This week I have learnt the truth of a number of well known aphorisms: pride cometh before a fall, no plan survives first contact with the enemy, a fool and his money are easily parted.
Excuse aside, all is fair in day trading and war
This week I have learnt the truth of a number of well known aphorisms: pride cometh before a fall, no plan survives first contact with the enemy, a fool and his money are easily parted ... I could go on, but you can probably already see where this is going. Last week I announced hubristically that I had identified a surefire system for beating the stock market. Snappily, I named it TEPECCLC - and that was the short version; I shan't bore you by spelling it out again now.
Suffice to say that I vowed to watch my portfolio, daily, like a sharp-eyed, hungry hawk, swooping each time any one of my dozen or so stocks even so much as flickered in a downwards direction, selling it and injecting the proceeds into any that were on the rise. The success of such a scheme, I wrote, relied on "a complete and ruthless absence of sentimentality and a determined vigilance throughout the FTSE trading day". Determined vigilance? Who on earth did I think I was kidding?
First, the excuses. Much of the potential for success in day trading lies hidden in the twin twilight zones, the half-hour or so just after trading commences and just before it stops for the day. This isn't the neighbourhood where real investors are found. These are the poorly lit back alleys where the day-trader tramps loiter, kicking cans and hoping to panhandle something shiny in the trash. They are rewarded by the occasional odd twitch in prices, up or down, that can be exploited to good old-fashioned, opportunistic short-termist effect.
Part of my problem is that the London Stock Exchange, on which I trade my imaginary portfolio, operates between 8.30am and 4pm, which out here, at this time of year, means between 11.30am and 7pm. Back in the UK, a day trader can wake up, slip into his silk dressing gown and bowler (still regulation headgear, even for virtual commuters to the Square Mile), make some Earl Grey tea, step outside and shoot a brace of pheasants, listen to the Today programme, write a brief letter of complaint to the editor of the Daily Telegraph about the cost of shotgun cartridges (as much as £7.25, or Dh41.4, for 25 - criminal) and peruse the Financial Times before logging on to his Share Centre account and taking a calm, relaxed view of developments.
Out here, by the time the opening bell sounds the would-be FTSE-trading gladiator is already hours into his day, having either diced with death on the Mad Max Beyond Thunderdome highway or been driven to distraction in the ever-morphing maze of roadworks that used to be downtown Abu Dhabi, but now often resembles the CGI set of Inception. Relaxed, he is not, and by the time 11.30am creeps around some idiot is bound to have called a meeting and, before you know it, the sweet spot has soured and the trading day is half over. And at about the time the market is winding up, he is back on the road, being wound up by all and sundry.
All this, of course, is compounded by Sunday being part of the weekend in the UK, and Friday - a working day in FTSE-land - being a day of rest here. In short, the trading window is a small one and, frankly, it's very easy to forget to squeeze through it. Which is exactly what I did. The pragmatic Prussian generalfeldmarschall and military tactician Helmuth von Moltke, victor of the Austro-Prussian and Franco-Prussian wars, enabler of modern Germany and populariser of the pointy-tipped pickelgruber helmet, managed to live through all but nine years of the turbulent 19th century by never forgetting a simple principle: a brilliant plan poorly executed will always fare worse than a mediocre plan adhered to diligently.
Wise words, mein general. Last week, my portfolio had swollen to almost embarrassing proportions. I have had some ups and downs since I began fantasy trading on June 20 (well, mainly downs, to be honest), but last week fortune smiled on me and showered my account with nothing but little blue "up" arrows. The bottom line was that my initial £15,000 had, somehow, suddenly become £15,616.75. Fired by this success - and temporarily blinding myself to the fact that I owed it all to dumb luck, rather than the exercise of personal skill and judgment - I proclaimed myself a genius and announced that, "with a bit more effort and an aggressive strategy", I could easily push the value of the portfolio to £16,000.
I didn't, fortunately, say exactly when I would be pulling off this trick, but clearly it won't be this week. One day after the other, the effort I had fully intended to invest in the project seemed to find its way into other things. On Friday, for instance, I forsook close-of-play trading for a last-minute invitation to try out the "business class" experience at the new Reel Cinema in Dubai Marina Mall (it was, since you ask, very nice and comfortable, though the sudden rush of pre-ordered iftar goodie bags just before 7pm was a little disconcerting and, with a plot as fragile of that of Inception, hopelessly disruptive).
Before I knew it, an entire trading week had passed and I had not so much as logged on to my account. But when I finally did ... oh dear. Somehow, far from blossoming to £16,000, my £15,616 had withered to £14,932 - a loss of 4.38 per cent. Far too late, I wheeled out the grand plan, selling the two currently "red-arrowed" stocks - Standard Chartered and Royal Dutch Shell, both down just 1 per cent. The cash I made - £1,922.15 - I ploughed into the healthiest performer on my board; Old Mutual, which was up 8 per cent.
By the time the dust had settled, and the various trading charges had been deducted, I was left with seven stocks worth £14,917.94 - which, minus negative cash equity of £-3.53, amounted to a sorry total of £14,914.41. Clearly, my portfolio had been on a wild rollercoaster ride behind my back. In between thrashing the Austrians and the French, Von Moltke found time to coin another adage: that no plan of battle survives contact with the enemy.
It is true. I am my own worst enemy and my cunning plan failed to survive contact with me. How jolly lucky that this is not real money. Or war. firstname.lastname@example.org