Today we continue our series of tips by looking at Forums and Discussion Boards…

30. This may sound strange for someone handing out supposedly handy hints but ‘beware of the Tip‘.

Many users with poor spread betting positions will try to alter the valuation by creating a buzz in the forums about a particular market. Essentially the same thing that the City Slickers did in The Mirror.

During the City Slickers scam James Hipwell made £41,000 in six months by buying shares, tipping them in the paper and then selling the shares after the market had inflated the prices. Of course the City Slickers were prosecuted.

You have been warned. People in forums often try the same thing hoping that fellow users will act on that information and alter the valuation so the “tipster” can close out for a profit

31. Beware of low quality information! Some of the ‘tips’ that are posted aren’t necessarily intended to mislead like the Mirror’s City Slickers. They are just posted by poorly researched investors.

Eg someone may refer to spread betting on Alcatel Lucent shares. “the share price has halved, but they’ve cut 12,500 jobs, cut costs and are rearranging the boardroom, worth a look, I think they’re under valued”.

This sort of poorly researched tip (intentional or not) is quite misleading. At the time of writing the job cuts and boardroom changes haven’t been confirmed…and then there’s the small matter of 3 profit warnings in a year.

32. More ‘beware’ for you…there be monsters etc. but poor (poor) jokes aside beware of the stake sizes and portfolios.

Many members will post large stakes sizes. Some people will be boasting, others can afford more, some will have bitten off more than they can chew. Don’t let other people’s stakes affect you. Stick to your trading plan.

Likewise let’s say someone has a similar trading position in a given market and they post a message saying they’ve closed it. Stick to your plan. If you want to close the trade, close it, but their funding, their portfolio, etc is likely to be different to yours.

By all means research something that someone else has tipped but trade the markets that you understand and that you have researched

Time Time Time

33. If you’ve got something worthy to write eg suggesting CleanFinancial.com (this website!) to newcomers then do so.

However don’t get drawn into pointless discussions and arguments. You’re better off spending your time with your family, your friends, you’re better off working, researching etc.

Of course, the forum and messages boards can be an amusing soap opera but you won’t gain much by joining in many of the ‘discussions’ apart from lost time and high (er) blood pressure.

34. Message board benefits – are there any? Other users will often write about their own errors, greed, lack of stop losses, bad luck, numerous positions, poor data etc. ie many of the principles and ideas discussed on this website. Real life examples can help remind you of these important lessons.

Forums? pinch of salt!

DB

Clean Financial - Spread Betting