Denial, anger...or spot the opportunity?

Faceless Bureaucrat:  I've spent 21 thrilling years in public service as a Faceless Bureaucrat.  I really enjoyed the first 16 and the last 2, there was only one rather soul destroying section latterly in which I felt I was being slowly lobotomised.

At that point I took my little briefcase and left the employment of the NHS for nearly a year to go it alone as a freelance consultant.  During that time I had great fun being paid more to work less with more respect.  But I missed being part of an NHS team and getting the Christmas cards.  I also chose the beginning of the worst financial crisis in decades to set myself up in an area which was, within 2 years, to be subject to some of the biggest cuts.  NHS spend on consultancy has sunk like the Titanic in the past 6 months.

Just as well I snuck back into the arms of the NHS 15 months ago then...?

 I've spent most of these 2 decades in the commissioning side of things rather than the provider (hospital) side.  If it's moved, I've commissioned it and so right now my job is to teach commissioners how to commission.  I deliver workshops to managers, GPs and nurses to help them understand what commissioning is all about and how to manage change successfully.  I give them the good practice theory with a handful of real life examples, get them to apply the theory to their own circumstances through exercises, we all have a jolly good time and 97% of them tell me they would recommend the courses to their colleagues.  Lots of them come back for seconds which is usually nice.

But the NHS has decided in its wisdom that this sort of thing should no longer be funded centrally, but instead happen on a pay-as-you-go basis, something that requires a different scale of organisation behind it to make the marketing, pricing and billing add up.  It's a difficult transition to make, particularly when it's unclear whether any NHS organisation is willing or able to host such a function and take on the inevitable risk involved.

One of the things I teach people about managing change is the transition curve people go through when undergoing any change that is potentially negative.  It starts with denial (it's not going to happen to me!), followed by anger (why is this happening to me?), followed by being lost (what's going to happen to me?).  That's the negative part of the curve from which some never move.  If you're smart you do that bit quickly and move on to the understanding bit (I see what's happening and why), acceptance (I can handle what's happening) and finally - if you're really lucky - advocacy (we should do more of this happening stuff).

So where am I on this transition curve?  My confession is that I've always rather liked change, my life has, frankly, been full of the stuff.  So I don't tend to linger on the denial or anger, rather I like to get my head into the future and try to spot the opportunities - as sure as thaw follows snow there will be some.

As my blog readers will know, I've already spent time and money investing in my future as a trader and am slowly working my way through the learning process.  This is my goal, over all other work goals.  I will be a successful trader, it's just a case of when.  It may take me 2 years, 5 years or 10 years but I'm committed.  I've met many successful traders and they don't have anything I don't.  With discipline, persistence and time it will come.

The question is, how do I keep the pennies coming in whilst I learn this new art?

There are many options for me.  I can allow myself to be made redundant on March 31st, take the pay in lieu of notice which is highly likely to be forthcoming and spend 4 months solid improving my trading. But if I need more time to become consistently successful at trading then I'll be back to job hunting again this spring/summer.  Not the end of the world I guess, the job landscape will be clearer by then and I'm confident I could pick something up, if not permanent then interim and manage to negotiate part time hours just as I have for the last 5 years to give me time to trade.

But if I'm made redundant in March I only get 4 months pay to see me off.  If I can hang on until past Sept 2 (the date I rejoined the NHS in 2009) then all my previous 20 years' service becomes valid for redundancy payment.  This means it would be so much better to be made redundant after Sept - I'd get 22 months' pay instead.  That would fund me to spend time trading for a lot longer...

The problem is not getting some sort of job to take me up to Sept, I've never had a problem bagging a job before.  The problem is that then they won't make me redundant.  I'm not in denial, honest!  I just can't see it happening.  If you've got the experience (which I have), are presentable (which I must be) and sufficiently able to adapt (no problems, love change) plus you're able to make decisions (definite tick) then the NHS never likes letting you go.  And more importantly (if I'm really honest) they hate paying big lump sum payments such as 22 months' salary to anyone.

The fact that I'm currently facing redundancy from April is such a rare and unlikely event for me that it feels like it is The Opportunity.  Of course there's a lurking thought that it may be difficult to get back into employment if I spend 4 months off but then a quick look back at my CV (which I've recently been updating...) reminds me that of the last 10 jobs I applied for I secured 9 of them. And that doesn't include the roles I was given when people approached me as a freelance consultant, I'm only counting those where I had to compete.

I don't want to appear arrogant here but part of grabbing the opportunities of change is about being able to objectively analyse the situation and your position in it, these are the simple facts.

So, having fast tracked my way through denial, anger and being lost I am now trying objectively to work out how I can benefit from this situation I'm in.  If I find another job now or by March 31st what will I gain over and above what I have now?  A sense of security.  Probably nothing more as the odds are in my favour that I can get a job later in the summer, or even wait until winter if I pay myself a dividend from my business account.

But if I sit it out and get made redundant I get 4 months' pay without having to work for it.  This equates to an unparalleled chance to invest time in trading.  An opportunity like that is unlikely to happen again.

