April 10th 2025 'Live' Trading Session Recording

Live Trading Session Introduction: Stephen Cox introduced a live trading session focused on active trading (minutes to days, not months), contrasting it with long-term buy-and-hold strategies. They aimed to provide real-time trade demonstrations and explain their methodology.

Market Analysis (Yesterday's 10% Jump): The market's significant jump was attributed to Trump's backing down on tariffs (excluding China) (00:01:05). Stephen noted his prior suspicion of underlying market activity, suggesting a potential rally (00:02:11).

Short-Term Market Outlook: Stephen expressed a less bullish short-term outlook, citing uncertainty and damage to business confidence (00:03:07). He believed a China trade deal was needed for significant upside, otherwise predicting sideways movement (5,000-5,500 range S&P 500) (00:04:11).

Key Indicators: They highlighted the 10-year US debt yield and widening credit spreads as warning signs of economic stress (00:05:15). Jamie Diamond's CNBC interview mentioning credit market stress was cited as a factor in Trump's policy change (00:06:19).

Earnings Season and Frontloading: Stephen discussed the potential for better-than-expected earnings due to frontloading of purchases (companies buying products before tariffs take effect) (00:07:18). They emphasized the importance of companies' commentary on future prospects, referencing Delta Airlines' refusal to provide guidance as a sign of uncertainty (00:08:29).

Trading Platform and Methodology: Stephen primarily used a spread betting platform (with examples adaptable to other platforms like Interactive Brokers). They described their personal account's strategy of withdrawing $1000 per $1000 profit (00:10:09). Their most profitable trades involved the S&P 500 and Euro/dollar (00:11:03).

Spread Betting Explanation: Spread betting involves betting on price movements per point (e.g., €1 per point). Stephen stated an 88% success rate but acknowledged losses (12%) occur (00:11:52). Their aggressive trading style involves making small profits in short timeframes (00:12:45).

Position Sizing and Averaging In: They outlined a rule of using a maximum of one-quarter (often one-fifth) of their margin for initial positions, allowing them to average in if the trade goes against them (00:12:45). They stressed the importance of avoiding over-leveraging (00:15:33).

Trade Examples and Indicators: Stephen illustrated their approach with examples using trend lines and economic calendar data (news announcements) to inform their short-term trading decisions (00:16:29).

Responding to Questions about Trading Style: They clarified they primarily focus on one trade at a time (00:21:17), using profit takers but generally avoiding stop losses due to their averaging-in strategy. They noted exceptions for scenarios with limited monitoring capabilities (00:21:58).

Interactive Brokers Considerations: Discussion touched upon replicating IG spread betting trades in Interactive Brokers, noting potential limitations in trade permissions (00:25:32).

Short-Term vs. Long-Term Outlook: Despite the short-term uncertainty, Stephen expressed long-term bullishness for the market, believing that companies would adapt by cutting costs and improving efficiency (00:28:10) (00:41:12).

Inflation Data and Market Reaction: They anticipated a potential downward market movement if inflation data came in higher than expected (00:42:07), but acknowledged uncertainty and possible manipulation of reported data (00:43:05).

Order vs. Deal: A distinction was made between "deal" (market price execution) and "order" (setting a specific entry price) in spread betting. They demonstrated placing a limit order (00:45:07) (00:48:40) and executing a deal (00:49:25).

Averaging In Strategy and Risk Management: Stephen emphasized their averaging-in strategy as key to managing trades that initially move against them. They showed how this allows for managing losses and potentially reaching break-even points (00:50:18) (00:52:03). They use RSI to inform their decision of when to average in (00:54:10).

Trading Strategies and Risk Management: Stephen Cox advised against trading immediately after announcements due to price volatility (00:59:11), suggesting a waiting period of several hours for the market to settle (01:00:01). They also explained the impact of short covering on price movements, noting that it can artificially inflate prices (01:01:08).

Trade Execution and Platform Use: Richard Fitzgerald highlighted a key feature of the trading platform, explaining that limit orders are automatically saved upon exiting the input box, eliminating the need for a save button (01:02:55). Stephen Cox further elaborated on the platform's functionality, showcasing a "one-click" option for closing trades, contrasting it with the default confirmation prompt. They explained the advantages and disadvantages of each approach (01:03:42).

Trade Review and Next Steps: Stephen Cox indicated they would revisit a specific trade around noon to re-evaluate based on upcoming inflation data, stating a preference to avoid holding the position through the data release. They also mentioned the possibility of averaging into the trade if the conditions were deemed favorable (01:02:02). The participants expressed overall appreciation for Stephen Cox's insights and explanations (01:04:14).