Best Thread How To Make Money Trading The Markets.

[amit1986]

There are many reasons to trade only equities and not futures, besides personal preferences.

1) There are thousands of stocks in the U.S. Even if some are too thin to trade, there is a good possibility that another stock may be moving/trending. The greater the possibilities, the higher the probability you are likely to find something to trade, especially on flat days. This is not necessarily the case with futures. Realistically, only a few contracts are liquid enough to trade and this limits your possibilities, especially on grinding, boring days. On the extreme end, you recommend only trading the ES - talk about putting all your eggs in one basket!

2) There is no uptick rule anymore in the U.S. markets. So, you are able to short at anytime.

3) Scalping is actually quite easy. Large orders get filled within a split second using direct access brokers like Interactive Brokers. I scalp everyday (although not intentionally) and it works quite well.

4) Not too sure about the taxes argument as I am not an accountant, but if you do the research, there are smart ways to work around them.

The primary reason for trading stocks though is my first point - the variety is so large, that there will almost certainly be something happening. Can't necessarily say that about the futures though...

why trade equities not futures ? you pay more taxes for your gain at the end. you have to put more money $25k for day trading. and after u sell u have to wait for 3 days for ur fund to return. plus there is an uptick rule. its harder to scalp.
I'm just v confused with all of equity traders.

 

[razor99]

There are many reasons to trade only equities and not futures, besides personal preferences.

1) There are thousands of stocks in the U.S. Even if some are too thin to trade, there is a good possibility that another stock may be moving/trending. The greater the possibilities, the higher the probability you are likely to find something to trade, especially on flat days. This is not necessarily the case with futures. Realistically, only a few contracts are liquid enough to trade and this limits your possibilities, especially on grinding, boring days. On the extreme end, you recommend only trading the ES - talk about putting all your eggs in one basket!

2) There is no uptick rule anymore in the U.S. markets. So, you are able to short at anytime.

3) Scalping is actually quite easy. Large orders get filled within a split second using direct access brokers like Interactive Brokers. I scalp everyday (although not intentionally) and it works quite well.

4) Not too sure about the taxes argument as I am not an accountant, but if you do the research, there are smart ways to work around them.

The primary reason for trading stocks though is my first point - the variety is so large, that there will almost certainly be something happening. Can't necessarily say that about the futures though...

well said Amit. I trade both equities and futures (primarily ES, Russell and Crude). I can be in multiple trades at once in equities, and find that I can control risk better in equities and there's always something to trade. By controling the risks I mean that my ave win to ave loss is between 3 and 4 to 1 while trading equities it is more 1 to 1. In addition if I am trading say 10 ES contracts using a tight stop of say 1 point, that is a 500 dollar loss. I never let my equities loss approach anywhere near that. Also, my futures setups sometimes (frequently) never occur and I don't want to be at the screen all day waiting. Any day of the week I can find a good stock(s) to trade right at the open and be done in an hour while my ES or CL or TF setups may never happen. I do admit that I am much more picky on setups for ES/Crude/Russell hence the frequent no trades. I am much more a discretionary trader on stocks. My favorite setup is similar to Mr. Charts, if I see one moving, get on with a tight stop and exit when momentum dies off. Another setup I like to use is to fade the gaps (only after the fade starts)and then reverse on a gap continuation. My last mainstay is a breakout trade. I only get on board if it has bounced of support resistance at least once. If it blows by on the first attempt, oh well...

Just my 15 cents

 

[Mr. Charts]

Not posted for a while as I've been away on holiday.
Thanks for the excellent posts, timsk, amit and razor.
Richard

 

[Mr. Charts]

Here's one from today using this method which illustrates a point I don't think I've made before.
+40c per share in three minutes in a strongly trending stock.
The point is that this very much looked like a volume blow off to me so it seemed a good idea to exit before any possible quick reversal.
In fact, immediately after my exit the stock fell by a whole dollar.
Never get greedy, take what the market offers; you can only eat a mouthful at a time so if there is a good reason to exit, I take it.

I occasionally trade FX using various methods and one trade this morning was using a modified version of this particular method.
If amyone would like me to start posting those occasional FX trades, email me and I'll start a new thread.
Richard

 

[Mr. Charts]

And I mean email, not PM. I don't read the latter unless I already know the sender for reasons mentioned early in the thread.
I did actually read a PM recently and the author wasn't prepared to bother reading the thread and expected me to provide him with a brief summary with full instructions on how to make money day in and day out that he could write on the back of a postcard !

Richard

 

[timsk]

One of the exit techniques that Richard recommends is to set a stop at or just below the previous candle. With time based charts, it's quite common for momentum to ease off the pedal at some point in the trend - which results in a small candle. This increases the probability of being stopped out on the ensuing candle. A loss of momentum is often a 'heads up' that the trend may be coming to an end, so this is a good time to exit. Equally, it could just be catching its breath and have a lot further to run.

A variation on this technique is to apply exactly the criteria to non time based charts such as Kagi, Renko or Point & Figure. The downside is that you won't always exit in quite such a timely fashion and give back a little of your profit. The upside is that you won't get stopped out early and be able to ride a good many trends further than you would with purely time based candle or bar charts.



The chart above is a Renko chart with tail wicks of Richard's OMVI trade. The green up arrow indicates where Richard got in. As you can see, had you got in earlier around the pull back at 22.25, you could have remained in the trade all the way up to the top - as no candle breached the low of the preceding candle. If you weren't alert to to the volume blow off, you'd have been stopped out at the breach of the low of the final green candle. Personally, I like Renko and P&F charts so that I don't have to spend my time agonising over - and interpreting the 'meaning' of candlesticks. I understand that for many this is not an advantage - but a severe handicap! So, this suggestion certainly isn't a better solution, merely a variation on the theme that may suit some traders.
Tim.