Well, I've not yet made my decision.  I guess I'll have a chat with a few people about this and see.  It is of course quite difficult to make this decision because as a Faceless Bureaucrat one likes to have safety nets and minimise risk.  But let's face it, I'm transforming from Faceless Bureaucrat to Bad Assed Trader and Bad Assed Traders take risks to generate rewards.  The question is, am I more Faceless Bureaucrat or Bad Assed Trader right now?

Faceless Bureaucrat looks redundancy in the eye

Faceless Bureaucrat: The time has come to consider a Very Different Future.  My team in the NHS has been issued with our letters notifying us that we are at risk of redundancy.  They are consulting for 90 days and then will let us know for sure.

There are massive (management) redundancies taking place - unprecedented in the NHS.  So here I am on holiday in Phuket missing all the action going on at work.  There's life coaches lined up, interview and CV skills preparation training, there's counselling available for anyone feeling a bit down about the future and, even worse, I'm missing all the Christmas fun they've been putting on this week.  Apparently people have taken to wearing woolly jumpers and playing board games at lunchtime.  They've been auctioning promises and there's live comedy and canapes on Friday to cheer everyone up.

What with the fact that it's been snowing in England and the heating has apparently broken down in our offices it seems I picked a bad time to come to a place sitting on a steady 30 degrees and which I keep mistaking for paradise.

So I have instead spent my time attending meditation classes in order to improve the ability of my mind to concentrate and access the inner me or higher mind, however you like to see it.  I've gone to the gym nearly every day and had Thai massages on the beach daily too.  Of course I miss the office terribly.

I'm not trading until January 11 (11/01/11 - good binary number) as not only am I on holiday but it's all so unpredictable over the Christmas period.  I'll wait for things to settle down before putting any more money on the line and any time I have to dedicate will go on analysis and backtesting of strategies. So Bad Assed Trader is also taking a break.

I am considering my future options regarding work.  It still stands that if our team can generate sufficient income to cover our costs and can find an NHS organisation willing to host us then we won't be made redundant but this looks decidedly dicey right now.  I've made a list of contacts I may start approaching come February if necessary for possible secondment or short term contract, depending on what's happening.  I am not at panic stations yet, nor even considering taking a bus to get there.  I may be a faceless bureaucrat but I'm not a bad one at that.

Even so, I may have a lot more time to dedicate to trading come April...

Learning rather than earning...

Bad Assed Trader: My special thanks to one of my followers, Poobah, for advising that when I'm on holiday I should try holidaying.  Rather than trading.  I think I will take this advice now and resume trading properly after the first week of January when things are getting back into normality.

But before I restart my holiday I should share my latest trading escapades.  They are not major catastrophes, but nor are they stunning victories.  This trading lark seems to be about plodding forward relentlessly, trying to gain a sense of the analysis (objective assessment of price action), along with a measured approach to managing the trade (not jumping out too quickly and missing the real profit action nor hanging in there too long and seeing profits disappear).

Most importantly for me it is now about spotting myself angling for a trade and trying to make one where the odds are against success, or when once in the trade catching myself trying to make the trade go a particular way because that's what I want rather than what is actually happening.

This "willing" of the trade seems to be a common error amongst traders - we can blind ourselves to what is really going on and this really does not help because try as hard as we can we simply cannot control the way that the price of the currency pairs moves.  Apparently it takes a billion quid to get the price of the British pound to move a couple of pips (which I think is a few hundredth of a pence) so me sitting at the desk in my room in Phuket urging the little bars up and down is unlikely to have much impact.  Particularly when I don't have more than about a hundred quid on any of my trades.

This may sound bleedin obvious but when you get drawn into a trade it is easy to find yourself believing you know what will happen next, when of course you don't.  You may guess correctly, you may have probability on your side in your predictions, but you never actually know and we have to keep reminding ourselves of that.

So, what have I been up to?

Well, as usual, I've had some excitement and a win, along with a couple of errors.  But hey, I'm still a learner rather than an earner so I'm not too hard on myself.  I'm reflecting in order to improve, that's the main thing.

I spotted that the Japanese yen was ready to bounce up yesterday late morning so I put a long (buy) trade on.  I had a good set of evidence in my favour as it was bouncing on a few different lines on 3 different time frames and the price action on the hourly time frame showed price was repeatedly testing lows but bouncing back up.

It took a while before the trade really took off but when it did - and I was watching it at the time having come back from a tailors shop in Patong getting fitted for a couple of new dresses and a jacket - it really went for it.  Within an hour or so I had hit my 1% return but I had put my target higher and so was trailing my stop loss up behind price action so that I would lock in profit but not take the trade off prematurely.

I watched price action peak and start to turn and I did think to myself (this was at about 1.2% profit) "hmm, shall I take the profit now or keep trailing the stop loss?". Well, readers, I will not make the same mistake again as I have now agreed with myself my future plan in this scenario.  The thing was, I was then going out to dinner so had to decide to either take the profit or leave the stop loss and target on and let the trade take itself out.  I did the latter.  Price then dropped to my stop loss and I made £85 instead of £140.  Next time I will take the profit when I see price turning for any intraday trade that I can't keep watching and trailing up the stop loss.

