Market chat

[options]

I can see this will start a healthy debate.

My view fwiw is that point D on that chart is the point to take a fib reading from.

But I would normally take a reading from the previous days close for intraday work.

On a longer time frame on a daily chart of say a few weeks/ months. I would take the first point to be from the lowest bar in a bull market and from the highest point downwards in a bear market.

Others I know are going to have their own views.

This will be interesting.

Also, interesting to note is that your own sup/res lines often coincide with some of the fib lines.


Options.

 

[dsmodi]

The Fibonacci discussion may be better suited to continue on any of these boards....

http://www.trade2win.co.uk/boards/showthread.php?s=&threadid=3185&highlight=fibonacci

or

http://www.trade2win.co.uk/boards/showthread.php?s=&threadid=4022&highlight=fibonacci

 

[Naz]

Tradesmart.
You are right Tradestation is not available to UK citizens now.But other packages exist.

You are also right that you can open Nasdaq Level 2 direct access accounts for $10k.One of the reasons for me showing those examples was to dispel the myth that you need a big account to trade this way and also show that you dont need to be a manic daytrader to trade the Nasdaq and make big profits.

Fibs.I only use fibs on the Nasdaq because the index and stocks have proved that they work very well as pullback areas of support or resistance.Where to put them? I put them in a couple of time frames from the extremes of the last major move.If i get two of them crossing at the same level that is very positive.

Do i trade off them without level 2 confirming it? You must be joking.All they represent is a potential set up.Its watching the players on the level 2 screen decide if they want to play off that fib level that works not believing that having identified a fib area its definately going to bounce.

 

[ChartMan]

Yep. The Fib levels are there for you to take note of. NOT to act upon until the level has resolved one way or the other. As for where to plce the zero and the 100, it is verysubjective. You should look at all the possibilities startin with the most recent reaction low( or hi), in the chart above that's point D. Using teh other values gives you ever smaller slices to analyse. The primary object ( in my opinion) is to evaluate from point D to see if the chart is respopnding to Fib trend line action. often you will see two co-incident vales, one at say 23% , the other at 50%- you can read iinto this that that level is "strong" one way or the other. Hook that in with support res. values,either horizontal or trend line based and you have some concrete values to base stops/entries on.
I wouldn't be to keen on just using Fibs to plan entries/exits, but more to be aware of where they are and to pay more attention when the price action approaches.
No doubt there are traders that plan their life around them....

 

[BeM]

Stop-Loss!

Hi,
I have this question, but please don't start to tell me what I already know like... "the trend is your friend", "stop-loss, stop-loss, stop-loss", "1% or 1.5% of capital to risk"!
The problem is that my strategy is to guess the day's movement, at least for a few hours or so, so I do this taking into consideration the news, the past performance of the market, the market sentiment and so on.
But I've lost so often because I put my stop-loss 2 or 3 points from my open price and the market went my way after bouncing back just to trigger my stop-loss. For example today, Tuesday, the trading hours is not over yet but I went short S&P 500 twice and I lost about 5 points because of the stop-loss and this has happened quite often!
What do you more experienced traders who don't trade only for a few minutes, scalping and so on, think?
Thanks a lot

 

[Riz]

2-3 points s/l on es is not too tight for intraday trading, BeM, considering it often moves on 5 points intervals...I wonder if you should concentrate on improving your entry rather than widening the s/l level...on those trades when it moved in your favour only after stopping you out, have you checked what s/l would have prevented that? just a thought

Riz

 

[ChartMan]

