LONDON, England – Several days have elapsed since my very useful meeting with Robbie Burns, a.k.a. the Naked Trader. Robbie's advice and encouragement have helped me narrow down just what sort of trader I'm going to be as I try my hand on the money markets.
I won't be trading commodities for the moment either. I just don't know enough about the commodities markets, but I will start to follow gold in the hope that one day I'll feel that I know enough to spot opportunities. That leaves just shares - and UK companies in particular. As a financial journalist it's what I know best having followed the ups and downs of the stock markets, day in day out, for the last 15 years.
So, I'm not going to be a day trader. In reality I'm going to be somewhere between a swing trader, who looks to take advantage of medium-term price changes, and a trend trader, who looks to take advantage of longer-term price trends.
Now that I know who I am, I suppose that the moment of truth has arrived. It's time for me to stop paper trading and commit my own money to a position.
I've spent the last few days looking for companies that fit Robbie’s exacting criteria. I've been getting up at 5am and going to bed after midnight, trawling through data on the web.
So far I've come up with a list of eight companies that I think are worth watching using technical analysis - but I'm only part way through the list of FTSE 250 companies. I'll be researching and adding to my list for weeks to come.
One of my companies, which is in the defense sector, is due to release its annual report in the very near future. The "fundamentals" (i.e. my research into the company – its profit/loss, previous performance and outlook etc), look good and technical analysis is giving me a strong buy signal.
Heck, let's go for it!
When the market has settled, around 40 minutes into the session, I place a "long"spread bet, meaning that I expect the share price to rise, at £1 ($1.63) a point. I place a trailing stop loss below the level where I think it may be triggered by normal market "noise." And that's it. I'm in.
Because of the stop loss I know that my total potential loss on this trade, if it goes against me, will amount to £28 ($46), which represents a little more than two percent of my total available capital.
A heart-stopping moment comes several days later when the World Bank releases its revised economic outlook for 2009 and the markets head south. But luck is on my side. My company's share price holds firm. The next day the company releases a very healthy annual report and the share price rockets nearly 100 points in a day! The next day it rises even further and the day after it rises again.
I'd love to be able to report that I rode the price rise all the way to the top, but I didn't. I played safe and got out 88 points higher, realising a profit of £88 ($144), improving on my risk-to-reward strategy of 2:1. With time and experience I'll learn to ride the price and take profits when the market tells me that the share is overbought. But for the moment I’m happy to have made money. It feels great.
So, my first trade was a success. I'm under no illusion though – not every trade will go my way. In fact, I'm prepared for the majority of trades to go against me. But, as Robbie Burns was at pains to point out, the trick is to micro-manage my positions so that I get out of negative trades long before they can seriously erode my capital, while riding the winners. The aim is for profits to outweigh losses. This way seven out of 10 trades could go against me - but I could still make money.
I haven't traded again since my first success. I'm in no hurry, much to the frustration of my colleagues, who can’t understand why I'm not making or losing a fortune. I'm still steadily building my list of companies to watch and I'm waiting patiently for trading signals. I'll go at my own pace and won't trade recklessly, jumping in and out every time I see the vaguest of opportunities. I want to be sure that I have the best possible chance of winning before I go in again.
In the meantime I am the angler, watching his lines for a bite.
* How does Adrian Finighan fare in his career as a rookie trader? Watch Quest Means Business Monday to Friday: 1800 GMT London, 2000 CET, 0300 HK.
HONG KONG, China — Since the death of Michael Jackson, I’ve been thinking a lot about Prince.
Prince performs at the halftime show of the 2007 Superbowl.
That these two would weigh on my mind is unusual. As a teenager in the 1980s, you’d be more likely to find Jimi Hendrix, Pat Metheny, the Cure or the Violent Femmes on my turntable.
The seminal MTV moment for me wasn’t “Thriller” but the first time the psychedelic Bo Diddley riff of the Smiths’ “How Soon Is Now?” poured out of my TV. For a small-town kid stuck in the sonic prison of Top 40 pop and country radio the music was like tuning into signals from a distant planet.
And yet this week it’s Prince I can’t get out of my head. The career arc - if not trajectory - of Michael Jackson and Prince were closely matched. Both came out with brilliant career-making albums in the early 1980s. Both were credited with crossing color lines and musical genres. Both saw sales ebb in the next decade.
Musical taste and popularity aside –Jackson outsold Prince 10-times over - their careers are a contrast in two executive traits: the perfectionist versus the workaholic.
In the 27 years since “Thriller,” Jackson released only four albums of new material. Since his breakout album “1999” the same year, Prince has released 21 new albums.
While preparing his “Thriller” follow-up, “Bad,” Jackson reportedly had this note taped on his bathroom mirror – “100 million” – his sales goal. (The album sold well but never approached “Thriller” status.) When Prince’s album sales were at low ebb in the 1990s, he ignored industry advice and released a triple-CD of new material. When that did poorly, he followed it with a five-CD collection of unreleased songs. That also tanked.
In recent years, the music industry model has switched from album sales to live events as a major source of revenue. On this landscape, Prince staged a remarkable comeback: a nearly $90 million tour in 2004, the 2007 Super Bowl halftime show and 21-concert residency at London’s O2 Arena. Prince often follows his two-hour concerts with small-club after-shows of improvised jazz that stretches as long as three hours.
Jackson’s 50-date stand at the O2 Arena starting this summer would have been his first tour in 12 years. The start was pushed back to allow more time for Jackson, the perfectionist, to rehearse.
Post “Thriller,” Jackson’s life was tailor-made for the tabloids: chimpanzees, Neverland, dangling a newborn out of a window. His arrest, trial and acquittal on child molestation charges got more airplay than his music before he died.
Prince was no stranger to tabloids and eccentric behavior (such as changing his stage name to an unpronounceable symbol). Yet he seems to protect his private life. When Prince’s son died in 1996 from a rare disorder shortly after his birth, the singer eschewed press and sued the nannies that sold the painful details of the death to the tabloids.
Looking at the two lives, it seems to me Michael Jackson could have learned some lessons from Prince. High goals are important for career success, but pinning “100 million” to a mirror strikes me as the wrong ambition, especially in a creative profession.
Jackson and Prince both burst onto the scene when their talent and public taste happened to coincide – that rarely can be planned. While Jackson’s career got lost in “Neverland,” Prince focused on his work despite a fickle public. Fans went and then came back again – Prince’s work ethic never changed.
As a commercial act, Michael Jackson was the undisputed “King of Pop.” But as a career model, perhaps it’s better to be a Prince.
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