That was the good news.  The bad news is that I jumped in a little prematurely to a EURGBP trade...twice.  I had been studying the pair and made a note in my book that price was likely to come up to 0.8400 to 0.8420 before dropping again.  I saw price had come up to just below 0.8400 and that there was a resistance pivot level at 0.8412 which acts as a bit of a ceiling...usually.  So I entered the trade at 0.8394 as it was dropping and put my stop loss at 0.8418 thinking this was well clear of where price was likely to go.

Of course it wanted to peak one more time didn't it - up it went to 0.8417, just below my stop loss but the spread (difference between buying and selling from the broker) meant that it took out my trade.

When I came  back from dinner I checked and saw this had happened and thought "Oh well, sometimes price action does peak one more time before dropping, the same parameters are in place so I'll place the same trade again - this time one of the indicators, MACD, looks even better in my favour". So on went the trade and off I went to bed.

When I checked this morning of course the price had decided it still wanted another peak - this time right up at 0.8439, well over my stop loss, so out I went again for the full 1% loss.

Having re-analysed the trade I think this was one I was "willing" to work rather than really objectively analysing.  Live and learn, live and learn.

So I'm off now to sit by the pool in the far eastern warmth and relax.  No worries.

Faceless Bureaucrat has asked for a quick look in but I'm beating her back down.  She wants to update you on the job/redundancy front, but I've told her she'll have to wait for now as the pool beckons.

So Faceless Bureaucrat will be checking in again soon....

Breaking into the Forex

Bad Assed Trader:  I have started trading the Foreign Exchange (Forex or Fx) which is, I have to say, much more exciting than the stocks and shares.  Which means you can lose your 1% in minutes rather than days...

I am trying to stick to just a few currency pairs as I've been advised that it's best to become a specialist in just a few.  I liked the look of the EURGBP (Euro against the pound) as it seems to me that the long term trend is clearly down and although it has recently been going up it looks like it's just turned and is heading back down again.  I have done the analysis, drawn on the trend lines etc and so was looking for an opportunity to use one of the strategies I've been taught.

A pivot (bounce) trade came up on Nov 23rd which I took.  The complicated thing with Forex is you have to check four different time frames when you're trading intraday (in and out of a trade within a few minutes or hours).  But I was very careful to check that the four hourly cycle showed the price was about to come down and the hourly one said the same.

There was news that morning which had taken the price artificially high.  I don't trade the news itself as I'm not an economist, but if the news helps to set up a good trade then I'm not objecting.

And so I entered, live at 9.20am and sold the euro against the pound. It wasn't really a very good trade when I look back on it as I'd neglected to check that there was further news to come which meant the price went up a bit and then faffed about for a couple of hours which was a bit tedious.  But then, suddenly, price started to tank and go my way and I was able to sit and watch the money tipping into my account all the way to £113 when I clicked the close trade box followed by "buy" and exited the trade.  I had made my full one percent and was pleased I hadn't jumped out too early.

I'd like to be able to end my blog on that high note, but alas, life is never that simple in trading.  Any faint hearted look away now.

Buoyed with my success I did, the very next day, place two trades.  One on GBPUSD (called "cable" on account of the cable that was used under the Atlantic) and one on the New Zealand dollar.  I figured the pound would go down - and so it did.  But not at 6am when I put my trade on for it to go down (short).  Instead it went up down up down up and by the third up it had stopped me out - because I had moved my stop loss down a smidgen.  If I'd left the stop loss I would have made the 1% as I did guess the direction of travel which then happened at 8.05am when the price dropped by 60 points - a lot more than the modest 20 points that I was targeting.

Oh well, that will teach me not to fiddle with the stop loss prematurely.

And then the New Zealand dollar.  Well, when I look back I can see why I shouldn't have traded it long (to go up) as it had recently had a lower high and so the uptrend was turning.  So I can't say I at least guessed the direction of travel as I actually got it completely wrong - I bought the bloomin thing and then watched the price tank and take me out within a couple of hours.

The net result of those two days was a loss of just over £60 and a sense of humility.  Must try harder. But not put off at all.

Having said that, I'm now on holiday in Phuket and will spend the time doing analysis and maybe some back testing of strategies to improve my technique.  One of the traders I met recently said not to trade near Xmas and he meant from late November as the banks do odd things in the run up to the holiday.

Having said that I could do a teeny bit of trading with the Asian markets now I'm in a different time zone....

And the final results were....

Bad Assed Trader:  So my first group of trades have now concluded, all profits and losses netted off and the results are in.

Bodycote dropped from the 70 odd quid and ended up being stopped out for a loss of just under £40.
IG took me out for a £46 loss
Derwent lost me about £170

So that's £256 down.
But Dominos, bless their cotton socks, brought in £323 - so I'm up £67 on those 4 trades.

I'd like to say that's my conclusion and let you all think that I'm already winning, but I'm too honest for that.

If you're faint hearted then look away now...

On Sunday evening, after my last blog I slipped a trade on Aggreko (still following all my rules I hasten to add) which went up a bit and then went down and stopped me out for my full 1%.  Even worse - it entered me above my planned entry so I ended up losing a smidgen more than my 1%.  All in all, I'm down £73 on those 5 trades.

But hey, I'm learning, that's the point isn't it?

And more excitingly, I've had an introductory course in Forex (Foreign Exchange, or Fx) trading which looks like much more fun - so much faster moving.  There are lot of common principles but some differences too.  More on Fx later as I start to get to grips with it.

