Cant decide whether to trade indices or not

[hardrlz]

Hello all , i am just getting into the world of trading more seriously , and i cant decide which type of instument is the right for me. I have had some experience trading forex only in demo accounts and i know the basics of the trading world.

Recenetly i have read some articles which advised that one should fit his strategy to his risk tolerance, account balance and mental attitude. As far as knowing myself i concluded that daytrading is not suitable for me , as usually i can get easily distracted, i cant stay concentratedd for more than 2 hours and i dont like working under pressurre. So i am thinking of getting into swing/trend trading.

I also read that for noobies its good to concentrate on one instrument only and try to study it as hard as possible. I am intending to choose one market and instrument such as maybe one index like FTSE, S&P or DAX. I am not sure why but indeces are more appealing to me than currencies,stocks and options.

However, i also read that with small account you can trade indeces on leverage only through CFD's or Spread bets which would have overnight costs and higher spreads if i am swing/trend trading them.

My question is if i trade CFD's and hold them for several days/weeks with a small account would the interest costs eat my account pretty fast ? Also which index would be a more suitable one for me in terms of volatility, gaps and spreads ?

Thank you.

 

[malaguti]

Hello all , i am just getting into the world of trading more seriously , and i cant decide which type of instument is the right for me. I have had some experience trading forex only in demo accounts and i know the basics of the trading world.

Recenetly i have read some articles which advised that one should fit his strategy to his risk tolerance, account balance and mental attitude. As far as knowing myself i concluded that daytrading is not suitable for me , as usually i can get easily distracted, i cant stay concentratedd for more than 2 hours and i dont like working under pressurre. So i am thinking of getting into swing/trend trading.

I also read that for noobies its good to concentrate on one instrument only and try to study it as hard as possible. I am intending to choose one market and instrument such as maybe one index like FTSE, S&P or DAX. I am not sure why but indeces are more appealing to me than currencies,stocks and options.

However, i also read that with small account you can trade indeces on leverage only through CFD's or Spread bets which would have overnight costs and higher spreads if i am swing/trend trading them.

My question is if i trade CFD's and hold them for several days/weeks with a small account would the interest costs eat my account pretty fast ? Also which index would be a more suitable one for me in terms of volatility, gaps and spreads ?

Thank you.

Your strategy should ideally include your risk tolerance, rather than fitting one around the other. As for which index, I'd probably have said none of them unless your account is large enough to cope with how far away your stop is going to be if you are looking at longer time frames
That said, which chart do you think might be slightly more favourable to trade, A or B?

 

[viratfx]

the spread is immaterial if youre swing/position trading.

imho cfds are the way to go. Find a good broker though

IB and FXCM are my pick

 

[gerryg]

If you prefer to pursue long-term trends then you should take a careful stock of several things that may both contribute and put an unhealthy sign on your trading. The most important is swap charges, also known as rollover. Before entering into a trade to any asset or pair, check rollover list available at your broker website. It should look like that http://bit.ly/1rtrkXc. There are long and short swaps, but note that you can both benefit and miss from it. Calculate losses and profit from before opening any trade, because if you expect market to be relatively flat, then swaps can take primary role in trading..

 

[hardrlz]

malaguti thats why i am oriented towards leveraged instruments so i can have higher exposure with smaller account balance. I am guessing that after i am comfortable enough to trade with real money i would be putting around 10 k . By looking at the charts i would say definately A , as it looks more harmonic and without heavy downturns

 

[malaguti]

malaguti thats why i am oriented towards leveraged instruments so i can have higher exposure with smaller account balance. I am guessing that after i am comfortable enough to trade with real money i would be putting around 10 k . By looking at the charts i would say definately A , as it looks more harmonic and without heavy downturns

Yeah, it was a pretty easy option. You will probably know chart B is the FTSE. Chart A is a stock. Stocks can also be leveraged. I really wouldn't write them off just yet. There are many stocks within the FTSE that trend far far better than an index and probably far better than this stock I chose.
Follow your own instincts of course, just to give you something more to think about

 

[hardrlz]

You are right , but somehow i dont feel secure with stocks as they can be manipulated and require indepth fundamental knowledge, also as i said i want ot concentrate on few instruments as to learn how they behave and build my strategy around that.

