Spread Betting for Trading the Volatility

I see that many spreadbetting traders are sitting on their hands out of the latest stock market turmoil.  Which probably makes the markets even more volatile as the day traders take over and push the futures up and down with very little real volume.  We keep getting two or three share up days followed by another two or three days of falling prices.

I use spread betting for trading this volatility, as there is no commission or stamp duty (just a wider spread) but also there is no capital gains tax to worry about and I try to use the whole allowance on my investments.  The intraday traders (self included) tend to be like sheep following the technical analysis. I noticed in the last bear market that a sharp trader I knew who'd do anything to have an edge in the markets still let his long trades run to target or stop, but he gradually did more short spreadbets. I didn't do enough shorts mainly because I was focused solely on intraday. Now, I am prepared to go with bull or bear by having separate long and short watch list's selected on fundamentals - just waiting for the technical analysis.

One thing is for sure - my dividend friggin' days are over. I just looked at the money made this week column and not the money made...er...lost this month column. I will still beat the market hands down but the objective is to make money not to lose it.  It is difficult to say whether I played a blinder or cocked it up this month. I got some things right e.g. SNR (Senior PLC), CNE (Cairn Energy PLC), MDC (Media Corp PLC), VGM (Vatukoula Gold PLC), MML (Medusa Mining PLC), DDT (Dimension Data PLC) and even FXPO (Ferrexpo PLC) yesterday. And I got some things wrong..mostly things that I sold that then went up again and I didn't buy back e.g. SOLO (Solo  Oil PLC), BAO (Baobab Res.PLC). And then there are some things I bought back that carried on down e.g. CHNS (China Shoto PLC).

These 'wild' weeks are difficult. One doesn't' know whether it's the start of something really nasty or just a correction. I can't afford to lose money so I take a defensive stance, selling and buying back. When you get a rebound, it generally would have worked out better to have sat it out but in 2007 that was not the case. How does one know? I therefore prefer to accept lower gains for safety but it isn't half frustrating on weeks like this.

What does work for me is the notion that one has to be first out and first back in. Waiting to be last out and first back in, or even last back in is just a money loser.

This time I did things a little differently. I didn't sell SNR (Senior PLC),, I added. Ditto MML (Medusa Mining PLC), and CNE (Cairn Energy PLC). That's a bit of shift for me and I'm delighted with outcome. I did sell DDT (Dimension Data PLC) and that went rather well. MONI (Monitise PLC) I screwed up. Sold at bottom and bought back higher. Doh.

So...the .FTSE looks to end mid-year some 6% down, against which I am likely to end down just below 1% and, at worst, when FTSE was down 11%, I was down 1.5%. Not bad but I may have to buy budget toilet paper for a month as a punishment for not doing better.  I am up on the year, so doing well there as well.  Phew.