Now I know you'll be thinking something like "Shouldn't she get to grips with the stocks and shares first before she plunges into a market with a 3 trillion dollars a day liquidity?" (you were thinking that weren't you??).  Nah!  I'm a bad assed trader, I'm not going to miss the chance to take part in the biggest market in the universe (to my knowledge).

So I'll be analysing some stuff on the weekend and hope to update you again soon....

Mixed bag

Bad Assed Trader: Well yes, Xstrata did of course do exactly as I predicted and currently stands at 1417, a full 174 points up.  My consolation is that I predicted the move, even though I'm not profiting from it!

So what about my other trades?  The bad news first.  IG group went up a bit so the trade kicked in, but after a few days it sloughed back down and as I'd moved my stop loss up rather cautiously it has pipped me out for a small loss - about a third of one percent.

Worse still, the Derwent trade bombed and I had added to my position a little when it looked promising, moving my stop loss up on the first trade to reduce my risk, but sadly it dropped and took me out for just over 1% loss.

But the good news is that I'm still in my Bodycote trade which now stands at 278 (up 11 points) which translates into £79 in my profit/loss account (over half a percent).  Even better, good old Dominos pizza has steadily increased and is currently up to 515 which is a rise of 50 points and has so far put £347 into my P/L account.  Now this isn't over and it could suddenly drop, but my stop loss is tucked right up at 513 so if it starts to drop I'll be out of the trade with most of that profit netted - over 2.5%.

All in all I reckon that makes me up on the trades so far, but I can't say that until the money is banked.

And what I can say is that this is jolly good fun, Bad Assed Trader is pleased to be on the grid....

Watch Xstrata shoot up...

Bad Assed Trader:  On reflection I felt I had got a bit gungho about my trades so despite being a Bad Assed Trader I do perhaps have a Faceless Bureaucrat lurking within.  So I've gone back and checked the charts on the four new trades I've placed to find reasons not to trade them.  And I've spotted a good reason to delete my order for the Xstrata stock.  Price action was trending up but has just recently had a lower high (peak on the chart) and a lower low (trough on the chart) which means the trend could be turning down.

I've deleted the trade so now Xstrata is going to shoot up and prove me wrong...isn't it?

On a Roll...

Bad Assed Trader:  Buoyed by my early success I have scoured the sectors and stocks and, still maintaining my exacting standards for spotting a trade, have managed to find four more. Well, five really.  I forgot to mention that I placed a trade on Derwent (a "real estate" company in the FTSE 250 - I will only be trading with the top 250 stocks as they have the volume needed to behave relatively predictably).

My order to buy Derwent kicked in at the tail end of Friday so I will let you know how that goes later this week.

In the meantime Bad Assed Trader has placed orders to buy:

Britvic (beverages - mmm orange juice) at 487
Bodycote (industrial engineering - smacks of big strapping chaps...) at 267.8
IG Group (financial services - hmmm) at 534
Xstrata (mining - may be a bit risky the way commodity prices are falling at present apparently) at 1243.5

To manage my risk I am only risking 1/2% - one half a percent - on each of these trades, so if they all go badly wrong I'm unlikely to lose more than 2% of my trading capital in total. Even Bad Assed Trader understands that managing risk is paramount in trading.  They all look good to go - all bouncing off that 50 Moving Average line etc and trending up, but you never know what could happen.  Georgie boy (our distinguished chancellor) could say something to blow them all out of the water - it doesn't take much in these shaky markets to send the investors into a panic.

And the next piece of exciting news....I'll be learning Forex trading tomorrow and Tuesday so hopefully new markets will open their arms to me and tell me there's room for just one more wafer thin Bad Assed Trader....

Unleashing Bad Assed Trader at last - a Successful Trade

Bad Assed Trader:  Whilst Faceless Bureaucrat toils at the coalface of NHS management my forces are unleashing...  On Monday night I spotted another opportunity to trade.  This time it was "DOM-LON" which is not a company peddling rubber/leather/spikey stuff but rather the bog standard Domino pizza chain. I'm a keen pizza fan myself which did warm me to this opportunity.  But of course the trade had to meet my exacting criteria and so it did.

To translate a little from my earlier technical entry, when trading it's important to follow the cyclicity of price - when a stock price is going up it doesn't just shoot up, it goes up and then backs down a little, then goes up again followed by another retracement.

We aim to catch the trade when the price has just retraced and is ready to bounce back up again.  But how do we know when it is about to bounce back up?  We have a number of means, but the most important is to find it bouncing off a particular line on the chart.  The best one is the 50 day moving average.  This line is automatically put onto the charting software and shows the average price for the last 50 days (with a bit of technical whizz put in which gives stronger weight to the most recent price action).  Price likes to return to this line regularly so it's a good idea to catch it when it does and make a trade. When price is going up steadily the 50 moving average runs along beneath it and the price action runs away from it (up steeply) and then whiplashes back to it before bouncing off to shoot up again.

So back to my Domino trade.  I spotted it was an uptrend, I spotted it was retracing and I spotted it about to bounce on the 50 day moving average line and hopefully spring back up rather than crash right through.  So I placed an order that would be filled if the price went up a couple of pounds from Monday's high.  And it did the next day, Tuesday.