 

[malaguti]

You are right , but somehow i dont feel secure with stocks as they can be manipulated and require indepth fundamental knowledge, also as i said i want ot concentrate on few instruments as to learn how they behave and build my strategy around that.

I understand, I do find though that any "manipulation" is less apparent on the higher time frames and as far I'm concerned, they don't need fundamental knowledge at all. I do very well without knowing a damn thing about the company's fundamentals despite having financial qualifications.
Anyway, you're decision and feel free to ignore anything I've said, you need to do whats right for you.
Give me a shout if you change your mind though. And Good luck

 

[yellowfloyd]

Hello all , i am just getting into the world of trading more seriously , and i cant decide which type of instument is the right for me. I have had some experience trading forex only in demo accounts and i know the basics of the trading world.

Recenetly i have read some articles which advised that one should fit his strategy to his risk tolerance, account balance and mental attitude. As far as knowing myself i concluded that daytrading is not suitable for me , as usually i can get easily distracted, i cant stay concentratedd for more than 2 hours and i dont like working under pressurre. So i am thinking of getting into swing/trend trading.

I also read that for noobies its good to concentrate on one instrument only and try to study it as hard as possible. I am intending to choose one market and instrument such as maybe one index like FTSE, S&P or DAX. I am not sure why but indeces are more appealing to me than currencies,stocks and options.

However, i also read that with small account you can trade indeces on leverage only through CFD's or Spread bets which would have overnight costs and higher spreads if i am swing/trend trading them.

My question is if i trade CFD's and hold them for several days/weeks with a small account would the interest costs eat my account pretty fast ? Also which index would be a more suitable one for me in terms of volatility, gaps and spreads ?

Thank you.

The thing with the index is you can get carried away with it and end up punting a lot if you solely concentrate on it. I often trade the index but only as a hedge. If I am fairly long and the market is starting to come off I may put a short contract as a hedge. But I wouldn't solely speculate on the Index. Find it too hard to call , too many factors influence it .

 

[hardrlz]

Arent stocks influenced by more factors ? If i am not mistaken indeces are influenced mostly by fundamental economic factors , while stocks include company specific factors and thus bear systematic risk as well ? I beleive that ones strategy should be based both on technical and fundamental analysis and thats why i am trying to concentrate on an instrument where i can incorporate efficiently both.

 

[malaguti]

Arent stocks influenced by more factors ? If i am not mistaken indeces are influenced mostly by fundamental economic factors , while stocks include company specific factors and thus bear systematic risk as well ? I beleive that ones strategy should be based both on technical and fundamental analysis and thats why i am trying to concentrate on an instrument where i can incorporate efficiently both.

as far as Im concerned they are both divorced of each other.
If the fundamentals of a stock are good, and its in a down trend I'd be daft to think of buying into it. If its in an uptrend, and some other news come out, I'd be daft to try and second guess whats going to happen, and then get out.
There is only one common denominator, the trend. the technical analysis not the fundamentals.
Let me give you a couple of real examples.
Apple, the death of steve jobs what do you think should have been the effect on the share price. I say should, because you will know what happened, it had absolutely no effect, if anything the price started going up more.

Another example, 9/11 why did the markets rise on such catastrophic news?

This is just my opinion of course, but second guessing based on news, political or economical events is pointless. It will be displayed in the chart and you will have loads of time to get out as long as you are doing the analysis of course.
Also trying to rationalise movements in the price based on these factors is also just random guesswork. Stocks rise due to scotland vote, next minute they're going down..oh thats because of threat of war, then they go up again, oh thats because we're feeling more relaxed about IS militants.
Complete and utter boll0x
However, its whatever works for you. If you feel you need to be able to justify getting into an uptrend, then so be it. I don't. Its up, and as long the sector is up, I'm good. Anyway I could go on and on, but I'm blissfully unaware of what analyst is spouting next. It works for me, thats only where my opinions come in.
Anyway, look good luck like I say and wish you the best

 

[hardrlz]

Thank you for your input I am way behind of knowing what would eventually work out for me , as right now the only stuff i know are basic definitions and the way the markets operate , so i hope in the near future i will have enough beginner practice to start crafting a sustainable strategy. Maybe you are right and i will eventually find out that technicals is what is right for me , maybe i will go more into fundamentals , but as for now i am trying to figure out a step by step plan as to how i am going to gather all the knowledge needed for designing and implementing the right strategy for me