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MY IG 1 to 2 Loss Profit Experiment

 
Author Admin
Admin


#1 | Posted: 24 Oct 2018 16:44 | Edited by: Admin 
My IG experiment.
https://www.ig.com

I have an account with IG stock brokers. They have a Demo Spread Betting Platform. You start off with $25,000. I blew $1500 messing around, but now I have placed a load of bets to the value of $15,000. I will be placing more deals until all the money is gone, making sure I have enough to pay for all my lost trades. I am using the 1 / 2 profit principle as outlined in a previous post of mine. I am acquiring the shares by looking at the Stock Screens on Finviz. You lose money as soon as you buy stocks as their sale value is below the buy now value. This is how my portfolio looks now ...

IG Portfolio

Already down nearly a grand! Finviz screen can be found for free here ...

Finfiz Stock Screens

The trick is for all the REDS to turn BLUE, cos when they do it means profit. Only thing is though as this is an experiment I want to see if the 1 / 2 (loss to profit) principle works at least 50% of the time so I will leave the stocks play out fully (won't cash them in early).

The setup I have now is perfect for emulating stocks and shares trading across the board. As this is very much dependant on the stocks I pick only when I can beat 50% of my trades - as in win 50% or more - will I consider myself ready to trade properly using this type of system.

I am still trading but not in the above manner.

Another good thing about this is IG trades with loads of international markets so most of the stocks I pick (if not all) are active until 9pm (from 2:30pm). The UK Stock Market is open from 8am until 4:30pm. You can trade all day if you want with IG

Whilst writing this my loss has been halved. Only $500 down now.

As far as I can make out all Spread Betting is doing is showing you the profit and loss in real time, whereas with stocks and shares you have to work it out for yourself. Of course you can use leverage but even so I think it closely resembles actual trading as the same thing happens when you raise or lower your initial trade amount.

I am risking $400 dollars (2% of $20,000 - apparently you shouldn't risk any more) whilst attempting to profit 2x this amount - $800 on each trade. This is the 1 / 2 loss to profit system. You set this up by placing a stop loss and limit order. Very easy to do on IG.

Although the Demo Account is meant for Spread Betting it is perfect as a platform for this experiment.

To explain a little further a 'Stop Loss' is a point where you sell so you don't lose any more money. With the above trades I am placing it far enough away points wise in the hope of staying in the trade whilst the price fluctuates - as it does. I don't want to be kicked out of the trade too early. The 'Limit Order' is my selling price, which in this case is 2x the Stop Loss - as many points above the price as to equal $800. This is quite easy to work out as it is double the number used for the Stop Loss (you can see it quite easily on the IG Platform).

By the way Spread Betting is extremely dangerous as you can lose more than you started out with - a lot more! Stop Losses are essential for protection. With some brokers you can use 'Guaranteed Stop Losses' as 'Ordinary Stop Losses' can fail to kick in on a very fast moving market.
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Author Admin
Admin


#2 | Posted: 26 Oct 2018 18:24 | Edited by: Admin 
My initial test didn't go well. Slow moving stocks for one thing. I'm looking for something a lot faster and more exciting.

After a break of 24 hours I had thought over what I had tried to do and whether or not I could improve on the practice. I figured out my stop losses were far to low making the much needed share price rise way out of the ball park - or take forever to reach. Why not place a much closer stop loss thereby only needing a much lower share price rise? OK, this increases the risk substantially, but it means I can get out of the trade quicker should it be profitable. At this point I'm still thinking along the lines of the 1 / 2 principle - risk 1 to gain 2.

It showed promise. I searched for suitable stocks and placed a load of orders. There was a lot more movement this time - both losses and profits that is. Most went into profit though for a while. Again I just didn't feel comfortable with the length of wait before the profit was taken and the trade closed. It still has to move 2x the stop loss distance before triggering. I then had a brain wave - an idea anyway ...

What if I ditched the 1 / 2 principle and stuck to 1 / 1? OK, with the 1 / 2 setup even if you only get 40% of your trades right you still make money. but then again you have to win each trade by a comfortable margin - 2x the stop loss margin. What if I used 1 / 1? Figure it out - I have to win more than 50% of my trades this time around, but this time my limit order will be half the distance of the 1 / 2 system - a massive difference. And then I thought of another way to edge the game my way ...

What about placing a number of bets on the day - say 10 using 1 / 1 - risking 1 to gain 1. As I'm looking to break 50% why not really make this work by selling ALL of them as soon as 50% are won? This will greatly improve profit. Just close the whole lot whatever losses or profit they might be showing. As half have already won and the rest haven't reached their limits the profit will be the amount risked minus the profit or losses. This might be better than letting them all play out. We shall see ...
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