The third and final traders university mentor session

The third and final traders university mentor session

Last week I had my final session with the mentor from the TU. We looked at some of the trades I have been placing and tidied up some of the strategy I had been using. I am pretty pleased with my day to day trading and seemed to be doing all the right things.

I had had a good day, and at the time was trading at about 10% of my capital in profits for the month. This is on target. We started to discuss trading with the FOREX (foreign exchange) as now I had the FTSE 350 day trading down, it might be time to look at faster intra day trading.

We covered a package he uses called Metatrader 4. I have since downloaded this and it is a free charting package amongst other things for a few of the major currencies only. If you are a FOREX trader, I would definitely recommend a look.

The session went well and I am petty pleased I have got to the stage I have in about a month and a half.

I wrote a review of the TU and sent it to them to help with feedback. I am happy to say I would definitely recommend the course to someone wanting to learn spread betting.

 

The first ‘one to one’ session with my mentor from Traders University

The first ‘one to one’ session with my mentor from Traders University

I was eagerly looking forward to my first session with my mentor from the TU course that I attended. I have been trading for 3 weeks but have had little success and was beginning to wonder whether the strategy was up to much. However, after my first session with one of the TU mentors, I am back to being very enthusiastic.

He showed me there were quite a few things I have not been doing correctly or thoroughly enough. I do have a tendency to assume that I know best and go off and do my own thing. In this case this was probably not the best thing.

The main points I have not been following are:

Keep my entry points close to the close of the last day so I can get into the trade at the first possible moment. I  was using the ATR(10) to place my entry points away from the last days close. This is not correct. The strategy details placing your stop roughly the ATR(10) away.

Note: (ATR(10) is the average movement of the stock over the last 10 days).

I have altered my orders that are ready to be placed for this weekend accordingly.

Also, I have not been analysing the trend lines and resistance / support lines in accordance with the their strategy. This means most of my trades that have been entered, have not really been up to much as there was less movement to be gained in the trend.

I have some homework to do now which is to analyse 3 trending sectors and pick 3 trending stocks and find all the power plays and pivot plays over the last 2 years for each one. I need to record the number of points each one would have made or lost according to the strategy. This should give me enough experience to quickly identify the entry points and also gauge how much I could win or lose by them. Basically, it will allow me to learn the patterns.

Also my mentor recommended a book by Thomas Myers called ‘A course in Technical Analysis. I will get this and let you know if it is any good.

He also answered some of my questions about calculating the dealer’s spread into your stop and limit positions. The difference in the spread should be negligible compared to the amount won and therefore don’t add the spread difference to your stop loss. This is another good correction for me to make in future.

All in all, I was very impressed with the information from the mentor and he did spend about 50 minutes with me instead of the 30 minutes allocated.
We might even have some business in common between his company and my own, so I am looking forward to see if his company may become a client of ours. (I’ll let you know if anything comes of it)
So, it is still thumbs up for the trader university course so far!

Sorry if this post has been quite technical, but this is a journey to riches and it seems that for this aspect of the journey being technical is called for.

 

Traders University Course on spread betting the FTSE 350

This weekend just gone, I attended the two day Trader’s University course (www.knowledgetoaction.co.uk). (See previous posts)

I stayed over in a hotel called Jury’s Inn in Chelsea, which is only two minutes walk from the seminar and got a good room. I’m not very good with mornings so I wanted to make sure I could get up as late as possible but still get there on time.

I arrived early and booked in. The room was great but the food was awful!

The course started the next morning and about 40 people attended. There was plenty of room and two massive screens to see what was going on. I sat down the front as I had forgotten my glasses, but wouldn’t have needed them anyway.

The presenter (Sandra) was excellent and gave the whole day an uplifting tone. She had just the right amount of humour to make you laugh but not to getting the way of her seminar and getting the information across. There were three other trader coaches there who helped with the exercises etc. and also Kelly who helped with the admin and bookings etc.