 

[timsk]

I occasionally trade FX using various methods and one trade this morning was using a modified version of this particular method.
If amyone would like me to start posting those occasional FX trades, email me and I'll start a new thread.
Richard

Hi Richard,
Hope you had a good holiday!
I don't touch Forex myself, but I have no doubt that this would be an even more popular thread than this one is, given the obsession that most T2W members appear to have with that market!

Tim.

 

[amit1986]

Nice trade on OVTI!

If only all stocks displayed similar breakout-momentum...!

Amit

Here's one from today using this method which illustrates a point I don't think I've made before.
+40c per share in three minutes in a strongly trending stock.
The point is that this very much looked like a volume blow off to me so it seemed a good idea to exit before any possible quick reversal.
In fact, immediately after my exit the stock fell by a whole dollar.
Never get greedy, take what the market offers; you can only eat a mouthful at a time so if there is a good reason to exit, I take it.

I occasionally trade FX using various methods and one trade this morning was using a modified version of this particular method.
If amyone would like me to start posting those occasional FX trades, email me and I'll start a new thread.
Richard

 

[Mr. Charts]

Thanks for your excellent contribution, timsk.

I'm not sure if the interest is there for an FX thread from me as there have only been a handful of emails.
Richard

 

[timsk]

I'm not sure if the interest is there for an FX thread from me as there have only been a handful of emails.

Hi Richard,
That doesn't altogether surprise me. For the most part, US equities traders who follow this thread don't trade forex (probably). One thing is for sure, there are more T2W members who trade forex (or want to learn how to trade it) but never venture near equities forums like this one. Indices forums possibly- equites no! As you know, I don't trade forex and before taking up the Content Manager post, I rarely went anywhere near those forums - except to read specific threads by members like Newtron Bomb. It's a shocking thought, but mention the name Mr. Charts on forex forums and the typical response could well be 'Mr. who?'

Tim.

 

[razor99]

Hi Richard,
Hope you had a good holiday!
I don't touch Forex myself, but I have no doubt that this would be an even more popular thread than this one is, given the obsession that most T2W members appear to have with that market!

Tim.

Richard,
Once again thank you very much for the education. I would love to see anything you want to post - Forex, Indicies, Securities, pork bellies!!... Also, I know you have posted this somewhere on this thread, and it took me awhile to get through it once,I hate to click through it again. Can you reiterate what you use for a scanner (quotetracker?) and a few details on how you set it . Would you say that the majority of hits are from your homework watchlist or from the scanner? I have been having moderate success using this setup, but am having trouble finding the multi bar trends (usually see them after I know its too late judging from T&S buying/selling presssures.

Thanks again

 

[Mr. Charts]

Hi Tim,
That's true, there probably aren't too many FX traders reading this thread.
I'll start a thread with just occasional posts illustrating a set up similar to the one on this thread.
Since the US isn't open during the UK morning I have most mornings free so occasionally I have a look at the major pairs. Sometimes a nice easy set up of the dozen I use on US shares crops up - in which case there's no point leaving money lying around unwanted
Richard

 

[Mr. Charts]

razor,
Thanks for the kind words. I use eSignal turbo scanner which includes several different scanner types.
I use different ones at different times and with different parameters, but you can simply use other scanners looking for big movers. I also read news stories pre-market but DON'T trade the news as such, but look to see if any of my set ups occur and then if they trigger. Gappers are also of interest but not necessarily so.
I do scan frequently and have my watch list so usually find the sort of set up in this thread, but as I said I have other set ups as well.
Hope that help,
Richard

 

[tradespreads]

I wouldn't mind dental work on FX.

 

[Mr. Charts]

I spent this afternoon helping someone in a live session and there were two trades using just the one set up described in this thread.
PWER was stopped out using the method described in this thread for just +13c per share.

 

[Mr. Charts]

The other one was a nice big fat juicy one, CTRP, which produced a gain of $2.60 per share. So for a 100 share beginner for example, that was $260, for someone trading 2000 shares for example, $5200.
The exit was because visible buying started to appear.
Both stocks were found using a scanner after market open.
Richard

 

[Mr. Charts]

An important point is that not only was one long and the other short and in different time frames, but both were clear and definite trends. This is one of the reasons why I like trading US stocks intra-day; there are many thousands of stocks you can use a scanner on, whereas with other trading instruments like FX there are very few choices. I like going for clear and definite moves and the huge range of stocks means you can find opportunities every day.
Richard

 

[Mr. Charts]

Thanks for the repeated spam clearance, mods.

 

[barjon]

Thanks for the repeated spam clearance, mods.

It's a pleasure!! They don't give up this latest lot,do they?

I'm posting to ask people not to quote their posts when they object since that means the link to their site is still available - which is what they are after - unless mods happen to spot the posts and delete. We usually "block" delete all the posts from an offender which is why we don't necessarily see the follow up posts that members make.

Ta.

jon

 

[Chartsy]

yeh, if i was ever to day any sort of directional day trading, i'd pick stocks over forex,futures and others. Just that you have thousands and thousands of stocks...get a good scanner as the one in this thread...and pick the market conditions you like yourself rather than forcing yourself to trade whatever is happening...though it does require more money, i'd say at least $50k to day trade stocks