Of course I've been checking it regularly to see what happens and now I've just come home from work and checked its progress and there's a tidy £145 sitting in my profit and loss section of my trading account. I had risked about £130 on that trade by placing a stop loss about 19 points below my entry price so that if the price went down I would be taken out of the trade at that level and take that loss - but thankfully it went the right way.

My first successful stock trade....which means Bad Assed Trader has officially been born.

No go...for now

Faceless Bureaucrat: Ah well, Bad Assed Trader has ducked out for now and killed the trade we put on as it didn't trigger.  No money lost, none gained.  We have to stick to the rules and if it doesn't trigger we let it go and move on. Too bad.  An inauspicious start.

And apologies that Bad Assed Trader got so carried away in our last blog that she showed off all her technical terms without explanation.  She is a bit of a show off, hence the bad assed bit. We'll strive to do better next time and thanks to Poobah for pointing out the error of our ways.

We're on the lookout for further trades but have had a few friends over for dinner and was preoccupied today with having fun.  Back to the grindstone tomorrow...oh, and the Forex training will hopefully get things moving a bit faster very soon.  Can't wait.

Found a Trade!

Bad Assed Trader: Finally!  Just as I was nearing the end of my tether a trade has appeared and I've placed it!  I'm going long on Senior (Aerospace and Defence sector - trending up well) daily cash rolling trade.  I'm going in at 142.8 with my stop loss at 134.2.  This means my risk is 8.6 points.  I'm staking £7.73 on each point - less than 1% of my account as it's early days.

Let's see how this goes tomorrow.  I think the trade meets my criteria, it's bouncing off the 20 day moving average and an upward trend line, the volume is over 500k and the MACD indicator is converging.  Cyclicity looks good so I'm up for it.

Will report in due course...

Is Perfection the Enemy of Good?

Faceless Bureaucrat: Well call me a perfectionist if you will but I'm not finding the trade that meets the exacting criteria I've been given.  But I'll let you in on a secret, despite having had no success as yet with the stocks I have not given up because there is Hope.  At the end of my two day course I signed up for another course - in Foreign Exchange trading, otherwise sexily known as "Forex".

Why Forex?  Well the traders who were there supporting the course told me that it's far more interesting, fast moving and lucrative than stock trading.  And because of its size - three trillion dollars a day traded - it's far more difficult to manipulate so you don't get the level of insider knowledge affecting your technically placed trades.  This makes it a more predictable market to trade.  Faceless Bureaucrat likes the sound of predictability when one is looking for trading action.  The traders tell me that Forex is ideal for intraday trading (where you get in and out of a trade in hours or even minutes - sounds exciting!) and once you've mastered the trade you really can generate an income to live off.

So although I continue to run my searches for bouncing share prices to get a good short term deal I am really now holding out hope for the Forex training turning me into that Bad Assed Trader I so yearn to be.

Meanwhile, it's touch and go as to whether FB will still be in a job post April.  Although the NHS has come off relatively lightly compared to other sectors in public service in the Spending Review our region is looking to cut management costs by about half.  Our team, which provides support to other teams who are top sliced to fund us, have been told we have to be self funding after April.  In many ways this seems eminently sensible, we know that those who we support value us as we continually evaluate their satisfaction with our service, but whether they will still feel able to pay for us once the mechanism to do so becomes more Pay-as-you-go remains to be seen.  It'll cost more to administer that's for sure...

Needle in a haystack

Faceless Bureaucrat:  Having spent an hour or so putting my checklists together I have today spent a few hours wading my way through sectors and stocks to see if anything fits the bill - or ticks the boxes (something we faceless bureaucrats just love).  It has to meet the exacting requirements I have been taught.  Now maybe I'm too fussy.  Or perhaps unable to see what's right in front of my nose, but it's like searching for a needle in a haystack this search for the elusive trade.

I found quite a few sectors that are trending quite well - I saw evidence of recent "golden crosses" where the 50 day moving average crosses up through the 200 day moving average (showing an increasingly strong uptrend) such as on Household Goods.  I saw evidence of a sector stumbling as it approached a Big Number - in this case 4000 (Media Sector).  Apparently Big Numbers have this affect quite often - it's all to do with trader psychology.

I saw that the Banking Sector trend looked pretty indifferent and really quite shady and that Construction is flat. I'm learning something about what's going on in the real world from seeing these charts it seems, which is quite interesting but not making me any money.

Having found some good sectors like Travel & Leisure, Pharmaceuticals, Mining and Automobiles, I've drilled down into the stocks themselves.  As I'm looking to go long (buy) in line with the FTSE going up I'm looking for evidence that price action has retraced (moved down) to a moving average line and is about to bounce back up.  It's important I don't get carried away, as amateurs like me do, by seeing sharp moves upwards.  The traders say "If you've seen the move, you've seen the move" - which means you've missed it.  Move on.  Don't try to chase a trade, you lose money. You have to be able to recognise the signs that the price is about to move in your direction and put the trade on before the price moves substantially - catch the move.

I'm looking to find the price hitting the 50 moving average (MA).  This is apparently the best one as price action always keeps returning to it eventually - it's like it's on a piece of elastic and can only stretch so far away from this line before springing back to it.

