Update

Well at the end of May I had one really bad day losing 930 euros in 1 trade... it wasn't just me but I was feeling very demotivated and I couldn't see how anything made any sense with spreading. Luckily since then it has gone better.

Week 4: Day 2

On the open I sold the schatz for a quick profit and made several trades and by 8am I was up 150 euros, which is my profit target for the day. I felt each time I hit my target early I missed out on opportunities so I kept on trading and bought the spread on the low of the day at 7's, it went down and I bought 5.5's too, it carried on downwards, the euribor bids were pulled and it fell down, the schatz didn't follow. The spread was at 0's and instead of buying the spread I punted the euribor and made a quick tick profit. The spread moved up 2 ticks and came back down and I bought at just under 0's whilst still being long 5.5 and 7, I sold some at 2's so took a 2.5 tick profit, my largest winning trade yet but I still had two massive losing trades running. When it fall back down I did it again. My original trades seemed a mile away and when it moved up I sold them both at 4's and was back on 150 euros for the day. Having been down 575 euros it felt pretty good and it was great to not lose anything on the trade overall even though it went heavily against me. It was pretty scary having 3 clips on, which is really my limit although I am able to go further but I doubt I would.

With 3 clips on a 1 tick move against me is equal to my daily target each day! I could easily blow a weeks work in minutes so buying more really took some balls lol.. I felt like the downward move was complete and it was a good buying opportunity. Although at one point I was thinking about getting out the trade and almost did! I made one more trade to bring my day to +175 and called it a day!

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.

Week 3: Day 4

I made a buy early on at what appeared to be the low, but it was in a down trend over the week so the second time I became hesitant to buy again. It was annoying because I would have made 50 euros but it did retrace back to the low, and I did manage to sell it near the high for a small profit but didn't buy it when it came back to the low. It did break down and I bought it a few ticks lower and sold for a profit and it continued to gradually make new lows and I did the same again. I really think I should have been selling the lower highs, especially if I think it is still trending downwards. Something I realised is that it is so against human nature to sell a price that seems cheap, it appears to make more sense to buy the new low but logically this is far more riskier as you are fighting against the trend and it could just fall further than you think.

As the day went on it was ranging downwards and the range was becoming tighter and tighter and I feared an outbreak and more towards the downside. I was really hesitant to get involved and just decided to watch and it did in fact fall about 5 ticks in a short space of time. I then considered buying it and I had myself queued and then realised I wasn't going to get the price I wanted so I pulled my order which was to sell the schatz. Literally 2-3 seconds after I pulled my order, there was news I believe from Trichett saying there will be no quantitative easing and I think just the fact he said the word made people panic buy and it literally rocketed up 6 ticks and then retraced back but continued to rally upwards making the TED spread plummet further. I just sat back and watched I didn't trade after 1.30pm and was pretty happy to not get caught in this trade like I did last time.

I had a good day today and I have had just 1 losing trade in my last 24 trades, so wondering how far this will continue!

Week 3: Day 3

At midnight last night Germany banned naked short selling of German bonds, which is what I trade and I wasn't sure the affects of it. There was also a rumour about the Euro breaking up and I decided to watch rather than get involved as did many others around me. I eventually traded at about 11am and made a tick. I made 2 other profitable trades for the day and finished at about 5pm, which is a long day when you get in before 7am!

I am having a really good run for the last 20 trades or so with only a couple of losing trades, which is awesome. Today I realised the schatz was making the spread range and the euribor was often not moving with the schatz. Therefore I normally entered with the schatz first much more and realised the best entry was when the euribor looked like it was about to go bid or offered and then to que the schatz, get filled and lift or hit the euribor depending if I was long or short. There were a lot of opportunities to leg and you could get a good price leaning on the euribor throughout the day. There were many more trades I mentally took which worked out well but didn't take because of the fear of rumours becoming fact. I really didn't wanna get caught offside of a huge movement.

I was feeling a little demotivated after losing 200 euros on Monday, but overall it's going well and I feel like I am improving and thinking about more each time I enter a trade. My goal right now is to be at least flat by the end of the month after commissions which for me are already over £500 for the month... :(