Day Trading Tactics

[tomorton]

Whatever you do, ignore the TV.

Price action is the key to trading. The date of the Annual Report or the BoE decision or the michigan sentiment survey are the 'get ready' signals but its the market's reaction to this (and other) news that tells you whether to go long or short. If you're basing a decision on the company accounts or business model or Chairman's statement or consumer fashions rather than share price, then you're investing not trading, and should therefore have an extended time frame for your position, it won't do for day trading. Investing on fundamentals is not wrong, but trading on fundamentals is nonsense.

But investing or trading, ignore the TV.

 

[GCC]

Investing on fundamentals is not wrong, but trading on fundamentals is nonsense.

Digress a bit. Sometimes even if you are investing in the long term you should ignore the TV as well. By the time the news comes out from the TV the things have already happened. This is not to say you shouldn't watch TV, but your decision of buying should be based on your own research instead of what people on the screen tell you.

Bulls make money, bears make money, and pigs got slaughtered. And pigs watch TV.

 

[Bakez]

Digress a bit. Sometimes even if you are investing in the long term you should ignore the TV as well. By the time the news comes out from the TV the things have already happened. This is not to say you shouldn't watch TV, but your decision of buying should be based on your own research instead of what people on the screen tell you.

Bulls make money, bears make money, and pigs got slaughtered. And pigs watch TV.

Nobody is making any decisions based on what is on the morning breakfast shows. Where has anybody even claimed to be doing this?

 

[Bolimomo]

This is exactly how I turned 100k into 500k on a demo account.

If you are so hot with a demo account, what's stopped you from finding a sponsor to turn $100k (or pound) into $500k in real money? You should see people lining up, begging you to manage their money for them!

I found this as in the same errogance level as someone who aced in Microsoft Flight Simulator to go and fly a Jumbo 747, or someone who beated everybody else in Internet Poker and now go to Las Vegas to enter the Worldwide Poker Championship.

 

[Bakez]

If you are so hot with a demo account, what's stopped you from finding a sponsor to turn $100k (or pound) into $500k in real money? You should see people lining up, begging you to manage their money for them!

I found this as in the same errogance level as someone who aced in Microsoft Flight Simulator to go and fly a Jumbo 747, or someone who beated everybody else in Internet Poker and now go to Las Vegas to enter the Worldwide Poker Championship.

I've already stated reasons why I'm not using real money and acknowledged the difference between a demo account and real money so don't have a fit.

 

[GCC]

Nobody is making any decisions based on what is on the morning breakfast shows. Where has anybody even claimed to be doing this?

Well, maybe I didn't express it correctly. I didn't mean that you have said making decision based on TV shows in your last post. I just wanted to point out that one should never make decision based on news alone because it could usually be lagging behind. It has nothing to do with your last post and I simply digressed from it.

But yes, there are fools who buy stocks merely because experts on TV recommend it or "insider news" say so. I am sure you can find a lot of them during the last phase of any bull markets.

 

[Splitlink]

We don't trade based on the news we see on TV? We trade based on proper trading statements and reports directly from the companies.

I know a trade where transaction fees eat up almost all of the profits isn't sucessfull, but at least I got in there, picked the right stock and at the right time with the pressure of real money rather than demo money over my head.

And are you suggesting that you completely ignore economic data and company news or accounts when trading (note: not the stuff you see on tv) when trading companies in the FTSE350?

There may be some, deep down, psychological reason that biases me to trade on the news, but I do not do it intentionally. I don't read a newspaper or Reuters, or anything beyond listening to the BBC and that only for current affairs.

I'm a chart reader, maybe not a very good one, but it gets me through the week.

I love good crime novels, I've always got one going when I am sat by the computer.

Split

 

[karl6666]

give it up then

I've already stated reasons why I'm not using real money and acknowledged the difference between a demo account and real money so don't have a fit.

Hey

I have an idea. The demos are great for learning your way around a new broker or charts. If your successful at your job, and you feel confident at trading, pull £5000 together, and as mentioned earlier try the asian markets on a night or take 4 weeks off work (holiday or on the sick). Feel the strain of using real money, feel the strain when your stop doesnt get hit, or the software crashes when your in a good profit, or 'phone a dealer' occurs. If you dont want to wrap in work, trying keeping positions open for a few days, with real cash, you can just track them every couple of hours, on your lunch breaks, or with a mobile phone

Your either ' in or your out dude '

Whats your thoughts and a way forward, are you prepared to commit yourself, do you have a plan

Karl

 

[tomorton]

A news trading strategy that I have used with profit (and later found also used by Alpesh Patel) and am happy to give away free is to -

prepare a list of FTSE350 stocks due to release results this week;
confirm that report is released as planned and that this occurred at 0700 as usual, and see the price of each at 0830-0900;
if price up on previous close (not on the day's open), and not by silly percentage (depends on market cap and spread) buy: hold until close or subsequent close, and then take (at least partial) profits;
use close of the session before the results release as stop-loss;
simliar rules, reversed, apply to shorting;
don't try this against the general market trend.