There was a lot of information to take onboard, and we each got a very thick manual of all the slides through the weekend.

As detailed in my last post, I changed my spread betting broker to igindex. (www.igindex.co.uk)

The course started by explaining what spread betting is and the differences between spread betting and contracts for difference (CFDs) and trading in stocks.

During the next two days we worked our way through the thick manual covering these topics:

·         Patterns in stock charts such as ascending triangles, flags and channels; these fall into two categories, converging patterns and pivot patterns.

·         Moving Averages

·         Indicators. We covered MACD, RSI, Stochastic.

·         Volume

·         Risk and reward

·         Power Play strategy or pivot strategy

For each topic we did a practical exercise to identify or work out the topic on charts printed in the manual.

The information covered was not complicated but there was a lot of it.

We also covered placing a trade and setting up sharescope. Traders University provide some filters and configuration files to load into sharescope so that you have all the necessary indicators etc in your setup that are used on the course.

After completing the course, I was looking forward to getting started.

I transferred £2K into my igindex account to get me started. The estimated return on investment for trading purely following their rules is estimated to be between 6-10% per month, which at 6% would double your initial capital in one year.

A lot of the trades do seem to make quite a small amount of money and at that rate of return I would need at least £30K in my account to be financially free just from spread betting. It would take me 4 years to achieve this with an initial pot of £2k.

The golden rules in spread betting are as follows:

• Dont ever trade without a stop loss
• Dont risk more than 1% of your capital in any one trade
• Weight up the reward : risk ratio and make sure it is at least 3:1

I have three skype calls that last 30 minutes for one to one mentoring to come, and so hopefully that will be very useful too.

The traders university offers more one to one training, time on their trading floor and also training in intra day trading and FOREX trading. This can make a lot more money. Their courses are very expensive, with the top option costing nearly £15K.

The reason they start you off on the FTSE 350 only and only trade out of hours is to learn the process in a slower moving market. Once you have the basics they then teach on faster markets.

I have decided that if I can get their system to work, and it s really good, I will invest the money I make into the next part of their course, however, if I cant get this part to work, then I wont go back to them.

So in conclusion, I would at this point recommend the course to anyone wanting to learn spread betting. I cant guarantee the system works yet and as I have only placed a couple of trades, but I will talk about that in a future post and let you know how it goes and if I make any money.

 

Getting the right broker

A new broker

Before attending the course last weekend at the traders university, I tried to register with the recommended broker, Echelon in Glasgow. I had not really shopped around as I thought that it might be a detriment to my learning on the course if I chose a different broker than everyone else.

I started the process of opening the account and sent my details to Echelon. They opened a web based trading platform account for me so that I could see what it was like before I had been accepted.

The web platform was a bit clunky and being a web developer I could see it was pretty basic. After a week, I tried to contact Echelon to see how the account opening was going. I was asked to ring back 3 times. I was getting a bit nervous about having given them all of my passport details and private account details which they insist on having before opening an account.

I finally got through to Michael Cohen, who was extremely rude to me. He practically hung up on me after telling me I would just have to wait until they were ready to open my account.

After being a bit peeved at this, I wrote to Michael and told him to close the process and destroy my details as I will not deal with rude people. I can’t imagine trusting them with my money.

I shopped around and found there are actually hundreds of brokers for spread betting and I chose igindex.co.uk. They are the market leaders and the difference to Echelon is incredible. The service is very friendly and I applied online through their website and needed to give no details like passport information.

My account was open and ready to trade in under 3 minutes. I have found out they offer better spreads than echelon as well.

The interface is great and instead of having to enter up to four separate orders to place a bet, stop, limit and entry point, like in Echelon, you can do it all in one screen. This is much better and much less likely to be error prone.

The charting that comes with igindex is almost as good as sharescope as is obviously web based for those times when you are not at home.

I would definitely recommend them.

