Did you forward test the method on paper to gain confidence in it?
- Are you trading with money you can afford to lose?
- Are you trading for excitement or taking it seriously as a business?
- Have you looked at methods freely available on this website and elsewhere on the net?
- Are you prepared to commit loads of time to learning to trade?
I humbly offer some basic Rules of Trading for your consideration.
The Trade
- Trade with the trend - no trend, no trade
- Plan the trade, trade the plan
The Entry
- Wait for the signal
- When the signal comes, don't wait
- A weak signal is still a signal
- Trade what you see, not what you think
The Exit
- Never let the profit go back into the market
The Stop-Loss
- Set a stop-loss on the entry
- Always obey the stop-loss
- Don't wait for the stop to be hit, close or cut losers early
The Sins of Trading
- Money Management - most of the newcomers fail in this regard, you should risk only a small percentage amount of your overall pot at any one time
- Trading against the trend
- Trading without a stop-loss
The Rules of Trading will keep you alive, the Sins of Trading can kill you. Don't give up.
Why do some many Traders Lose Money Spread Betting?
- Not understading of the very basics of investment or how to read a balance sheet
- A gambling mentality
- Gearing up to ridiculous levels
- Very short term view
- Many buying on tips etc trying to make a quick killing rather than doing any substantial research.
All in all, very easy to see why most people lose money from spreadbetting. The main problem with spread betting is that it will find any weakness in the psychology/discipline department and this is why it's a difficult area to crack consistently, iron discipline needed. Combine this with spread betting attracting new people to the markets and you've got your 80% lose stats. The main thing people MUST realise when they spreadbet is that there will be an apprenticeship to serve. Use small bets until you have a system that works for you!
Trade what you see and NOT what you hope...You only need good luck if you don't have a good system. If you have a good system then all you need is patience.
