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What spread-betting Sally did next

Created:

27 July 2007

Updated:

19 November 2008

Written by:

Dominic Picarda

She may not be Britain's most successful spread-better - not yet, anyway. But thanks to her online diary and a best-selling book, Sally Nicoll has become a cult figure in the fast-growing financial spread-betting community.

Having taken a year out from her career in advertising to write a novel, she also started betting on the markets. Very bravely, she decided to share all the thrills and spills of her early experiences with the entire world via the internet.

The details of Sally's development as a spread-better - not to mention her extra-curricular activities - catapulted her book into Amazon's top-50 bestsellers. While she's still hoping to get a novel published too, she remains an active spread better. But she's a much wiser and more successful spread-better than the ingènue of the early chapters of Bets & the City.

"I'm not trading full-time at the moment as I'm still hoping to make it as a fiction-writer," says Sally. "I'm typically making about 20 trades a month. I went into Apple Computer's September contract two days ago and I'm still long."

Getting the balance right has been key to her progress as a trader. "Trading is now fitting in with my lifestyle," she says. "Because I've got the emphasis right, I'm winning more often. It's all about being selective and not over-trading."

"There's a popular fallacy that you need to be sitting at your computer all day in order to be an effective spread better. Most of the time you don't need to be there all day long."

"For the first year that I was spread betting, I felt I always had to be doing something in the market. I just kept having a stab for all sorts of stupid reasons. Now I'm very selective about why I trade. When I trade, I know why I'm doing it."

Some time after she finished the book, Sally reckons there was a moment when it all began to click for her. "All of a sudden, I've turned a corner, and am really doing quite well. Rather than blind faith, I'm operating from a position of knowledge."

Sally reckons there are two main types of people who spread bet. "You've got gamblers and traders. Gamblers punt as they would on the Grand National at the bookies, based on nothing more than the jockey's colours. I changed from gambler to trader after I knuckled down and read some books and got some training. If you want to make money you need to educate yourself."

So, what has she learnt that has changed her behaviour so drastically? "It comes down to discipline, really. I force myself to keep a record of every trade in order to justify why I've done it, whether it's technical analysis or something I've heard in the news."

"Money management and sizing your trade properly is absolutely essential," she says. "If you're losing lots of different amounts on trades - £200 here, £50 there and the odd £20 - you're exercising poor money management, risking too much on some trades and not enough on others."

"Ideally, all your losing trades should be roughly the same amount and all your winning trades hopefully more."

"I now feel comfortable with where to place stop-losses. I don't get emotionally attached and when I lose, I cut my losses and move on to the next trade."

"I can't put my hand on my heart and say I always trade with a stop-loss. Sometimes I do trade without, although my coaches will probably rap my knuckles for saying it. When I'm watching a trade tick-by-tick, I go without."

As well as sound money management, Sally has become a firm believer in technical analysis. "I spend at least half an hour every day - and sometimes up to two hours - going through my charts and doing technical analysis. If I see something that looks good, I'll be there for when the market opens at 8am for London or 2.30pm for the US."

"I like to keep things simple, like trading with the trend, looking at moving averages. Price action is really important. I look for classic patterns like head-and-shoulders, double tops, and bull flags."

"Watching volumes is another thing. My package gives me Level 2 access, which is a lovely snapshot of what's going on at any moment in the day. I'm not into anything quirky like Gann, Fibonacci or Elliott Wave. Whenever I hear people talking about 'waves,' I think of Japanese poetry and it makes me laugh."

Having the right technology is an important part of Sally's new, disciplined approach. "It really is worth having real-time prices on a separate, robust programme, rather than a spread betting firm's own platform. I also get my news through this channel. My package - Sharescope Pro - costs me £85 a month, but it pays for itself. Market intelligence is worth paying for."

That said, she is a hardened sceptic when it comes to some of the more fanciful software out there. "I hate 'system' software, where the package uses a magic formula to generate signals for you. I don't believe something like that could possibly work."

As well as charts, fundamental newsflow also plays a part in Sally's strategies. "I went into my current trade on Apple in anticipation of the launch of its new i-phone. Hopefully, it'll be well received and the shares will go up."

With her growing market savviness, Sally could sensibly try her hand at some of the more advanced financial derivatives out there. However, she claims not have been tempted by the likes of contracts-for-difference or futures. But she has tried a variation on spread-betting.

"I do some binary betting, also through Finspreads, with whom I do my spread-betting. It's the fastest-moving market there is. You can lose a lot of money very quickly, so you really do have to watch your bet the whole time."

Although Sally is now deadly serious about the way she spread bets, it is still very much a hobby rather than her living. "I trade with a bank of about £15,000. I do sometimes withdraw some of my profits in order to spend on nice things for myself. But I don't see spread-betting as a way to generate income."

"Away from my spread betting, I do actually have some rather sensible investments. I've some pensions and there's even a PEP [personal equity plan] from many years ago."

"It's very unlikely you'll ever interview me as the woman who made a million from spread betting," she says. "I do it for the intellectual craic, like other people would do crossword puzzles or Sudoku."

As well as the mental stimulation, Sally is delighted at the idea that her very public experiences in spread betting are helping others. I get at least five e-mails a day from readers, sometimes as many as 20. Some say that thanks to me, they've avoided some of the pitfalls and they're making good money."

"As I like to say these days, 'I've made every mistake in the book so that you don't have to."