 

Getting ready for my trading course

Getting ready for my course

I have opened my welcome pack for the course next weekend on stock market trading with the ‘trader’s university’ in Fulham. The welcome pack is a CD with instructions as to what you need to do to get ready for the course.

The 3 things are:

·         Buy the GOLD version of sharescope and set it up with their settings

·         Open a spread betting account with a broker in Glasgow called Echelon

·         Create a SKYPE account so that you can receive conference calls and support after the course

I have done all of these things. I was very cautious about giving my details to this unknown firm in Glasgow. I have checked out their company on the web and cant find anything bad about them. I also did a lot more research on the trading course and also can only find very good things about them. So I trusted my details to the brokers.

Sharescope looks a lot better than the charting tools given by Barclays and I would recommend this over any information given by them. Sharescope is not an execution tool, just a charting and data package for research.

SKYPE looks amazing and I am already thinking of using it for all my business to cut down on BT calls. I have bought a SKYPE phone that does not need a computer.

 

A Place in the Sun Exhibition - what I learnt

A place in the sun exhibition

Yesterday, my wife and i went to the ‘A place in the sun’ exhibition at the Excel exhibition centre in the Docklands, London. We arrived early as we wanted to go to all of the seminars about investing in property.

How to build an investment portfolio

The first one began at 10.30 and was entitled ‘How to build an investment portfolio’ and was given by Mark Bishop from ‘A place in the sun’ magazine. Mark built up his own portfolio of 8 properties in different parts of the world. His talk was excellent.

He started by giving the advice that to build a portfolio, just like any business, needs a plan. He identified four types of investor:

1.       Someone looking for a lump sum or cash flow for retirement

2.       Someone who has retired looking to maximise the return on their money

3.       High roller, with lots of money looking for future generation wealth

4.       A couple with a small sum looking to gain maximum growth of their spare income

He defined three variables in each person’s plan. These are:

1.       Looking for cash flow or income

2.       Looking for capital growth

3.       Time

When making the plan, he advised knowing exactly what type of investor you are, do you want income, do you want capital growth, or a mixture of the two? What time frame do you hope to achieve this in?

He then talks about what assets do you have already, what are the raw materials you have to invest, these are things like:

·         Lump sums of cash

·         Equity in property

·         What is your mortgagability? This is a word I think he has trademarked.

·         What is your ability to service the debt, i.e. can you pay the mortgage back?

·         Spare time

·         Experience or skills

·         Appetite for risk

He then talked about the different techniques of fundamentally analysing a property, its location and the country to see if it is worth investing in. He talked about what yields were and how to work them out and also the different ways of investing in property such as:

·         Borrowing, or using leverage to maximise return on investment

·         Flipping, or putting a deposit on an un-built property and then selling it before it is complete for a higher price.

·         Lease backs, which is a French idea, where the government tie you in for a long period of time and give you a small return each year. This essentially pays for the mortgage but doesn’t give you an income. The idea is that it is very safe and when the tie in period is over, you have a property in France that you have got for potentially very little.

This is a very socialist idea from my point of view, and fits in with Alan Greenspan’s comments about some of Europe, especially France having very strong identity values that are more important to the French than the economy.

·         Contrarian buying, which I won’t talk about here.

·         Self financing

·         Off-plan buying, which basically means buying from the developer from the plan of the property before it is built.

He then discussed legal situations and what are the rights of the landlord or potential buyer and gave some very good tips regarding looking around the properties and how to deal with agents.

The talk lasted the full hour and so we had no break when the next speaker came on.

How to finance your investment property abroad

The next speaker was Nigel Lewis, again from the magazine. He is a journalist and has written for Daily Mail. (Although, this is nothing to be proud of in my opinion.)

His talk was very honest, and was an account of how he and his wife financed their property abroad. He talked about the different thought processes they went through, some of the mistakes they made and how he would have done it differently.

I won’t go too deeply into his story as he had different goals than I do. He wanted to be able to holiday in his property and that was a key part of his decision making process when buying somewhere. This is not one of my goals. If I want to go on holiday, I want to just go somewhere I feel like going and not to the same place over and over. My investment is purely for investment.

