Trading on Thin Ice


Let me get one thing straight, right from the start.

I am not a trader!

By that I mean, I have had no education, no experience and up until recently no interest in the area of trading. The last time I learned anything even remotely related was when I was studying Business in secondary school almost ten years ago. I do hope that I will become a trader; that over the coming period of months and possibly years, as I learn more and gain more experience that I can start to make a reasonable claim on the designation of trader. Until that day, I will probably always think of myself as trading on thin ice.

Thin ice is just a concept to me. I have only ever experienced one serious snowfall in my life and that was before the age of five. No doubt, the huge snowdrifts that I remember myself plowing through were just a couple of inches deep. Since then, there has never been a serious snow in Ireland to my memory and I don’t believe I have ever seen a lake that has frozen over. The only ice skating that I have done has been on an artificial rink. As such, thin ice as a physical reality remains elusive. Still the picture of a warning sign and the sound of cracking ice comes easily to the imagination.

In the same way, up until April of this year, trading or investing in any kind of market was merely a faint idea in my mind. Investing was shrouded in mystery. I didn’t really understand it and I had never owned any stocks or looked into how I could buy some. The only images I had of markets were those of the movies, Eddie Murphy and Dan Aykroyd in Trading Places Trading Placesor Ferris Bueller mimicking the actions of traders in the pits of Chicago. The closest I had come to any experience of the markets in my own life was through my family; my father who has a few shares in some financial institutions and occasionally gets some dividends and a cousin who was given some shares as a birthday gift.

Then again, it’s not as if I had ever been interested, I always figured investing was for people who had money and I didn’t have any. Just out of college in 2004, I worked for a year before going travelling in New Zealand for the best part of another year. When I came back, I got another job and then the future suddenly loomed ahead. I remember, in December of 2006, looking at both Apple (NASDAQ:APPL) and Nintendo (OTC:NTDOY) and wanting to buy shares in both. Looking at their charts today, I note that they both would have been good buys. Nintendo always seemed like a no-brainer to me, the Wii to my mind was going to be huge. Too bad, I still didn’t have any money at the time.

Roll on a few more months and a new job with better money. It’s a Friday and I’m at home, somehow I’m watching the Late Late Show. It’s an institution in Ireland, a talk show and I never watch it. I must have caught some part of the interview whilst flicking, maybe it was the name that was familiar or something that was said; Mark Shipman is talking about his book, “The Next Big Investment Boom.”Mark Shipman I watched the interview, found it interesting and decided I’d get the book. I wasn’t the only one. Bookshops around Dublin were caught by surprise and only had a few copies in stock that were quickly bought up. You could say, that all that has happened since and will continue for the foreseeable future can be laid at the feet of Mark Shipman.

My local bookstore got new copies the following week and I read it all within a day or two. I was hooked. I found myself in a new world of possibilities and knowledge. Over the next month, I would voraciously read the following books, “Trend Following” by Michael Covel, “Hot Commodities” by Jim Rogers and “The New Market Wizards” by Jack D. Schwager. I got my finances in order, consolidating my bank accounts; opening new accounts with better products and closing my old ones that were no longer competitive. If I only got one good thing from Shipman’s book, it is that my finances are now much better organised. He also pointed the way to financial spread betting.

This is an important point in my story, as without spread betting, I would not have the capital to be involved in the markets. Add to that the prohibitive transaction costs and government taxes and it would not have been worth my while to delve any deeper into this new world. Luckily, financial spread betting does exist with multiple firms available in Ireland. By the 24th of May, my bank accounts were in order, I had gathered my inital stake and I applied for an account at WorldSpreads. Two weeks later, I had entered my first positions and lost 50% of my capital.

This is another reason why I am trading on thin ice.