This works. Preparation and research are virtually nil. Money management rules if applied cap your risk on each trade. Limit these trades to 1 or 2 per day until highly proficient. Don't try to enter after 0930. Never be tempted to ignore or push back the stop-loss: the obvious rationale behind all this is that you let the thousands of market players do the analysis for you and it would be crazy to do that and then ignore their expert opinion. Price action is like free expert advice and a TA chart simply renders this into pictorial form.

There will be ways to refine this strategy, such as using a suitable TA indicator to verify the reliability of price action, ignoring entry signals if spread is excessive, pyramiding, scaling out etc. etc. The strategy is simple but I'm not saying its easy.

Success at trading is not a function of either IQ or scholarly preparation. And its important to recognise that most of us carry an inherent distrust of wealh that is not acquired through hard work: if we're talking about our own wealth, this translates into sub-conscious guilt, which can steer us into culs de sac of monastic levels of research, attending AGMs, screen-watching, news addiction, hoovering up share tips, collecting Annual Reports and so on, most of which tendencies are not just unnecessary for trading, but dangerous.

 

[karl6666]

poetry

A news trading strategy that I have used with profit (and later found also used by Alpesh Patel) and am happy to give away free is to -

prepare a list of FTSE350 stocks due to release results this week;
confirm that report is released as planned and that this occurred at 0700 as usual, and see the price of each at 0830-0900;
if price up on previous close (not on the day's open), and not by silly percentage (depends on market cap and spread) buy: hold until close or subsequent close, and then take (at least partial) profits;
use close of the session before the results release as stop-loss;
simliar rules, reversed, apply to shorting;
don't try this against the general market trend.

This works. Preparation and research are virtually nil. Money management rules if applied cap your risk on each trade. Limit these trades to 1 or 2 per day until highly proficient. Don't try to enter after 0930. Never be tempted to ignore or push back the stop-loss: the obvious rationale behind all this is that you let the thousands of market players do the analysis for you and it would be crazy to do that and then ignore their expert opinion. Price action is like free expert advice and a TA chart simply renders this into pictorial form.

There will be ways to refine this strategy, such as using a suitable TA indicator to verify the reliability of price action, ignoring entry signals if spread is excessive, pyramiding, scaling out etc. etc. The strategy is simple but I'm not saying its easy.

Success at trading is not a function of either IQ or scholarly preparation. And its important to recognise that most of us carry an inherent distrust of wealh that is not acquired through hard work: if we're talking about our own wealth, this translates into sub-conscious guilt, which can steer us into culs de sac of monastic levels of research, attending AGMs, screen-watching, news addiction, hoovering up share tips, collecting Annual Reports and so on, most of which tendencies are not just unnecessary for trading, but dangerous.

Sheer poetry Tomorton especially the last paragraph.....

Karl

 

[jak672]

Not wanting to flog a beaten horse, but there is a reason why the best market analysts are often 'too intelligent to trade'. As alluded to in earlier posts, being intensely analytical and cerebral, endless deliberating over big-picture macroeconomic events, building gigantic 100 mb spreadsheets etc....these abilities can be put to highly effective use as an analyst, ie forming market opinions without being directly responsible for transacting on them.

Tomorton, I understand it is difficult to completely change career track after 30 years, but you could definitely use your skills effectively and profitably in an environment removed from trading. If you want to put your money at risk yourself, value, longer term investing may well be a better fit...You're clearly an articulate, high IQ person, but paradoxically these highly marketable traits may prove the undoing of a budding trader. Best of luck.

 

[tomorton]

Hi jak672 - I don't disagree. Very few professionals such as economists or accountants have been known to make great traders, whereas they would seem to have a huge head start over the rest of us mortals. But they don't.

For myself, I did change career track (after 25 years) and went into trading (not full-time but to find a full income, two different things). I now use most of my daytime hours as a Project Manager.

 

[Pound foolish]

Wow what a thread!

Some good stuff in there!


First of all Iwont be losing thousands. My policy is to WAIT until a recovery if I get the timing wrong. The only loss would be if shares are suspended.

I hadnt realsied that there was a difference ebtwen a day trader (follows prices) and an Investor, (look for long term trends). At the moment I probably fall in somewhere in betweem which may or may not be great!

I would agree that I can and do deliberate over decisions and miss out at either end, (buy too soon, sell too soon,) but I have made gains I am happy with and can afford to step up without "losing my shirt"

I asked about the TV but realise that the TV news is OLD news as far as the Market is concerned.