Nigel’s plan was to borrow a small amount of equity from his own house to raise a deposit for a mortgage on an investment in France. He chose to get a mortgage in France as the rates are much lower than here. He chose to buy a French lease back which guarantees his return at 4% index linked for 9 years with the option to extend for another 9 years after this.

He will not see any return on the property until the property finishes the 18 years of mortgage repayments and he either sells the property or rents it out himself.

One of the problems that he found was that dealing with a French bank, they refused to deal with him in English and he had to sign a French contract. This is another indication of the French culture being more important to the French than business.

This type of agreement does not seem to be in line with my own beliefs or expectations of return. I also would not like to be tied into an agreement for such a long time. So although very interesting, I will look for another solution for my investment plan.

What to look for when making a property investment

The third speaker was again Mark Bishop, this time the topic of the seminar was ‘What to look for when making a property investment’.

Mark started off by giving the advice that before you can make the choices you need to know what your goals are. He recommends writing a business plan with a list of the desired outomes, what timescales these will be achieved and what resources you have to achieve them.

He talked about making a shopping list of the what you might want in your portfolio, how many properties, when you would buy them, where and for how much.

Then you can work out what income these would generate or what capital growth you might make.

He defined 10 triggers or points to go by, these are:

1.       Other people money
How little of my own money must I tie up, make sure you leverage other people’s money. By making use of borrowing you can by more property and make money on capital gains. He also discussed flipping (An idea that R. Kiyosaki hates).

2.       Net Yield
This is the rental income less deductions as a percentage of purchase price. Also whether this is actual (based upon past history), projected (based upon other properties in the area), or guaranteed by a developer.

3.       Mortgagability
How much can I borrow, at what rate, fixed, variable or capped.

4.       Money in verses money out
Making sure you take into account void periods (un-rented time). What is the difference between mortgage payments and net yield?
Make sure you perform monthly cash flow projections

5.       Short term capital appreciation
Is the fundamental value of the property below the market value or can you get it to be? Is the market in a low cycle? How is the currency performing?

6.       Long term appreciation
Look at trends (demand, yield increases), political, transportation or other events

7.       The Tax regime
Do you buy in your own name? Make sure the country has a double taxation treaty with the UK. Buying through a company or a trust. Which country to register the business, which country to borrow money? Make sure you get independent advice. (See later speaker)

8.       You Rights
Legal comeback if a property from a developer is late. Rights as a landlord. How well protected is the property title.

9.       Due Diligence
Test every assumption and every claim. Does the developer own the land, does the seller own the property? Does the brochure match the property you are buying? Is the beach really 2 minutes walk? Who is guaranteeing the income for guaranteed rentals.

10.   An easy life
Good documentation and good sellers go together. Bad contracts, probably bad people. Spread risk. Multiple complexes in one development to save on costs. Choose good advisors. Make income and debt in same currency.

All in all, another excellent seminar by Mark.

 

One of the most interesting things actually came after the seminar when I asked Mark about how he had built up his portfolio and he had come to the same conclusion as me, in that he would buy say 3 properties and put all of the rental income into paying off the mortgage on one of the properties, then buy another one, and put that into the mortgage. Very quickly you can pay for a house outright and then the income on that house is large. You then use that to pay off another one, and with those two get the next.

It is all about getting as many properties as possible and using the income to grow your portfolio to a size you are happy with. Then once the houses are all paid off, you have a large income cash flow.

 

 

Making your investment pay for itself through rentals

 

The next seminar was given by Ross Elder from Holiday Lettings.

Ross talked about what you can do to make your rental property stand out from the crowd. His company is a web based advertising company that advertises holiday properties to holidaymakers on behalf of the owners.

He talked about making sure you have good photos, neutral colour walls, and decent furniture. He talked about making sure that you do not get too personal with your investment.

