Starter Slow Trader Fund

To start trading can be somewhat daunting. You have to find a system to follow – a system is essential. Otherwise, you are trading without rules. You have to find and become familiar with a trading platform. And you need adequate funds to keep your risk low on each trade.

Since starting my blog in November 2013, I have provided you with dozens of share suggestions. However, from my portfolio, I have made about 200 trades during this time. I would not be able to blog these trades to you as it often happens too quickly.

I like to keep my risk level on any one trade at or below 0.5% of my fund. Risk-based on a unique one plus, two plus stop system that has been successful in managing my risk. To do this, and still have the freedom to trade a good variety of shares, your fund needs to be of a reasonable amount.

Most folks, when starting out, either don’t have the capital or trade with a small amount of money till they get confident. If you are trying to trade with £1,000 or £2,000, then your risk is usually unacceptably high as you are limited in what you can trade.

My thought is this: a few of us (open to say four or five of us) will each put £1,000 into a joint fund which I will trade. I will trade this fund in parallel with my central fund which will act as a financial umbrella for this proposed starter Slow Trader fund. I will manage the fund via a spreadsheet that will record precisely where we are. Your balance in the fund will be an exact split of the number of people invested. For example, five people invested (including myself) then you will have 1/5th.

Funds only take 3-working days to transfer. However, when you want to cash-in, you would need to allow for a 3-month lead time as this is about the maximum hold time of a share – but could be considerably shorter.

igThe platform I trade from is IG, a financial spread betting platform. Through IG we do not own the shares in the investor’s traditional sense but merely bet or trade.

sharescopeThe  charts I use are Sharescope Gold. For longer-term trades and value investments, I use Nick’s unique company analysis system.

You can follow the trades using any free share charting system; this will build your understanding of how to trade. The added interest of being invested provides motivation. I would update you on the progress of the trades via this blog probably monthly and weekly where I can.

Of course, there will be no management charge just the small Daily Funded Bet (DFB) charge imposed by IG which amounts to a few pence a week; because IG is a leveraged account. You bet with more money than you put down.

This charge is worked out by IG and applies to individual share purchases depending on how long you keep it and whether the share is in credit (its share price is up) or debt (its share price is down). IG make money via a spread when you buy: Let’s say a share is trading on the LSE for 100 pence, then to acquire that share through IG would cost you say one penny, making your share price 101 pence; this is only an illustration. IG spreads are usually tight (the occasional share attracts a widespread, a consideration in good trading). All trades, whether spread betting or investing carry a spread and IG is usually better than most.

All costs, no matter how small initially, are a significant consideration over the longer term when trading. That is why my system has a rule of risk versus potential reward. If this does not stand up, we don’t buy.

Profit, with present legislation, on spread betting accounts, is tax and capital gains free. That is why the account is called betting rather than trading. Other than the spread and DFB charge there are no other costs when buying or selling.

My style of trading is medium term, that is between a few days and a few weeks. Not day trading where the risks are significantly higher for many reasons that I will not go into detail here. I use daily, weekly and monthly charts. I do not use intraday charts which means a chart showing share price on the present day. I pay attention to the monthly cycle of the market, and I go long and short.

glassesFinally, I trade from all the FTSE 350, the AIM 100 shares and US shares (from about the $35 share price range and above). In total just short of 2000 different companies. I look through each of these at least once a week and place into watch lists for potential trade as the week progresses. From 2000 shares usually, 20 to 30 stocks will be possible trades of which about 5 or 10 will come right on any given week.

A fund of the size I am considering will hold probably between 4 to 20 shares at any given time depending on the market and price of stocks we trade.

thumbLet me know, either call or email, if you would like to join the starter Slow Trader fund or if you would like any additional information.

riskIt would be amiss of me not to mention risk.  Please see the disclaimer page on this blog.


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