My trading journey

My Trading Journey-Early Years-Futures & Options

My last post finished as I was ending university. This post covers my trading journey through the early years in full time work, whilst at the same time trying to gain experience (and profits) as a trader.

My first job was working for Reuters writing financial software. This was an amazing opportunity as I could learn about the markets and earn a living. I also had a live Reuters terminal on my desk which gave me access to a vast wealth of information and data. The constant updates of whatever I was watching on a given day did prove to be a big distraction from my day job though.

During these first 3 years at work I dabbled with trading Futures and Options. Spread betting and CFD trading did not really exist then so my choices of broker were incredibly limited. Neither had the internet really taken off so researching them was much harder.

I have created a new brokers page to help you understand the different types of broker and the considerations you need to make before choosing one.

The first futures contract I opened was going long on the 10 Year T-Note. It was a terrible trade and closed at a loss. The money management was wrong, position size was very wrong (but still the lowest I could do) and the timing was wrong. That was my first and still last time I have ever traded a full futures contract. Trading AtoZ shall be covering those 3 key aspects of trading with the experience I learnt then and subsequently.

My next major foray was with options, which at the time I thought were less risky. I bought a put option on Orange (an old telecoms provider). If you recall from my first posts you will know the time we are in. 1999-2000 was the height of a stock market bubble and TMT (Technology, Media and Telecoms) stocks were going crazy. That is when the TMT term was coined. I thought that the mobile network providers were hugely overvalued and due for a major correction. I was right, but very wrong on the timing, probably by about a year. Trading AtoZ has written a comprehensive article about options, how they are priced and various options trading strategies.

Just to get some perspective on the 1999-2000 bubble, the FTSE 100 is currently (as of July 2020) trading below the peak levels set over 20 years ago.

I also sold some of my original penny shares (see my first post for more details on how these came about). These early years were also spent expanding my trading and investment library which today stands proud on my bookshelf. Trading AtoZ now includes a Suggested Trading Books section which includes some of the titles I have found most beneficial.

Once the bubble burst so did my time at Reuters.

What did I learn in those first few years?

  1. If you want to be a trader for the long term you have to stay in the game when you lose.
  2. If you trade too big you will eventually get burnt very badly.
  3. You don’t make any profit if you are right a year after a trade has closed.

Leave a Reply