Spreading is kinda cool

I only made 1 trade on Friday so didn't bother to blog about it, but today I had a reasonable up day which was nice because every Monday I have lost money so far. In fact during my second trade of the day I was down 400 euros but it eventually came back in my favour.

I am approaching the end of my first month and it has been far better than expected. Spreading is really quite fun, there is very little information on the internet as well as scalping which are the two techniques I use to trade. Spreading ensures that I am hedged when I take a trade on and I don't even have to have a bias on any of the two products. I trade two similar products and when I buy one I sell the other, the spread between them changes with time and when the spread moves wider I sell it etc. The spread does trade within a range often but can move to a new range without warning. The challenge is to make a lot of winning trades and not allow your few losing trades to be to big. There are many things I like about this style of trading one is because I am trading the spread it doesn't really matter what each individual price is, I could be buying the high of the day on one of them but that could be because the other product just blew through it's high of the day and I think the other one will catch up. It is easier to do than trading outright I don't need to guess the market direction just try to work the bid and the offer. Because I am scalping I just look for a small profit.

I try not to pay the spread between the bid and the ask, as a scalper you would like to wait in line to buy something then wait in line to sell it, the cheapest seller is always higher than the cheapest bidder so if you can bid at the best price and have someone sell it at that price to you then you can offer it at the cheapest and hope someone buys it. Not everyone wants to wait in line and if the price is rising then normally no one is going to sell it to you at the best bid price so you have to buy it off the people on the offer before they retract their offer! and soon this will become the bid anyway. It is not just about going bid and then offer when you spread because you have to think about getting out a good price and keeping yourself hedged. If your not hedged it is very easy to just lose a days profit target, so there are many factors to consider and always two ways in and out of the trade. You can always buy 1 of the products if you think it is going to go up, if it doesn't but you see the other product about to move a price down you can sell it at the last possible moment which gives you a chance to make profit on an outright and if it doesn't work just hedge yourself. I have been doing this especially if I like the price I would hedge myself at, there are many other things you can do, e.g. buy and sell one side of your hedge when it is oscillating between two prices and turn a profit whilst being hedged some of the time! Maybe I will go into more detail about it but just to say I am enjoying this style of trading.