Swing Trading Advice

[Carbonio]

Hi guys, I'm looking for some advice on swing trading.

I did a little a few years back and did ok but work took over so put it on the back burner.

My main job involves working shifts, have interest in a couple of other things I can dip in and out of but I only work fourteen 12 hour shifts every six weeks. This gives me a block of eight days and a block of 16 days plus a couple of blocks of two or three days off , plenty of time to day or swing trade.

I'm currently putting around 25% of my pay into a pension and have around 50% equity in my main house. I don't think it's worth paying this down any more than I am due to the low interest rate so that leaves me with between £1000 and £2000 every month to 'play' with.

So, is £1-2k a month enough to start trading with and if so what's the best way to go about it. Can I swing trade from within a S&S ISA? If so which company would you recommend?

I'm a bit out of the loop with the trading companies, I used to use Interactive Investor a few years back but I'm guessing the fees may have changed. Who would you recommend to use that won't kill me with the spread and trading fees?

I tried CFD's with IG last year with FX but I'll be sticking to shares, probably 5 or 6 but I'm aware that buying in such small quantities at the start mean that fees will play a big part in the trades. Does anyone have a like to a good website or spreadsheet that works out profit/loss with trade fees?

Any other advice is greatly appreciated.

[limpsfield]

If you were talking about buying a couple of shares a month and holding them for a while the amount seems fine. But it sounds like you are talking about sitting in front of a screen for a few days a month and trying to make money. I think you would be better off using a leveraged product for this but most people lose money. (I worked in the industry for the two biggest for 10+ years).

If it was me I would start with spread betting, stick to equities like you say, take a view over weeks rather than hours and minutes and expect to lose in the first few months at least, maybe even longer. And trade the smallest my broker lets me.

To reiterate - most people lose! Through their own lack of risk control rather than any great City conspiracy.

Edited by limpsfield on Saturday 23 April 16:57

[Carbonio]

limpsfield said:

If you were talking about buying a couple of shares a month and holding them for a while the amount seems fine. But it sounds like you are talking about sitting in front of a screen for a few days a month and trying to make money. I think you would be better off using a leveraged product for this but most people lose money. (I worked in the industry for the two biggest for 10+ years).

If it was me I would start with spread betting, stick to equities like you say, take a view over weeks rather than hours and minutes and expect to lose in the first few months at least, maybe even longer. And trade the smallest my broker lets me.

To reiterate - most people lose! Through their own lack of risk control rather than any great City conspiracy.

Edited by limpsfield on Saturday 23 April 16:57

Thanks for the reply, I discounted spread betting due to the tax efficiency of trading through a S&S ISA, I'll get hit with 40% if it's not in a wrapper.

My aim is to build up the funds and invest them elsewhere if and when the market has its next crash, otherwise I could just put the extra 1-2k into my pension through salary sacrifice like I do already with part of my salary.

I enjoy researching companies and I have the spare time to do the trending so just looking for the most efficient way to do it.

[limpsfield]

I mentioned the spread betting due to the leverage aspect. I struggle to see how you can make much short term off £1-2k if buying through a broker and paying stamp and comm. sB is the most efficient way if short to medium term trading. But doing it through a normal broker means people will lose their money slower!

SB is also tax free of course.

Good luck with whatever approach you choose. Happy to answer anything else.

[Carbonio]

limpsfield said:

I mentioned the spread betting due to the leverage aspect. I struggle to see how you can make much short term off £1-2k if buying through a broker and paying stamp and comm. sB is the most efficient way if short to medium term trading. But doing it through a normal broker means people will lose their money slower!

Good luck with whatever approach you choose. Happy to answer anything else.

Thanks for the reply.

Maybe I should stick to just buying one or two stocks a month then and maybe look at liquidating these in 18-24 months and then look at shorter term trading. That should give me a nice little balance to start with, as long as I pick wisely then I see it as a savings fund as long as I'm careful with my stops.

[Carbonio]

limpsfield said:

SB is also tax free of course.

Just looked in to this and it may well be an option. I'll do some more reading, what platform would you recommend?

[DonkeyApple]

You wouldn't be liable for CGT on such a small trading pot anyway so the ISA or any tax wrapper is just an added cost.

Trading physical will mean you pay stamp which in swing trades will massively impact performance.

If you are trading equities short term then you have to use a spread bet or a CFD as they not liable for stamp.

Choosing between the two is key. Spread betting is simplest as it automatically has no tax liability regardless of your CGT allowance usage but runs the risk of a less stable bid and offer.

A CFD (a spread bet is just a type of CFD) is often these days quoted the exact same way as a spread bet so has no additional upside, however, there is the option with a CFD as it is CGT liable to trade it DMA and thus remove the quoting risk from the equation.

Generally for short term equity trading you would use a DMA CFD until you had used up your annual CGT allowance and then switch to a spread bet as the CGT saving will negate the slippage risk.