Diary of a swing spread better

[hungvir]

the size of your position should not dictate the position of your stop your system and the data u use to evaluate the instrument should, if you feel that you would lose too much putting your stop where it should be then your stake is too high and you need to look at your money management.

Remember greed and fear are the enemy, your trading should leave you feeling relaxed or even better bored. Thats how you know your doing it right.

So I know that you're bored at the moment

To be honest, I was thinking of quitting this biz/game/hobby/... several times. I just think that there're many more interesting things out there to do than sitting in front of a 'one eye monster' and staring at the bar charts. But I've decided to stay in this biz for a while. It's not always the most interesting one but enough to stimulate me.

Cheers,

Hung

 

[hungvir]

Hi Splitlink,
Just the fact that you said you supported Espanyol made me realize what a clever fellow to follow you were. I'm Spanish but live in Southport (UK), and I have been an Espanyol fan since I was a kid at school.

I'm not very good at trading yet but I'm trying my best to learn fast. I've joined Finspread and I'm reading through their Academy Trading Course which I find interesting but they explain things as if one were an expert already, not understanding that beginners (like me) need more down to earth explanations.
Anyway, I've just discovered T2W and I think it's great! I'll be reading your wise and cracking bits of advice!!
Cheers, Minarque

Hi Minarque,

I am standing in for Split and here's a bit of advice if you want it.

Take advantage of Fins' 1p bet for the first 8 weeks and ask them to re-enroll you to their Trading Academy again so that you can trade with as small as 1p per point for a total of 16 weeks. I did just that though the minimum I traded during the period was 20p. If you ring Fins' help line and were refused the extension of your 1p bet, ring again. One of them will be flexi enough to extend it for you.

For the record, I increased my stake to 10 pounds a point with Worldspreads within the first three weeks of spread betting and became an instant loser.

Hope this is helpful and if you have any question, just ask!

Good trading,

Hung

 

[Splitlink]

Hi Splitlink,
Just the fact that you said you supported Espanyol made me realize what a clever fellow to follow you were. I'm Spanish but live in Southport (UK), and I have been an Espanyol fan since I was a kid at school.

I'm not very good at trading yet but I'm trying my best to learn fast. I've joined Finspread and I'm reading through their Academy Trading Course which I find interesting but they explain things as if one were an expert already, not understanding that beginners (like me) need more down to earth explanations.
Anyway, I've just discovered T2W and I think it's great! I'll be reading your wise and cracking bits of advice!!
Cheers, Minarque

I'm glad my comments teased you out of being a lurker and I wish you luck with your trading.

As Hung says, use the special Fins rates as much as possible to get the maximum education as cheaply as possible, but take the market really seriously. Don't say " It's only a penny a point", or you may learn bad attitude habits that will follow you when you trade larger amounts.

Let us know how you are doing.

Split

 

[Splitlink]

Bought to close GUS at 0815 for 453.9 +12.1 points.

Split

 

[Splitlink]

That was a mistake. I could have done better. A bit trigger happy this morning

Split

 

[Splitlink]

Everything is going down this morning but I'll try a trade on NRK, with a close stop. Buy to open NRK at 1012

Split

 

[barjon]

Everything is going down this morning but I'll try a trade on NRK, with a close stop. Buy to open NRK at 1012

Split

mornin' split

interesting one - i thought i knew (broadly) your sets ups but that one floors me have you changed tack?

good trading

jon

 

[Splitlink]

mornin' split

interesting one - i thought i knew (broadly) your sets ups but that one floors me have you changed tack?

good trading

jon

I know! I should be shorting in this market and I had a good one with GUS but got out too early. Don't get confused with my strategy, it hasn't changed much- just one of my quirky days.

Split

 

[Chorlton]

Hi Hung,

Hope you're well Sorry I haven't replied until now but I've recently been away.

I've been doing some further research into Fibonacci (following your last reply) and I've noticed that a number of my shares do seem to correlate with these retracement levels!!!

