Anyone shorting the Dow Jones? pt 2

[BigBootyBabe]

I have created a 2nd seperate post because i don't want to get flamed by the mods for ''telling anyone to risk money''.. :innocent:

And so in this post i will instead merely say what I myself would personally do if i was in that same situation.

At end of the day you yourself will do whatever you choose to do fully of your own accord.


If my account was show that though i would-

*1stly set my target order for original trade at 14,285.

*2ndly add a 2nd £1 per point sell-order to go in at 14,653.
(This would give me an average entry price of 14,509)

*3rdly If market rose and that sell-order was filled i would then set my target order for the entire trade at 14,486,
as id then only need market to move down 1% and touch the 486 support to not only get me out of the trade but actually make £34.50 profit,
plus id have a very decent entry level of 14,509 which id feel safe and secure in holding at.

 

[BigBootyBabe]

Big booty babe. You clearly know what you are doing but would it not be more prudent to reset your stop loss when in profit? Eg if you sold at 14500 and the market came down to 14250. My thought process would be to set my loss at 14400. Thereby keeping the trade open. Eliminating any risk with (hopefully) profit on the upside.

Could even hedge your position at that stage. I am a relative newbie so your thoughts are appreciated.

And in response to your post,
i do use stoplosses to lock-in profit..

Its incredibly rare for me to exit trades through stoplosses though (since by default they exit you near the worst price possible),
i instead exit all my trades through limit-orders or manually,
with scaling out of trades for large pip count moves.

I only like to hold my trades for a few hours - 48hours max though,
as im an Opportunist Trader not a swing-trader,
and so don't like having to hold the same trade for more than 2days as by that long the opportunity that i was targetting will have faded.

My typical target is between 60-100points profit per trade.


But so for your example if i had sold at 16,500 but my overall target was 16,250,
the way id play that would be to- Move stoploss to break-even once market got to about 16,430, Cash in 1/2 of my trade at about 16,390, cash in 1/4 at 16,325, and leave the remaining 1/4 to run-on to that 16,250 target.

A 250points move is a very big move though, and so would have quite a few jolts, pauses and pullbacks along the way down,
which would make it a too big target for me as id be in that market for too long.

 

[piggybridges]

If my account was show that though i would-

*1stly set my target order for original trade at 14,285.

*2ndly add a 2nd £1 per point sell-order to go in at 14,653.
(This would give me an average entry price of 14,509)

*3rdly If market rose and that sell-order was filled i would then set my target order for the entire trade at 14,486,
as id then only need market to move down 1% and touch the 486 support to not only get me out of the trade but actually make £34.50 profit,
plus id have a very decent entry level of 14,509 which id feel safe and secure in holding at.

And if it just kept going up, through your 2nd short entry without going back down to 14,486?

 

[Moneylender]

Bbb, why first target order at 14285, his entry was at 14084, 200pips lower. What have I missed?

 

[BigBootyBabe]

And if it just kept going up, through your 2nd short entry without going back down to 14,486?

Research the method that Jim Rogers trades mate and that will answer your question.


If you have that little conviction in selling at that price though you have 3 options-

1) Don't sell there and instead wait for a higher price.
2) Only add a £0.50pp sell there, with you adding the other £0.50 sell if the dow hits 14,950+.
3) Sell at 14,653 but put your stoploss in at 14,703.



Im a reversal trader though mate,
and so i specialise in + am ONLY am willing to make trades into markets which are extremely elongated like this.

As what you need to remember is that ''the market isn't a machine'',
it will ONLY move if ''human people'' move it.
And human pyschology has remained the same for tens of thousands ofyears, greed & fear.

So with a move as huge and elongated as the dow has had FEAR will cause it to fall-back down as people will get scared of losing their open profit/missing out on shorting it.

Simple fact.

 

[BigBootyBabe]

Bbb, why first target order at 14285, his entry was at 14084, 200pips lower. What have I missed?

Because 14,285 is the ultimate lowest support that i can realisticly see this market dropping to before it bounces.

We are coming from 14,675,
and so a 600points drop whilst QE is there (and when italy election, cyprus bankruptcy, north korea nuclear attacking, USA spending cuts all failed to cause more than 150points drop) is just extremely unlikely to happen anytime soon.


In trading you have to accept losses occasionally when your entry turns out to be very bad,
but so when you realise that you're gna have to take a loss your goal has to be to dump the trade at the best price as possible (based on chart S&R).

