Losing £10,000 in two weeks on spread betting trades when you are not super rich would usually be a wake-up call for most people that their behaviour had got to a worrying point. But for Brian Jenkins, 35, it was a signal not to cut his losses, but to log back on to the internet and have another go, albeit with a money management strategy in place.
“The thing with spread betting is that it is 80 to 90 per cent psychological,” says Jenkins, a former soldier who has done tours of duty in the Gulf and Bosnia.
“I had a get-rich-quick mindset and there is no such thing. There is a get-poor-quick mindset, if you don’t get all the facts.”
Jenkins, who launched his own business promoting healthy living, doesn’t like to follow the herd when it comes to lifestyle or reaching his objectives.
With the Royal Engineers he worked on mine clearance trials in Bosnia and was a radio operator in tanks during the Gulf War. In his spare time he does things like sky diving.
“I am a hands on, get in there, and get dirty kind of guy,” he says.
It is perhaps not surprising then, that the father of two has stuck with spread betting – a high-risk pursuit traditionally favoured by City traders – to finance the future of Unique Lifestyles, the business he runs with his wife.
With the business still growing, Jenkins says he gets some income from neuro linguistic programming, which he is trained to offer to those wanting to lose weight or stop smoking.
But he is relying largely on the gains from spread betting to finance the expansion of the business and to achieve his long-term goal to introduce neuro linguistic programming into schools throughout the country.
“There are some simple, cool techniques that are in NLP which children can use,” he says. “But we have a whole package to do with food, exercise and mind techniques.”
Jenkins says he first tried spread betting several years ago, but realised it could be a way for him to make money, ironically, after he’d made his huge losses.
“Why did I go back into spread betting? Well I went back because I had a vision and I knew there was a method for me to get financially free,” he says.
He admits that the tax-free gains from winnings were also “a big attraction”.
What steadied his nerve was going on a financial spread betting course where he says he learnt a fundamental formula for winning.
From his Wiltshire home he applies the methods taught on the course. This involves a hefty amount of research, first narrowing down a sector, whether it be banks or pharmaceuticals, which has potential for a spread bet. He then conducts a valuation of a company within that sector, checking fundamentals likesuch as its price-to-earnings (P/E) ratio and operating margin.
He follows this by working out the company’s earnings and revenue growth over the past two years. Next would be an assessment of the company’s viability including gearing ratio and net current assets. Then he would consider the firm’s outlook.
Market sentiment, gathered from analyst boards and discussions groups, is also taken into account. Finally he would look at the company’s “technicals”, including the 50/200 moving day average and its share price history before placing a bet.
After all of this, key figures must be met to enable successful trading.
“What is fundamental is that all the green lights are on,” he says of his strategy.
Discipline is also very important.
“The golden rule is that at no time would I ever place a trade where I could potentially lose more than 5 per cent,” he says.
So far he says the strategy is paying off, with all his losses recouped. He is also beating his monthly target of 15 per cent returns on his outlays.
His goal is to make £30,000 through spread betting this year. He recently did well by going short in March on the S&P 500 and Dow and is currently eyeing high commodity prices, energy stocks and the US retail sector.
Whether his strategy continues to bear fruit over the long term remains to be seen. But in the meantime he shrugs off suggestions that his reliance on spread betting to finance his future is needlessly risky.
“At the end of the day I am not a gambler,” he says. “I don’t go to the bookies. The reason this is different is that is that I have a strict methodology and there is an element of discipline.
“However, I wouldn’t want people to read this article and get all hyper and go and trade and lose their money,” he adds. “If people find a formula and follow the rules, then it is an opportunity to make reasonably safe money.”