However, with my cynical head on I can't seem to accept if there is really any connection between what an individual share price is doing and these retracement levels. At the moment I seem more inclined to believe that this is just a coincedence!!! Consequently, I'm not sure whether I would rely on Fibs as part of a trading strategy. I'd be interested in your views & experience on this though.

On a seperate note, I do have a couple of questions which are aimed at all the regular posters on here, such as yourself Hung, Split, and others.

1. Money Management

I've read with interest the different entry strategies that are adopted but are Risk:Reward ratio's considered (and better still adhered to) before opening a position?

If so, in the case of stocks breaking out into new high's for example, how does one choose an appropriate Exit level? The most immediate answer I can think of is to base it on a % profit from the opening level, but obviously this isn't very technical and has no guarantee that this level would be reached. So what would be a better approach???

If a Risk:Reward ratio is not used, then how does everyone decide how much they are willing to lose on each individual trade and does the volatility of an individual stock also have any effect on making this decision?


2. Indicator usage

Secondly, after reading the previous posts on this bb, the underlying strategy that others seem to adopt (including myself) is to concentrate on those stocks which have a good underlying trend.

Consequently, can I ask what indicators others use to help confirm their individual trading decisions?

Split .... I think I read previously that you (apologies if I've got the wrong person though) don't use any other indicators, in which case can I ask what you rely on to confirm a trading decision?



Many Thanks.... and apologies in advance for the long post!!

Chorlton

Hi Chorlton,

Let me explain the reasoning behind the method I am following.

Assuming the trend has not changed (the price has dropped thru the most recent low for most shares, so this assumption is a bit feeble), I want to buy when the market shows some relative strength which may signal the end of the correction. That is when the price breaks thru the previous day's high by about 10 points (to avoid stop hunting monsters . In effect, I assume that the previous day's low would be a new significant low and the price would never get there again unless this bull market turns into a bear one.

I may be wrong and would end up losing hundreds of points but the rewards are thousands of points as well (for multiple longs).

Even if I use Fib lines to place my stops, the risk is still too much. But I am willing to take that risk. I still believe there're lots of money out there and all the fund managers will come in at a price they deem good enough. At the end of the day, only amateurs lose. The smart guys have already by put options weeks ago.

Good trading,

Hung

 

[barjon]

hi chorlton - 'scuse me butting in :cheesy:

so far as fibs are concerned lots of people use them and it's surprising how often the price at least shudders if not reverses at the fib levels (particularly, in my experience, fib50%). i don't use them as a primary tool but i do take note of them.

on money management]: in my opinion "target" always sounds a bit to precise for my taste. i think of it in two ways - firstly, the level where i will exit to protect and secure my capital (i close half position when i've got one to one - ie: if stop loss is 10 points the first exit is a 10 points + costs) - secondly, the level i will close the rest (usually associated with earlier support/resistance levels).

in your open sky break out scenario there will be no earlier s/r for guidance - i don't trade these so your guess is as good as mine.

my stoploss is variable and associated with signal price bar and i won't enter if the first "target" does not have clear water. ie) no s/r in the way.

so far as indicators are concerned i keep my eye on 15 day sma and accummulation/distribution but neither represent a primary condition for entry in my rules. for me, price action rules ok

just what i do, not what should be done - if you see what i mean

good trading

jon

 

[Chorlton]

Hello Jon,

No need to apologise about butting in. Afterall, the purpose of bb’s is to share info & experiences!!!

Interesting point about Fibonacci Retracements. In your experience are there any specific type of shares which perform better with regard to these retracement levels compared to others. Ie. Those which trade with high volume, or have low volatility, etc, etc.