But each time I find price has returned to the 50 MA I find some other problem with the set up.  Maybe the trend looks like it's starting to turn with the higher highs (peaks) levelling off and even a lower low (trough) appearing.  I'm looking to go long (buy) and so I must have continually higher peaks and higher troughs as evidence of a good strong trend.

Or I find that there are what's called "roadbumps" in the way of my expected increase in price.  This might be a big number in the way and evidence that the price has reached this before only to be pinged back down - and if this has happened more than a couple of times this is called "resistance" - it's like an invisible ceiling holding the price down.  I don't want a ceiling blocking my trade from moving up in the right direction.

And finally, I've been checking an important indicator called "MACD" which shows whether the moving averages are converging or diverging and if it doesn't look similar to the pattern on the chart then that's a danger signal and I should avoid the trade. That managed to wipe out the last few promising looking trades - MACD was showing lower highs or lower lows and indicating that the trend may be tailing off.

But at least I've noted down a few stocks to watch over the next few days in the hope they will start to set up in the way I need to place a trade. 

So I'm calling it a day for now without putting on any trades.  But I've been a good girl and done my work as planned so I'm allowed that glass of Chablis as a reward.  Apparently it's important we reward ourselves not for winning trades but for following our plan.  Faceless bureaucrat likes that concept.

Looks like bad assed trader will have to wait a bit longer to come into being....

Getting started

Faceless Bureaucrat: The two day course was everything it promised to be.  I arrived having watched all the DVDs, having opened my spreadbetting account with MFGlobal and having purchased my eSignal charting software.  I was ready to rock.

I confess that I was nervous on arrival.  I had tried to psyche myself up to boost my confidence but my usual rallying cry - hey I'm a senior manager in the NHS, I can handle anything - wasn't sufficient when I opened the door to see who else was going to be on the course.  The room was packed with young men and most of them looked very business like.  Wheelers and dealers, I thought.  My heart sank a little as I felt quite out of place, being a woman of a certain age which shall as yet remain undisclosed in order to preserve the frisson of sexiness I have tried to establish with this blog.  NHS managers? Sexy?! Come off it....

Well I tried.

Anyway, fortunately I spotted another woman of about my age who I had met on the free seminar and could become a co-conspirator.  Judith is a lovely lady and as we chatted it emerged she had, in her earlier years, done a degree in maths and psychology which sounds like a perfect combination to equip one for trading (although I guess economics would come in handy too).  I did psychology for my degree and my parents both did maths degrees so I felt a camaraderie developing here.

Judith and I sat together and helped one another (she was definitely better at the maths than me) and marvelled at tutor Craig's ability to keep us engrossed throughout the two long days.

So now I am ready to trade.  However, the first step is to do the analysis of the sectors and the stocks themselves.  I need to establish whether the FTSE is up or down first.  If it's up (and it seems to be) then I should be looking to go long (buy) on stocks and I should find sectors that are clearly trending up and then look for stocks that are also going up within those sectors.  Craig told us to do this analysis and then develop a watchlist of the sectors and stocks to trade in.  He did say that he had a watchlist of his own which he could have shared but it was important we do the work ourselves and get used to doing the analysis.

So this is my work for the weekend, lots of analysis.  I have already decided that imposing some discipline on myself is required.  I need to have some checklists to complete so that I am objectively assessing these sectors and stocks and also prior to placing any trades.  This should jolly well force me to work through it properly rather than just jumping in and trading willy nilly.

Oh the joy!  Faceless bureaucrat loves devising checklists of all description.  I shall spend a few happy hours doing this before getting on with the analysis.  I also read somewhere that I should have a trading plan with rewards and punishments for either properly following my plan or rebelliously diverging from it.  That should be fun to put together too.  And perhaps then I will be ready to actually start trading....

The Dark Art of.....Discipline

Faceless Bureaucrat:  I have, in a very dedicated fashion, been working my way through these DVDs to master the dark art of trading and I confess to enjoying every minute.  It really is fascinating stuff.  I find I am learning not to invest but to trade (there's a difference) and it's actually called spreadbetting.  Now this sounds dodgy to me, I'm not a gambler and I don't like the concept of betting.  But as I work my way through the seminars on the DVDs and refer back to my notes from the free seminar it becomes clear that this spreadbetting malarky is just the tool that traders use to make their money.  And it's completely tax free (no taxes!).

They also go on a bit about leverage, the technicalities of which are, to be honest, a bit beyond me right now but I get the general gist (it seems to allow you to make money with relatively little in your account) and the important message they keep harping on about is that you never trade to risk more than 1% of your account.  This is partly because the downside of leverage is that you can also lose more. 

So with an account of £10,000 you never risk more than £100 on any one trade, or with £5,000 account the max on the table is £50.  However promising and seductive a particular trade may seem.  The word Discipline keeps recurring, apparently it is a crucial quality for traders if they are to succeed.

Now Faceless Bureaucrat perks up at this point. Discipline! Aha!  We know all about that in the public service, like keeping our mouths shut in the run up to elections when we'd love to spill the beans on why certain policies are crap and promises hollow.  We've grown good - too good - at obeying orders from the high command in recent years and forcibly disengaging our brains in order to do so.  I reckon I can handle a bit of discipline....

