Buy High, Sell Low - Stock market trading for prats

Some of you who have perservered though this blog may remember me talking about the stock market and me toying with the idea of CFDs. Contracts For Difference. These are like bets on whether a share, commodity or a whole market will go up or down.

Well, I tried these and it was just as awful as my stock picking experiments. My first gamble, I mean, informed speculation was to try 'Shorting' London Stock Exchange shares. This company had just been chucked out of the Footsie 100, had been collapsing in price for months and all analysis indicated that they were stuffed. I 'sold' these shares on the assumption that they would tank further, on a gearing of 10 to 1. I.e £500 invested would bring either 10 times that much profit. Or that much loss... Natch, within a day of me taking this position the price of this previously defunct company had spiked up by 50%. Yowsa. I was looking at £2500 instant loss... Except that I was so incompetant buying the CFDs that I had only exposed myself to a tenth of what I meant to. Phew. Only a £250 loss. Inspired by this I then bought long on the Footsie. American and Asian markets had gone up wildly the day before, everything looked good; what could go wrong?

The Footsie then went down 100 points straight after me making my purchase. Another £500 loss. Cautiously, now I try and call what the market will do, WITHOUT actually investing any money. I have been wrong EVERY single time. I am now wondering if my ultimate money making idea would be to try and simply do the opposite of whatever I think is a good idea. That is what they call contrarian investing I believe. I'll let you know how that works out....