On Money Management you said “i think of it in two ways - firstly, the level where i will exit to protect and secure my capital (i close half position when i've got one to one - ie: if stop loss is 10 points the first exit is a 10 points + costs)”

Is it possible for you to clarify what you mean as I seem to be a little confused with your approach. For instance, using your example of 10 points for both your stop and your first exit, if the price initially moved in your favour to say just below this first exit level ie. 8-9 points but then fell 20+ points, your position would be stopped out at a loss, even though you were initially in profit.
However, if on the otherhand the price continued to move in your favour (rather than fall back) then after 10 points, 50% of your position would be closed off which seems a bit of a waste as ideally we want to let our profits run!!

PS. Please don’t think I’m criticising your approach though as that’s not my intention!!

In my approach I use a stepped strategy as follows.

1 Initially, I place my stop at a level which if breached confirms that my decisions for entering the trade were incorrect. This is probably the same for most people.
2 If the price moves in my favour then I move my stop to my Break Even point (which allows for the spread cost for entering the trade). If the price then moves against me below this level, I am stopped out but lose no capital… but equally make no profit!
3 If the price moves further in my favour I then move my stop to a level where I am happy to take profit should the price reverse and I get stopped out. This varies but normally its around 2-3 times my stop distance. I believe where possible a risk:reward ratio of 1:3 should be used but that’s only my opinion.

If the price continues to move in my favour without my stop being activated (remember I normally only trade stocks with solid underlying trends) then I have 2 choices.

Either (i) I move my stop further up to lock in more profit if I feel that the move has run out of momentum and may suddenly reverse or (ii) if I feel that the trend is still intact but a slight pullback is possible I then modify my original stop to 50% of my original open position and then add a new stop (again 50% of my open position) at a point very near to the current price.

With regard to indicators I have also recently started using the Accumulation / Distribution line but currently not sure how useful it is. Unfortunately, I am unable to back test so have to rely on what happening now to confirm the reliability of a new indicator.

Therefore I’d be interested in your views & experience about this one.


All the best,

Chorlton

hi chorlton - 'scuse me butting in :cheesy:

so far as fibs are concerned lots of people use them and it's surprising how often the price at least shudders if not reverses at the fib levels (particularly, in my experience, fib50%). i don't use them as a primary tool but i do take note of them.

on money management]: in my opinion "target" always sounds a bit to precise for my taste. i think of it in two ways - firstly, the level where i will exit to protect and secure my capital (i close half position when i've got one to one - ie: if stop loss is 10 points the first exit is a 10 points + costs) - secondly, the level i will close the rest (usually associated with earlier support/resistance levels).

in your open sky break out scenario there will be no earlier s/r for guidance - i don't trade these so your guess is as good as mine.

my stoploss is variable and associated with signal price bar and i won't enter if the first "target" does not have clear water. ie) no s/r in the way.

so far as indicators are concerned i keep my eye on 15 day sma and accummulation/distribution but neither represent a primary condition for entry in my rules. for me, price action rules ok

just what i do, not what should be done - if you see what i mean

good trading

jon

 

[barjon]

..........................Is it possible for you to clarify what you mean as I seem to be a little confused with your approach. For instance, using your example of 10 points for both your stop and your first exit, if the price initially moved in your favour to say just below this first exit level ie. 8-9 points but then fell 20+ points, your position would be stopped out at a loss, even though you were initially in profit.
However, if on the otherhand the price continued to move in your favour (rather than fall back) then after 10 points, 50% of your position would be closed off which seems a bit of a waste as ideally we want to let our profits run!! .........................


Chorlton

chorlton

well, i find that i often get off to a stuttering start where moving too quickly to b/e gets me stopped out of good moves. all i can say is that i review every 100 trades and that this continues to give me the best results overall.

basically i know that i have very good odds to make 1:1 so that's the bread and butter trade if you like. but there is a reasonable chance of going much further which is why i leave part of the whole position in play.

does that explain it better

good trading

jon

 

[Chorlton]

Hi Jon,

If you are reviewing your strategy on a regular basis and it is still the most effective method for you then good on you :cheesy:

Happy Trading,

Chorlton

chorlton

well, i find that i often get off to a stuttering start where moving too quickly to b/e gets me stopped out of good moves. all i can say is that i review every 100 trades and that this continues to give me the best results overall.

basically i know that i have very good odds to make 1:1 so that's the bread and butter trade if you like. but there is a reasonable chance of going much further which is why i leave part of the whole position in play.

does that explain it better

good trading

jon

 

[hungvir]

Hi Hung,

Hope you're well Sorry I haven't replied until now but I've recently been away.