I learn that we must always "trade with the trend" and to determine the trend we follow the Two Year Old Rule.  This means if you ask a Two Year Old which way that line is going and they are able to say "up" then the trend is up. This beats hands down something called "analysis paralysis" where you mull over the lines for ages before coming to the same conclusion.  Sounds good to me.

And these chaps have the right attitude.  They say that the market is like a woman, always right.  And it's not our job to fight her but to learn how to make her happy.  We mustn't get paranoid if she seems to be contrary and we mustn't take it personally, it's just the way she is.  Emotions must be kept in check.  Once again Bureaucrat feels this may play to our well honed strengths - we faceless types don't do emotions. 

And another nugget from the lessons - to succeed I must make a plan and stick to it, with every single trade.   Well!  As a Faceless Bureaucrat why would I want to do anything else?  We are simply born to develop and deliver plans, it's what we do best.  Suddenly, trading seems the obvious next step in my career and I just can't wait. Another romp through these DVDs before embarking on this 2 day course imminently to properly learn to trade and to Do Discipline.  Big time.

On learning to Think Differently About Money

Faceless bureaucrat: Having immersed myself in these rather impressive DVDs on trading given to me a the free seminar I understand that I must first of all learn to Think Differently About Money.  Particularly this popular concept that to earn more money we have to work longer hours or work harder.  In trading it seems the opposite can apply, which sounds mighty attractive to the likes of me.  I may be a bureaucrat but I like my play time.

From what I can grasp the obstacle for many new traders, particularly those trading their own account like me, is that they find it very difficult to lose money (no!). So when they inevitably do lose a trade this changes their approach to trading preventing them operating consistently and objectively which is vital for successful trading.

I start to see the message, you have to lose some money to be in the game, so to speak.  It's like your stake on the table.  I think I will try to look at it as one trader suggested to me - an investment in my trading education.  Each time I lose a trade - and I am told I will most definitely lose trades, however fantastic I might be - I must explain it to myself as a learning opportunity, to reflect on how I may improve my trading or just to reflect on the randomness that is trading.

Craig - our tutor at the seminar - had confessed, rather charmingly I felt, that even he has "draw down" months occasionally.  I wasn't sure whether I should feel comforted or alarmed by this so I suspended all feeling at that point and just marvelled at his steely nerve.  This is something I need to work on as we faceless bureaucrats are not known for our steely nerves, it is why we are faceless.

So I am now working on this different approach to money.  Part of the understanding is going back to our childhood and the things we were told about money in order to relearn our attitude.

One trader at the seminar told me that his Mum had repeatedly told him "I'm not made of money" so when it came to choosing a career he decided to find whatever was made of money and stick to it.  Someone introduced him to the Foreign Exchange (or Forex for the sexy name), he realised that here was something made of money and has never looked back.  He says he now fishes money out of this pool of 3 trillion (or so) dollars for a living.  I am so tempted.

It all feels rather exciting and I rather warm to this concept that to trade we have to understand ourselves better, this could be a personal growth opportunity for me.  I'm up for personal growth as long as it doesn't involve elasticated waistbands.

 The NHS hasn't offered much by way of personal growth recently, in fact it's felt more like personal decay, particularly since about 2002/03 when obeying orders from on high really became the name of the game.  I'm still waiting for this to change - anyone out there in NHS land who has found the turning point yet?  I live in hope.

And the latest on my own possible redundancy/MARS opportunity.... I have reread the small print on MARS and found a horrible clause which has rendered it worse than useless for me.  The ear I have pinned to the ground tells me that this is common amongst my faceless peers and that no-one is very interested in taking to MARS. Word is that they're telling their managers "You can stick Mars up Uranus". A spirited response I think.

But I rather like my manger who is from The North and has a great sense of humour so I just smile and shake my head at the Severance Payment option when it comes up in our mandatory one to one meeting To Discuss The Implications of The White Paper (diktat said it must be had by the end of Sept and we have all been "performance managed" on this important task).

Redundancy could instead loom but the latest for our team is a temporary reprieve.  This is down to the fantastic political skills of She From The North.  She has done fancy footwork with various managers more powerful than we which may or may not have involved intimate contact.

We now definitely have until April and may even go on a bit longer depending on how much pressure is put down from On High.  Oh the joys of one's livelihood being at the whim of the politicos. This does now involve Thinking Differently About Money but perhaps not in the way I really need to right now.  That sort of carefree way in which seeing your balance diminish does not phase you.

But still, I have seized control of my future and am nailing my colours firmly to the trading mast and at least I know I have another 6 months of work and income during which to learn my new skill.

Better get back to those DVDs.....

Can NHS managers cut the mustard...and trade?

Faceless Bureaucrat:  I get pretty naffed off with the press we get as NHS managers.  People seem to labour under the impression that we are robotic half-wits without independence of thought who are capable only of following rules and covering our backs.

So it came as something of a surprise to me to learn at the free seminar that to be a successful trader one must do exactly the same tasks in a repetitive - some might say robotic - way, trade only what one sees ("not what one thinks"), follow rules diligently and always cover one's back...or manage risk as they prefer to call it.

So here I am, having spent 20 years creatively solving complex problems involving multiple vested interest stakeholders to meet pigging government targets, often risking my career to actually get things moving...