 

He talked about making sure you understand the season and therefore how many rentals you are likely to get. He said that the season is NOT defined by the weather, but by the airlines that fly people to your location.

Watch out for changes in flight paths that stop people coming to your locations.

For 52 week coverage you could look at Euro breaks or the Canary Islands.

 

He said in most locations, it was common to have 90% occupancy in peak months, 40 – 70% in the shoulder months either side.

 

He said to watch for letting longer than 3 months; otherwise in some countries the renter may gain tenancy rights.

 

Do people need to hire a car? This money will come out of the budget for their holiday and therefore won’t go on the rent.

 

Check for the demographic of the area. Don’t buy a one bedroom apartment next to Disney. Most people will have children. What are the main attractions? Does the area have mass appeal?

 

Look for unique selling points.

 

He talked about making sure the cleaning is done correctly; maybe leave a welcome present such as a cheap bottle of champagne. He also said that is an agent is letting it, make sure you get the money. Call the property and if someone answers, make sure you have money for that week.

Don’t forget to include things like liability insurance into the cost. Leave an emergency number in the property with an information pack about the local area and different language peaking doctors locations.

 

His talk was very informative and I will definitely take some tips from him when I do buy a place to rent. His website apparently generates an average of 40 leads per advert. Not all leads generate a sale of course.

 

After this time I must admit I was getting a little hungry. These seminars were back to back and I was a little tired so I went to get some lunch. As a result I unfortunately missed the first half of Jonty Crossick’s talk on ‘Measuring risk and making returns’.

 

Measuring risk and making returns

 

Jonty talked about the different locations around the world and in particular the risk of currency fluctuations in the market. His company find good deals all over the world and advertise them to investors. They make a fixed fee if you buy the property.

I received an email from them after enquiring about a property in Brazil for only £15K.

 

The next seminar was by John Howell from The International Law partnership.

 

Protecting your investment

 

I found John to be a little cynical and dry but had some excellent advice. I will almost certainly use their services if I buy abroad. He is exactly what you need in a lawyer!

His company has a UK office but has offices with local solicitors in many other countries. They specialise in nothing else but property bought abroad.

 

His key message was ‘Protecting your investment starts before you buy!”

 

He had ten points which he went through as part of his seminar, these were:

 

Before you buy

1.       Understand Risk and Reward

2.       Understand the Maths and the effect of borrowing

3.       Understand the effect of Tax in the UK and elsewhere

4.       Decide on your investment strategy

5.       Do your research

When you buy

6.       Don’t buy rubbish

7.       Put the property in the right name

8.       Always use an independent lawyer

After you buy

9.       Understand how to get good management

10.   Understand when to sell and how to get a good price

After the talk I collected a few leaflets for later reading. I wanted to find out about foreign mortgages, so I got some information from a Spanish bank with a branch here in the UK I specifically asked them if they dealt in English and unlike the French the do.

I got some more details of some accountants who might be able to help me trade through the business rather than as an individual.

I got a really good book called ‘How to be a successful property investor’ by Alise and Jonty Crossick from Ready2Invest. This looks like an amazing find and I am looking forward to reading it.

I will of course write my comments here when I get round to it.

I got quite a few estate agents brochures advertising properties around the world and of course the ‘Place in the Sun’ magazine.

I think the exhibition was well worth going to and that my knowledge as an investor has increased significantly.

 

Introductory 2-3 hour seminar on stock trading

Introductory 2-3 hour seminar on stock trading

As detailed in my post of April 19^th, I went today to the free seminar held by the company Knowledge To Action (http://www.knowledgetoaction.co.uk/). The seminar was held in the Bloomsbury Hotel in Holborn

The seminar was very good and the lady who ran the course was well versed in NLP and gave an excellent talk. Despite some very stupid questions and comments from members of the audience (hopefully they won’t be there on the course)

The talker (I did not catch her name as I arrived 20 minutes late), ran through the decision making process of deciding to buy a stock, the lifecycle of owning that stock and then selling it again.

