commonrail:
2 questions winseer.
Have you made any money from investing?
Do you like a flutter?
Essay time… 
I have a lot of experience in the middle-range investments, but I steer clear of the “unlimited liability” ones.
This means that I don’t touch things like “insurance underwriting” or “option granting” or even chasing trends in the commodities markets.
The kind of investment I will go for started with the privatization share issues of the 1980’s. Some of the issues I didn’t get any of, as I lost out in the ballot when they were oversubscribed.
I didn’t touch BP because the float @ 330p was reducing the leverage to a point that I didn’t think I’d make much out of it.
Part-paid issues like BT, BA, British Steel, etc. were a goldmine on the other hand, as paying 50p for something part-paid, and seeing it open by almost that amount higher on day one of trading - meant doubling my money for only a 20-30% move in the actual fully-paid stock. Investments that cost two digits that then move two digits in a day’s trading - are exciting!
I didn’t touch Eurotunnel, because I didn’t like the idea of buying shares in something that was YEARS from turning any possible profit. I was wrong in that the shares went from 350p to over a tenner - but they did at least fall back to ease my emplonkeredness. I missed out, but a missed opportunity costs nothing.
The privatization issues introduced me to the concept of “how lucrative it is to have a part-paid investment, providing the ■■■■ thing goes your way of course”.
I had a close escape with shares in companies like British & Commonwealth and TVS -which I sold days before they collapsed in price. This taught me NEVER to just buy something and not keep at least a casual eye on it… I flogged shares that were getting bad press, and it was still possible for me to get out at a profit - so I made that happen at the earliest opportunity. “Never Let A Profit Turn Into A Loss”…
In 1989 I started trading derivatives. In those days, Traded Options on FTSE stocks were a lot more liquid than they are now, and you could effectively “rent” some shares buy purchasing call options, and “Insure” shares by purchasing put options. This allowed the kind of profits possible on privatization issues to be made on the long-quoted shares already out there.
Eg. instead of buying British Gas shares @ 200p and dumping them for 250p three months later, would buy 3 month-out 220p call options for 10p, and flog them for 30p when the share price hit the original 250p target. Options are worth at expiry the amount they exceed the strike price by, thus in this example 250p is 30p above 220p, so you have a good idea what you are going to get, which is even better if you exceed your target.
Options also have the advantage that if you bought say, 220 call options on PollyPeck with the shares currently at 200p, and the shares then go bust (as they did) - then you lose your 10p you paid for the option (per option) instead of the 200p you’d be losing (per share) if you’d bought the shares outright.
Options taught me that you can gear up your investment into a short-term punt on the market. The risk of losing money is higher, but the amount you can lose is limited at the outset to a known level.
Note that the share trader in this 200p to 250p example made a profit of 25% less commissions. The option trader made 200% less commissions. This struck me as a pretty good payoff - providing I got it right of course. Any fall in the share price would take the 10p options to be worth zero pretty damned quick, - but you still had until the expiry day for them to make some kind of comeback, which did occur in firms like Asda, Barclays, & Tescos for example.
Because you are buying options on shares for 1,2,3,6,9 months out (paying an interest rate premium on the price for the further-out contracts) you are effectively “renting the shares for a part-payment” giving you the lucre of the privatization issues at a fraction of the price. Commissions are based upon what you pay in rather than what you profit out. Turning £2000 into £20,000 has the same commission as turning £2000 into £3000 essentially.
Futures were something else I initially started in 1989, but didn’t fare so well on at first. My timing always seemed to be lousy, and I’d be buying just before a big fall, and would come a cropper.
I notice that this was coming about too often for comfort - because I was chasing trends all the time, rather than adopting the “contrarian” style trading practices that I used from Year 2000 onwards.
Yes, I came such a cropper in 1989 that I didnt trade again in futures throughout the entire 1990’s 
Chasing a trend: The market goes up 3 days on the spin. I’d buy, then the market falls back. I’m chasing the trend. I’m losing nearly all the time. Markets that rise 4,5,6+ days on the spin are quite rare even now… I stopped using this method of trading after the face slap I got in 1989.
Contrarian Trading: The market has already risen 6 days on the spin, and is now “Overbought” in technical terms. I get short the market by selling contracts I don’t own, and when the price falls back this time - it’s now in my favour for it to do so. If the right “set-up” doesn’t arise, then I am not in the market at all, just having my bankroll sitting on a broker’s account getting barely any interest. (Broker client accounts tend to pay slightly under the Bank of England rate which currently means zero… It was paying a bit more than that back in 2000 though!)
The setups are such that much time is spent looking at screens, and little time spent actually doing trades - just watching for the right setup to pull the trigger on one.
Even if every trade turns a profit (my best winning streak was 36 trades on the trot turning a profit in 2005) it might be over a year between the first trade on that list, and the last one - because of the sheer amount of time “doing nothing but looking at a screen”… I was working at RM at the time, so I stuck to trading those things I could follow at work such as the Sterling currency contract & the Dow Jones which was being quoted on the radio news at regular intervals. There were a few occasions where I heard the quote and thought "What the F— is it doing up there? - I’ve got to get short this!" which meant a phone call from work to the wife at home, who could stick the trade into the PC… I’d come home from work (late shift at that time) and it would often be a case of something like “Dow Jones sold @ 10850 up 300 on the day, come home to find the dow jones closed up only 100, and I’ve made 200 points @ $5 per point - a nice round $1000 in a few hours…”.
Yes, my missus played a large part in doing these particular trades with the Emini Dow Jones contracts… The commission is only $15 in and out as well, making it very cost effective. The profit goes towards the CGT allowace of both myself and my wife - having opened a joint account to merge both our allowances.
The most I ever made in a year was £15,000 - still under the combined CGT allowances we had at that time, and thus I never ever paid CGT.
I use as risk capital the sort of money others use to buy a new car with every now and again… Instead of buying that car, I’ll get an old banger instead, - and put the money I saved into something like a year’s worth of trades with the appropriate broker. I stopped trading in 2011 when I first went onto agency. I couldn’t know in advance what times I’d be working, and if I could not keep track of what I was doing, I’d probably come a cropper again - so I pulled the £16,000 I had on the account out, closed it, and done the house up. Quite a few bits done around the house (new carpets, new double glazing, etc) got paid for by amounts I occasionally took out of accounts like this.
One big problem that I never really solved though was “When the money was pouring in, I’d tend to draw it back to my bank account, and spend it all”. This meant that downswings on the trading account such as during the credit crunch when I got short the Euros bigtime - blew up in my face, 'cos I was completely wrong, and the Euro went up and up… I’d already drawn down more than I’d originally put on the account, and had only left about £8k (half of my profits) behind - which got wiped out by that Euro trade, and compounded further by a Yen trade that went ■■■■ up as well. I made a recovery of around half what I’d lost there on Coffee, Bonds, & Oil - but not enough to cover the Euro damage.
If you have drawn down to the home account, spent it all, and then had the trading account wiped out - guess what? - That’s me out of the game, on that occasion until 2010 when I did some more trading shortly after leaving RM with some VR money to play with.
It’s easy to make a few quid, but even easier to lose it all again. In that regard, I must be described as someone who likes to take a flutter. One MUST go into this sort of thing with eyes open - or one is going to be sorely disappointed.
Here’s the sort of screen I’d be keeping an eye on all day when trading… The actual trades are entered through software provided by the broker, not this board btw. It’s just there for information only, which is pretty good seeing as the data is live and free on the russian site.
The barchart site is there for charts, trendspotting, technical details, etc. Pretty good for research. Anyone out there good at math would find such information very useful in this game. 
)