 

[BigBootyBabe]

Ive set a small sell order for dow at 14,586.

Target will be set at 14,502.

 

[jlian]

We are coming from 14,675,
and so a 600points drop whilst QE is there (and when italy election, cyprus bankruptcy, north korea nuclear attacking, USA spending cuts all failed to cause more than 150points drop) is just extremely unlikely to happen anytime soon.

Reading news is a very bad way to predict the stock market, especially Wall Street. If a correction starts now or an opposite movement, it will have little to do with obvious events

Ive set a small sell order for dow at 14,586.

Target will be set at 14,502.

Where you put your stop ? Daily high?

 

[BigBootyBabe]

Reading news is a very bad way to predict the stock market, especially Wall Street. If a correction starts now or an opposite movement, it will have little to do with obvious events

Where you put your stop ? Daily high?

News is what moves the market each day mate..

I don't try and ''predict'' what the market is going to do in the next 5minutes though.
I instead just wait until the market is extremely elongated and overdone in 1-direction, wait for it to form a top/reversal formation,
and then start scaling-in my trades at that price and above.

Im selling here because im very happy and relaxed about selling at this time and price.


And my stoploss is currently at 14,592 (so 6points).

I have only got 1/3 of my trade in so far!
And so i DON'T want this market to drop straight down and hit my target, i instead want it to move against me and touch 14,653 so i then get my next 1/3 of sells in at a better price!

I very much doubt that is gna do that though,
instead looks like its about to break through 14,554 support and so go down towards my target.

 

[jlian]

News is what moves the market each day mate..

Nope, and I don't say this myself. Pls try not to give wrong advices to novices.
If you are using the news you would better scalping eurusd or something else in FX.
Indexes like DJI, S&P, DAX etc are not driven by news, 90% of time.
If Dow breaks 14285 the next days, it will be because of 3rd WW?
Nevertheless, I'm not trying to offend you.

 

[BigBootyBabe]

Nope, and I don't say this myself. Pls try not to give wrong advices to novices.
If you are using the news you would better scalping eurusd or something else in FX.
Indexes like DJI, S&P, DAX etc are not driven by news, 90% of time.
If Dow breaks 14285 the next days, it will be because of 3rd WW?
Nevertheless, I'm not trying to offend you.

Sorry but you are wrong mate..

The market is NOT a machine, it ONLY moves because human-people make it move by buying or selling it.

People make their choice to buy and sell based on their own personal pyschology and sentiment.
And the sentiment in people's minds is set by what the news shows their brain.


That is why when bad news comes out the market crashes so fast in seconds,
because people read that news and then act on it.

The 'news' alone cannot do anything, as the entire USA could blowup in nuclear explosion today but yet the market could not even move a single point unless people react to that news.
However people DO react to news, which is why markets move.

 

[jlian]

The market is driven by the guys who create the news not the guys who read the news in twitter and then the go short or long, i.e you and me. Therefore, their positions on the market are most of the time taken before the news come into the surface. Trying to make profits from the news is waste of time and money, unless you are in the Fx game scalping, something much less predictable than indices.

 

[kitbag1984]

Hi. Thanks for your help. I really do appreciate it.

As I said I am a newbie at this. I have spread at shares before and have had some success but admittedly I am down although I am learning. Finding that a diary is the best thing to do.

With hindsight I broke one of my own rules which was to go with the trend. And also trading something that I am not fully into. Shares are completely different from indicies.

So i posted a link earlier on his thread talking about historical pullbacks and return to the mean. The last few months have seen a fantastic rally. The article also talks of how the pull back will be large rather than small.
He also makes a good case for the market not going sideways. Please have a look.

http://www.spreadbetmagazine.com/blog/a-must-read-by-bob-farrell-former-merrill-lynch-legend.html

Also see this chart. Lol.

http://www.spreadbetmagazine.com/blog/chart-du-jour-history-rhymes.html

My timing was clearly wrong and with hindsight I would have set stop orders to sell. Increasing the price every week.

But hey we can't go back in time now. So you are right I am looking to limit my damage.

Your advice ref the stop points is well taken. My only hesitation in that is that I have a long while to go before contract expiry.I am happy to sit and wait it out. I am with IG and can set alerts so may set these up. Analyse the situation and take a decision. Although maybe I should be more disciplined.

I thank you again for your help especially ref numbers on another trade.

