Diary of a swing spread better

[Chorlton]

Didn't you get something out of it yesterday when the FTSE went up 140 points plus? But it's down more than 100 points this morning. As I stay true to the rule of only shorting when the price starts to come down again after three up day, I did not short it.

Good trading,

Hung

Hello Hung,

Can you expand on your strategy as to why you short only after 3 up-days? Is it simply that you are trading a "Pull-Back" but obviously in reverse?

Also, as you are a trend follower, can I ask what confirms your decision to short a stock? Short-term MA facing downwards, etc???

Thanks........

Chorlton

 

[hungvir]

Hi Chorlton,

It's just that the strategy has been tested (by Marc Rivalland) and it shows that if you short when the price starts coming down after at least three days (it can be more as long as a higher high is not made) then the chances of being right are much improved. But I have to say during the recent up trend buying after just a two day drop would have made money as well.

And for confirmation, I just use a short term MA (8/13 day) and RSI (13 day). MA should rise and RSI best not overbought when buying and the reverse for going short.

If you do a quick back-testing, you'll see that it works quite well when the market trends. It just requires a lot of patience.

Later,

Hung

 

[Chorlton]

Hi Chorlton,

It's just that the strategy has been tested (by Marc Rivalland) and it shows that if you short when the price starts coming down after at least three days (it can be more as long as a higher high is not made) then the chances of being right are much improved. But I have to say during the recent up trend buying after just a two day drop would have made money as well.

And for confirmation, I just use a short term MA (8/13 day) and RSI (13 day). MA should rise and RSI best not overbought when buying and the reverse for going short.

If you do a quick back-testing, you'll see that it works quite well when the market trends. It just requires a lot of patience.

Later,

Hung

Thanks Hung,

I think I'm definately going to have to get this book by Marc Rivalland, as it seems like a pretty useful book

 

[barjon]

....................................By the way, I still did not get it that share price does not drop the day it goes ex-divident. Isn't it true that you don't get the divident if you buy the stock after that day and as thus you're entittled for a discount?.......................

hung

yes, the share price drops by the amount of the dividend on the open (sometimes with a strong share it's not noticeable - without the dividend there would have been an up-gap opening for example), but you can't take advantage of that drop with a short spreadbet - that would be too easy

with a rolling bet, for example, if the price closed at 500p and there's a 5p dividend the next day your bet will be re-opened at 495p to take account of the dividend.

good trading

jon

 

[hungvir]

Hi Chorlton,

It's just that the strategy has been tested (by Marc Rivalland) and it shows that if you short when the price starts coming down after at least three days (it can be more as long as a higher high is not made) then the chances of being right are much improved. But I have to say during the recent up trend buying after just a two day drop would have made money as well.

And for confirmation, I just use a short term MA (8/13 day) and RSI (13 day). MA should rise and RSI best not overbought when buying and the reverse for going short.

If you do a quick back-testing, you'll see that it works quite well when the market trends. It just requires a lot of patience.

Later,

Hung

And stop loss for short positions would be the high of the previous day and profit would be taken when price stays out of the top band of the Bollinger Band for three consecutive days.

 

[hungvir]

Thanks Hung,

I think I'm definately going to have to get this book by Marc Rivalland, as it seems like a pretty useful book

You're very welcome!

If you've read 'Trading Day by Day' then MR on Swing Trading should defintely be your next

 

[hungvir]

hung

yes, the share price drops by the amount of the dividend on the open (sometimes with a strong share it's not noticeable - without the dividend there would have been an up-gap opening for example), but you can't take advantage of that drop with a short spreadbet - that would be too easy

with a rolling bet, for example, if the price closed at 500p and there's a 5p dividend the next day your bet will be re-opened at 495p to take account of the dividend.

good trading

jon

Thanks, Jon! Got it now. It's indeed too easy to make money that way, isn't it The spread alone would be as big as the dividend.

best,

Hung

 

[hungvir]

Went short the DOW at 11076, stop loss 11108. All conditions for going short are satisfied - a lower low was made, the 10 period MA is sloping downwards, RSI is not oversold. Will see how it goes. Not sure if I am still in the market after this post though

 

[hungvir]

It went up to 11103, 5 points away from my stop but is coming back down again now.

 

[hungvir]

Though a profit is not yet shown, a limit order to take it is in at 11041

 

[hungvir]

The price dropped quite fast when I got in so the stop loss was a bit oversized. Did not have enough time to place a stop sell order.

 

[hungvir]

Wow, it's dropping fast. 20 points plus in profit already.

 

[hungvir]

Stop loss is down to 11082, 6 points away from entry.

 

[hungvir]

Stopped out of the trade. Stop sell order is in again at 11072. Stop loss is at 11111.

The price went dow to 11050, 9 points away from my limit buy order to take profit then went all the way up.

 

[Vaco]

i take it youve taken your profit on that dow trade now hung

Now that its on its way back up hopefully it will stay there for the close.

 

[hungvir]

You can do everything right but still not make money. Well, if I had gone for 20 points as my target then it would have been a winning trade. But then the risk reward would be a bit ... er crazy.

 

[hungvir]

No, I did not take it. Was waitting for more

 

[hungvir]

The 'trend' has changed to up now so I'll wait for three down bars to buy. This time I'll take profit when it gets to 20 points Not much volatility in the last hour anyway.

 

[Vaco]

If the dow closes above 11100 i'm confident thurs and fri will see it move further up. boy am i glad i went long again (watch me eat my words when it goes crazy again 2mmorow and i get stipped out

 

[hungvir]

Then I'll go short again next week