I've been doing some further research into Fibonacci (following your last reply) and I've noticed that a number of my shares do seem to correlate with these retracement levels!!!

However, with my cynical head on I can't seem to accept if there is really any connection between what an individual share price is doing and these retracement levels. At the moment I seem more inclined to believe that this is just a coincedence!!! Consequently, I'm not sure whether I would rely on Fibs as part of a trading strategy. I'd be interested in your views & experience on this though.

On a seperate note, I do have a couple of questions which are aimed at all the regular posters on here, such as yourself Hung, Split, and others.

1. Money Management

I've read with interest the different entry strategies that are adopted but are Risk:Reward ratio's considered (and better still adhered to) before opening a position?

If so, in the case of stocks breaking out into new high's for example, how does one choose an appropriate Exit level? The most immediate answer I can think of is to base it on a % profit from the opening level, but obviously this isn't very technical and has no guarantee that this level would be reached. So what would be a better approach???

If a Risk:Reward ratio is not used, then how does everyone decide how much they are willing to lose on each individual trade and does the volatility of an individual stock also have any effect on making this decision?


2. Indicator usage

Secondly, after reading the previous posts on this bb, the underlying strategy that others seem to adopt (including myself) is to concentrate on those stocks which have a good underlying trend.

Consequently, can I ask what indicators others use to help confirm their individual trading decisions?

Split .... I think I read previously that you (apologies if I've got the wrong person though) don't use any other indicators, in which case can I ask what you rely on to confirm a trading decision?



Many Thanks.... and apologies in advance for the long post!!

Chorlton

Hi Chorlton,

Dont' worry about your long post 'cos I am still the record holder of having the longest one I suppose

I actually replied to your post when I saw it earlier today but when I clicked 'Sumit Reply' it just disappeared I just saw Jon's post (great one, Jon!) and I agree with what was said.

About why Fibs work, I don't think any one has a good enough answer. It's the same mystery like why two thirds of the earth are water and water accounts for more than two thirds of the human body. There're people who use Fibs more extensively but for me I just watch them to make sure that I don't buy/sell at the wrong price level.

With regards to your question about exiting strategy, I find the method that Marc Rivalland (author of Marc Rivalland on Swing Trading - a great book) uses to be quite effective. That's looking to get out of your positions when the price has been above (not the whole bar) the upper or lower bands of the Bollinger Bands (21 day/ 2 deviation) for three consecutive days.

I can't say much about indicators because for me their application is still 'work in progress'. But I quite like RSI. I am also looking at MACD as from what I read the divergence between the price itself and MACD is significant enough.

Hope this helps.

Hung

 

[hungvir]

And another update - I just made the largest loss measured in points - a 216 one thanks to XTA. It went down the hill and the break did not function

As Split said the market was going down and I was fighting it. I actually looked at XTA's chart and it could manage to go up big time the last time it made a lower low. But not this time. I have to admit the writing was on the wall and I should have listened to the market more. But thanks to my so-so money management, I could cope with this.

 

[hungvir]

Decided to short the DOW at 11097. I have an hour to make some profit (for me or for somebody else.

 

[hungvir]

It's coming down and stop loss is around 11125.

 

[hungvir]

I remember reading a story in the Sunday Times in which the author tolds us to unbucle our seatbelt because there's still good value in the market. If only people care about value.

 

[hungvir]

It's coming down and stop loss is around 11125.

Stopped out. It went up to 11140. That's it for today.

 

[hungvir]

Idleness is mother of all evil trades I know day trading is not for me but I still dive in from time to time. I'll be waitting to short the next rally now.