My problem is I'm away from the UK at the moment so can't really do anything more for the next few days. I will certainly look into it when I'm back.

Ps I note that the FTSE is down 1% as I speak meaning a second day drop. Again if the payroll figures aren't as expected maybe this will also spur the correction on.

I am currently £224 down as the Wall Street bet runs even when the market is closed.

Any thoughts on exiting now?

 

[jlian]

Any thoughts on exiting now?

Usually professionals advice to close immediately such losing positions. The problem is that you might fall to the same mistakes again, or to open a long position now, when the technicals indicate that there might be a correction to the rise from November 16.
Anyway my advise is to seek professional advice from someone that has proved to be successful and not from guys on the internet, which they might papertrading. I don't know if I am really helping you though.

 

[kitbag1984]

Jlian.

No I agree and appreciate that none of this counts as financial advice. However surely the point of the forum is to discuss trading/positions and movements?

Although I do accept that I am a rookie to this forum.

 

[Moneylender]

Kitbag it looks as if BBB has been banned according to some on other boards.
Personally I saw nothing wrong with his views, strikes me more like some kids playground gripe against him.

 

[jlian]

BBB has been banned? Sorry to hear that

 

[SuddenDeath]

Hi. Thanks for your help. I really do appreciate it.

As I said I am a newbie at this. I have spread at shares before and have had some success but admittedly I am down although I am learning. Finding that a diary is the best thing to do.

With hindsight I broke one of my own rules which was to go with the trend. And also trading something that I am not fully into. Shares are completely different from indicies.

So i posted a link earlier on his thread talking about historical pullbacks and return to the mean. The last few months have seen a fantastic rally. The article also talks of how the pull back will be large rather than small.
He also makes a good case for the market not going sideways. Please have a look.

A must read by Bob Farrell - former Merrill Lynch legend  - Blog - The e-magazine created especially for active spreadbetters & CFD traders

Also see this chart. Lol.

chart du jour - history rhymes? - Blog - The e-magazine created especially for active spreadbetters & CFD traders

My timing was clearly wrong and with hindsight I would have set stop orders to sell. Increasing the price every week.

But hey we can't go back in time now. So you are right I am looking to limit my damage.

Your advice ref the stop points is well taken. My only hesitation in that is that I have a long while to go before contract expiry.I am happy to sit and wait it out. I am with IG and can set alerts so may set these up. Analyse the situation and take a decision. Although maybe I should be more disciplined.

I thank you again for your help especially ref numbers on another trade.

My problem is I'm away from the UK at the moment so can't really do anything more for the next few days. I will certainly look into it when I'm back.

Ps I note that the FTSE is down 1% as I speak meaning a second day drop. Again if the payroll figures aren't as expected maybe this will also spur the correction on.

I am currently £224 down as the Wall Street bet runs even when the market is closed.

Any thoughts on exiting now?

thanks for the link to a great article

 

[Lee Shepherd]

Jlian.

No I agree and appreciate that none of this counts as financial advice. However surely the point of the forum is to discuss trading/positions and movements?

Although I do accept that I am a rookie to this forum.

@Kitbag,

Advice is simple. If you do not know what to do then get out of the trade immediately.

You have to limit loss and this should be done PRIOR to you opening any trade. As it stands you are living in hope that it goes back in your favour - hence you asking for advice.

As it is, if you ask what should I do, this advice is best. Ask a bull and they'll say buy some more or hold, ask a bear and they'll say dump and reverse - Remember there's always a buyer and seller so you'll find both reasons and both will conflict with one another. This is not good for you as an individual with your own set of rules/guidelines etc.

By dumping now when you have no idea (or a hope at best) will allow you the time to re plan and do it better, it will also remove all panic/fear and of course, its always easier to close a small loss (matter of opinion) than a larger one or at worst allow a margin call to shut you down.

Lee

 

[kitbag1984]

Lee. Thanks I appreciate your advice.

I did have a stop loss In place which has not yet been hit and set a limit. This was done at the time of opening my position. I allowed myself a large stop due to trading only £1 per point and having a long expiry.

It isn't entirely correct that I have no idea where the trade is going. I am new to trading indices and saw this to be a good way to start. The articles mentioned give some of the reasons why I believe the Dow will drop and by some large margin.

I appreciate I'm not as experienced as many on this forum but hey we all have to strt somewhere!

Ps the Dow has now dropped over 1% on what look like good volume. I am wondering if this is the start to the correction or a mere blip in the bull run.