Diary of a swing spread better

[hungvir]

My first taste of my modified strategy - a 87 point loss on EMG.

I actually made a mistake. I bought December contract and thought 'market price' meant the share price. It actually meant future price and my stop loss was too far away. Another lesson learnt.

Will place stop buy order again at 2631 and stop loss at 2543, risking 88 points again. But the stake will be just 50p, Fins' minimum.

 

[hungvir]

I may be wrong but I have a feeling that a correction is just around the corner for the indices. It's been six months from the last major one in October last year. Will the next rally be the last for a while?!

 

[hungvir]

Having said that, I am still looking for opportunities to long the FTSE. I'll let my stop loss take care of the rest.

 

[hungvir]

'How To Lose £5,000 This Year!'

Interesting article. And they even don't mention spreadbetting

 

[Splitlink]

Hi Hung,

May I criticise a little? I hope it is helpful. If you thought that EMG was going go break out why not get in at the bottom of the range? That way you will be closer to a stop. It's true that you could be wrong but the breakout was wrong, too, and my method would be cheaper because you stay in above the lowest low and leave when that low is penetrated.

For instance, if you had decided two days ago that EMG was a good breakout possibility and bought at the lower end of the bar you would have had all day yesterday to get a profit.

I rarely trade breakouts because I don't know where to put the stops. I prefer pullbacks in an established trend because I can decide where my stops will be.

I'll have just as many losers to winners but they are not so expensive, unless I get caught with an overnight gap.

To compare our methods on EMG. If I thought that it was going up I'd be buying near the open today, if it is near the end of yesterday's bar. If it was lower than yesterday's bar I'd leave it alone until it recovers to it. If it opens too far above I would look for another share and not chase it. Where I put my stop dictates on where my entry point will be.

I've got to go out but I thought I'd mention this while I am here. Hope it is of use and we can chat about it later.


Split

 

[Splitlink]

0813 Closed DGE 907.1 -2.6 points.

Bad start to FTSE this morning

Split

 

[Splitlink]

0851 Decided to have another go at DGE B/O 905.9

Split

 

[Splitlink]

0923 Given up S/C DGE at 901.6

Split

 

[Splitlink]

1155 B/O DGE for 907.4 on minimum stake. Trying something out :idea:

Split

 

[hungvir]

Hi Hung,

May I criticise a little? I hope it is helpful. If you thought that EMG was going go break out why not get in at the bottom of the range? That way you will be closer to a stop. It's true that you could be wrong but the breakout was wrong, too, and my method would be cheaper because you stay in above the lowest low and leave when that low is penetrated.

For instance, if you had decided two days ago that EMG was a good breakout possibility and bought at the lower end of the bar you would have had all day yesterday to get a profit.

I rarely trade breakouts because I don't know where to put the stops. I prefer pullbacks in an established trend because I can decide where my stops will be.

I'll have just as many losers to winners but they are not so expensive, unless I get caught with an overnight gap.

To compare our methods on EMG. If I thought that it was going up I'd be buying near the open today, if it is near the end of yesterday's bar. If it was lower than yesterday's bar I'd leave it alone until it recovers to it. If it opens too far above I would look for another share and not chase it. Where I put my stop dictates on where my entry point will be.

I've got to go out but I thought I'd mention this while I am here. Hope it is of use and we can chat about it later.


Split

Hi Split,

Thanks very much for your suggestions. It makes sense but it would go against the method I am using.

The rule is waiting for a three day drop in an up trend (as long as most recent low is not violated) and stop buy when the price goes up again (meaning previous day's high is breached).

I modified it to just two days and it did not seem to work.

If I strictly follow the three down day rule to buy in an up trend and three up day to sell in a down trend, the back-testing result for EMG in the last 24 months would be...

 

[hungvir]

Sold short on June 11, 04 when price dropped below 1628. Stop loss at 1661, most recent high, risking 33 points. Available profit 400 points. Holding period - 3 months.

 

[hungvir]

Next trade would have been at a loss

 

[hungvir]

The long on Nov 4 would have produced more than 160 points in profit after a week. If I'd stayed with the trade looking for better gains, I would have been stopped out on Jan 11 with a profit of just around 60 points making the RR ratio pathetic. The share was actually range-bound.

 

[hungvir]

There would have been no trades between Jan and June because either the 20 EMV's slope was still upward or there were no three up days in the down trend.

 

[hungvir]

The next long trade (opened after three proper down days in an up trend) would have been stopped out at a loss of 27 points.

 

[hungvir]

Both of the next two trades would have brought about a loss of above 40 points. But the trade after that would take us to today, a potential profit of more than 1000 points.

It does look like the system can produce as many as 5 or 6 consecutive losing trades but one big win like the most recent one would make it a winning strategy in the end.

 

[Lightning McQueen]

Hi Don,

Regarding trading the DOW, I almost stop day trading it. I am thinking of swing trading it, holding for days/weeks but I am not sure if my tiny capital is suitable for it. Chances are you would risk about 100 point a trade and if you apply the 2-5 per cent rule of capital at risk per trade, you would need quite a bit of money.

Best,

Hung

Hi Hung

yes you would be right about the required amount of capital required if not more to swing trade the dow and holding for weeks but it is swing trading the dow intraday that would require the least in my view.
maybe you should concentrate on stocks as split does if you dont like daytrading.
stop placement and risk / reward are quite contentious issues for members of these boards so no real help will be forthcoming for us on these, so we will have to sort them ourselves to fit our own strategies.

1155 B/O DGE for 907.4 on minimum stake. Trying something out :idea:

Split you have been busy posting hope all is going well on the trading front I see you have an idea good luck with it.

As for myself I am still short the Dow from 24th april not going well but not to bad either
will move the trade ticket from the "other thread" when I find it amongst all the posts
only 50 pts in the red so letting it run as I currently have a sell signal. I should be able to get better entries and exits next week as im on early shift and can be home watching.

Don

 

[hungvir]

Hi Don,

It's true that trading intraday would make stop loss on the DOW less of an issue. But as I can't afford to day trade it, I'll wait my capital is bigger before going back to it.

I assume most technical indicators would work well with the DOW as a large number of techies trade the index and the market.

Good trading,

Hung

 

[Splitlink]

Split you have been busy posting hope all is going well on the trading front I see you have an idea good luck with it.

Hi Don

Busy trading in and out, you mean! I've been trying to spot a low, by using a 5 minute chart- always a dangerous tactic. I had a good trade with AVZ the other day and am trying to make another good one before I lose the profits on it.

Hi Hung,

It is a peculiarity with trading that two people can have opposite opinions on a chart pattern and, with persistence, both can still make a profit.

I've always been of the opinion that the type of pattern you illustrate is more likely to be a pullback rather than a breakout. Obviously, you look at it differently. I must say that, looking at your charts, my pullback theory does not always hold water. I can only hope that we don't take each others money! I suppose, if I don't do EMG trades, that will take care of that problem!

Split

 

[Splitlink]

Are you both dealing with Fins? If so, are you using the tick charts on their new platform? I've just discovered them because I did not think much of the tick charts on their old platform. This is a welcome change, though.

Split