But if I am to survive in the wild world of trading I must now reclaim the caution I threw to the wind and get back inside the box.  Sharpish.

Apparently trading is 80% psychology and 20% technical skill.  I am relieved to hear this as am rather worried about the technical side which involves lines on charts and long numbers but think that years of dodging and diving in the NHS will have my psychology well honed.  But is it honed to the right shape for trading?  I like to think so but on reflection feel that the traders at the seminar have already got the better of me as despite having promised myself I would commit to nothing at this seminar I left with a pack of DVDs and a weekend booking for a two day intensive course in trading stocks and shares.  Fully paid & committed, because they offered a nice discount if we signed on the dotted line right there and then.

What was I saying earlier about half-wits?

I now fluctuate between thinking I've been duped and being madly excited to learn more because, quite frankly, the free seminar was brilliant.  My conclusion is - I need help.  I know nothing of this but I want to make it happen.  I can't do it alone, so in my well honed NHS manager way, I call on the professionals to advise and guide. And actually, these guys seem really professional.  Let's hope I'm right.

A Breathless Entry....

Faceless Bureaucrat: Am still recovering my breath after being taken on a journey of discovery by a fit young Australian chap called Craig. About half my age but hey, even Faceless Bureaucrats can appreciate a man who knows his bulls from his bears. And the leverage...well I never...

Suffice to say, I do now understand that bull markets are when things are looking up and bear markets are the opposite. And traders apparently say "When bulls go up the stairs, the bears jump out of the window".  I make a mental note to wait until after the bears and take a soft landing.  But this little ditty tells you more than that bull markets go up and bear markets down, it also tells you that when the market goes up it generally goes up in relatively slow stages like steps but when it drops it really goes - or "tanks" the traders like to say. So actually you can make money a lot faster in a bear market.

And apparently you can make money from prices going down which seems odd, particularly since you don't actually own the thing that's going down in value, you just borrow it from some obliging chap and sell it whilst he's not looking.  Then when the price goes down you buy it back more cheaply and slip it back to the chap before he's noticed.  I thought these trading guys were all sharp as Katie Price's nails but clearly some of them are not paying attention.

I learnt so much on my free seminar and am anxious to share more but as the NHS is, at present, still requiring my services I am back on duty to put in the hours I took off for that long and eventful lunch break.

How much can I afford to lose?

Faceless Bureaucrat:  A word of advice from my Uncle when I share my plans: "Never trade more than you can afford to lose".  Apparently this is Rule #1 of Trading.  I'm not really completely sure what that means - I can't afford to lose any money....who can??! Does that mean I can't trade?  I think about this long and hard, as we Faceless Bureaucrats are prone to do.  And then I resolve to Start Small.  If I'm crap then I won't lose much and can put it down to experience.  But I don't like the concept of losing, or the horror of seeing money that could usefully be deployed securing shoes or nice dinners out just disappearing into the ether that is The Market.  I hope the free seminar I'll be attending shortly will provide more reassurance about this whole issue...

First Step: Find out what it's all about

Faceless Bureaucrat: To say I know nothing about trading is an overstatement.  It's got something to do with markets and stocks and shares I believe.  I understand they label things with animal names but haven't a clue why...bulls....bears....what's that got to do with the price of bread?  I have to find out more before I do anything with my little pot of gold.  Faceless bureaucrats like me don't step out into the unknown without a spot of training so I google training in stocks and shares and book myself onto a free 2 hour seminar run by one of the many companies offering such things.  This one's soon and its local and they look ok.  I promise myself I won't make any rash decisions or spend any money....

Rain Check Before Starting - am I Anti Risk?

Faceless Bureaucrat:  As a Faceless Bureaucrat I gravitate towards the safe options.  Being in the NHS (National Health Service for readers outside the UK) I've had over 20 years of being contained and institutionalised. Any move made to improve health care goes through numerous layers of hierarchy, at least one of which is likely to take issue with the idea - even if it's on the notion that this means change which equals risk. And we don't do risk.

So why do I think there may be Bad Assed Trader potential within me? Because I feel frustration from that containment.  It's not that I want to take risks heedlessly but I'm prepared to manage them.  I'd like to reclaim my sense of personal responsibility.

If you're anti risk then I'm not the girl for you.  Read no further.  But if you have a bit more ooomph, like to make things happen, then maybe you'd like to sit alongside me on this journey. Because it is going to happen.

The Beginning

Faceless Bureaucrat: So what do you plan to do with your redundancy, sorry, MARS cheque? Fantasising about the holidays/new car/new consultancy business?  Or just early retirement? And your lump sum will earn what percentage interest rate exactly as it gently ebbs away?

Yes, I thought so...but we're NHS managers, we don't think about stuff like that do we? We picked a career to Make a Difference and if it happened to have great job security and actually a pretty good salary, well that was just an added bonus wasn't it? But money isn't what motivates us.  We are the Pure Ones - even though everyone else sees us as low life on a par with estate agents and traffic wardens.

But now the Big Wide World beckons.  Put down that comfort blanket and get real.  You're on your own now.  Prepare to enter the Waste Land that once was the Private Sector or think of something better.

Yep, that's exactly what I thought.  What is there that's better?  And that's when I came across the notion of Trading......