She talked about how to protect your position and only have the risk of losing up to 1% of your capital.

She ran through a specific strategy that they teach on the course at a high level. I learnt a lot and realized my silver ‘investment’ really was an amateur thing to do.

I decided to enroll on the course as they were offering £1000 off to participate in a marketing project where an expert looks over your trading figures for six months and publishes anonymously how well you have done as a beginner.

I am assuming they will want me to do well so it seems like a good move. With the joining fee of £1999, I will get the two days on their trading floor, with expert help. You are grouped into groups of five, with people in your group living near to where you live. This way hopefully I meet someone who has similar goals who I can bounce ideas off.

The course runs on a Saturday and Sunday and the idea is that by Sunday you will know what stocks to buy and you go home on Sunday and place your first orders.

After the two day course, your mentor will call you on Skype on the Wednesday and see how things are going and have an hour chat. Then every week on Wednesday for an hour, a conference call is set up so that the group can receive weekly updates about the current market situation, ask questions and discuss what is going on. This is offered for six months after the course.

During this time, a professional trader will answer questions by email.

It is easy to be cynical about these things, but all of the books I have read so far, say you need a mentor and I feel like I need some instruction on this so I signed up.

The course in on the 17^th and 18^th May. I will write here about my experience and what I learnt.

Their main strategy is day trading and momentum trading. This means going with the market and trends and trading on a daily basis for one hour a night.

You always trade once the market is closed and look at the day’s activities, indicators and prices. The average life time of a trade is between 3 and 7 days. They focus on spread betting with stop losses in place to keep the risk to only 1% of your investment.

 

Different types of stock analysis

Different types of stock market analysis

I have learnt that there are two different types of stock market analysis. These are:

1.       Fundamental analysis and

2.       Technical analysis

Fundamental analysis looks at the details of a specific company; these are things such as; who the directors are, what market the company operates in, what the chairmen statements are and other highly specific things about the company.
By analysing a company, it’s history, current status, reviewing it’s income and balance sheets, it is possible to derive some expectations of the future and therefore predict which direction the company’s share price may go.

Technical analysis, on the hand, is about looking at the company’s stock value only over a period of time on a chart. By comparing the stock price against it’s moving average and other calculated chart lines, it is possible to see trends and patterns in the stock which help to predict the future value. The theory behind technical analysis is that the price at any given moment in time, is the sum total of all the investors’ knowledge that have bought or sold the shares, which is likely to be more accurate than one persons predictions.
As all the investors are subject to human nature, especially desire for more and fear of loss, the charts show predictable patterns.

I know more about technical analysis at present as I have finished two books by Clif Droke, ‘Moving Averages’ and ‘Technical Analysis’. These are both very good books, and I would recommend anyone interested in stock market analysis reading both of them.

Next steps

I intend to read up more on fundamental analysis to complete the picture. Heather, my wife, also found a very good course on stock market analysis which covers both technical and fundamental analysis. There is a three hour free introduction seminar which I am going to go to. The course itself is £3K + VAT. It is also recommended that you need at least £2K to invest to make it worthwhile.

I need to complete more of my plan before I am ready to commit any money yet. I am looking to gain as much advice as possible and put together my master plan. However I am going to go to the free seminar and if it looks really good, I might sign up.

The course can be found at: http://www.knowledgetoaction.co.uk/

If anyone has been on this course, please let me know what you thought of it. Thanks

 

Investment property abroad

After a quick search on the web I have found an exhibition called ‘A place in the sun’ (http://www.aplaceinthesunlive.com/) that is on at the Excel centre next weekend.

The seminars include:

How to build an investment portfolio
How to finance your investment property abroad
What to look for when making an investment
Making your investment pay for itself through rentals
Measuring risk and making returns
Protecting your investment

This seems like a perfect start. There are also articles for download about buying property abroad for investment which I shall read.

I’ll write here again with more info when I find out more.