Oh Dear Oh Dear Yes I agree with Riz.take a careful look at your entry. If you can get tat a little better, then your stop loss is fine. 2 points sould just about be ok , 3 points is a bit wide- you should know if it's going against you before you're 3 points down. It also makes a difference what platform you are using...FINS/CMC/IB?
Take a look at the charts that I do- the ES just loves bouncing around the 00's and 5's. Try and pick an entry around these values. The reason being that you could ,theoretically, use a 1 point stop. The reason is that if it's gonna go though these magic numbers, it will likely move to the next one so you you will know quicker if you've got it wrong.
I missed this bit " guessing the day's direction"- that's not a good idea. It's ok to have it in the back of your mind but you can't trade on a guess..... I know, we all like to call it Up or DOWN, but to us it's a game ..... One can make assumptions about the likely direction and appropriate action based on pivot points, but you have to wait for them to happen.
Sit back and ask yourself why did I enter there? More importantly, can you figure out why that decision was not good?
How about coming into the US chat room at 2:30 and get some help? We can't trade for you , but we can offer help and advice so that you can make a better informed decision.

 

[options]

All down to timing.

But when do you take the trade?

Ah, when someone can come up with a foolproof way of when to click the button, he will be a very rich man (or woman).

It's not the exit, nor the running of the trade. All down to when you go in.

Options.

 

[BeM]

Thanks folks!
I think there is something important with timing, sometimes I don't choose the right timing to enter.
I still have to figure out a lot of stuff. I use Fins. I really want to concentrate in the future also on my own gut feeling and where I think the market will head however keeping in mind the actuall tendency of the market. You know that very short movements of the market are random but the strongest side takes over sooner or later. Whenever I went with my own feeling I had quite some successful, unless my s/l killed me

God... I hate my AOL broadband, the worst possible service!

 

[Naz]

All down to timing.

But when do you take the trade?

Options.

Maybe this might help.Today i was helping out in the first steps section of t2w.Running a position in MSFT on a thread called "stop loss".For all intents and purposes any t/a trader might have said oh its just broke the trend line down we go again.However on my level 2 it was a fake.They were buyers i closed out 1/2 my short position immediately and at then very same time wrote up and posted on the thread so the exact time is logged by the post.

It was the EXACT low of the day in MSFT.Proof again if it were needed that using Nasdaq level 2 no matter what style of trading you're doing can only give you a vision that many others dream about.I enclose the chart to show the exact point.Please bear in mind that the chart is Eastern Standard time and there is a 5 hour time difference.

Of course because it was MSFT is was the low of the day in the Nas Comp and the Nasdaq 100.Even if you do not have a Nasdaq trading account but just rent Nasdaq level 2 data and get proficeint at it think of the benefits it could have in trading in other areas.Its there posted live on this site today!

 

[ChartMan]

Errrhhhmmm. Your regular TA guy may have thought trend line break and down we go.... but not the T2W TA guys . Here's the take:
From 16:45 the sellers were walking away.The real bottom was confirmed at 17:00 with the peak trough in CCI at -300.Buyers /covering was increasing. Now there is a standoff as the market decides what next- up or down. Through to 17:30 the sellers are static at < 100K/min, whilst the buyers are steadily increasing from 29K to 50K+, then there is a dip in the sellers, followed by a continuation in the buying volume.
All the time CCI is rising, producing the familiar RS switch. The downtick that broke the trend line wasn't accompanied by the corresponding increase in downtick volume, giving volume divergence, suggesting a false breakout.4 ticks later, the uptick volume resistance line was touched, confirming acceptance of the move up.Further confirmation with the pullback would have been the "safe " long entry.
It's easy to pull these out of the hat, to illustrate a point, especialy after the event and there is know way of knowing if this is typical as I don't study this particular instrument. All things being equal, the fact that CCI was in a divergent uptrend (as was RSI) should have rung bells if nothing else. Forget the fancy volume analysis. The other thing is, you could wait all day for one of these to turn up.........

 

[Naz]

Thanks for the input Chartman. Level 2 showed the fake move as clear as anything.

Its great that this site can offer two different slants on the same move.Keep up the good work.

Naz

 

[kinglatfan]

What a fantastic thread this is.


Tonight by chance I have read the following and replicate it here as my contribution to the debate:


"The best scalpers sometimes trade 300 or more times a day. They are like sharks swimming in shallow water,waiting for a moment of weakness. And those moments occur all of the time. But this is not to say that scalping is easy! And,truth be told, with scalping as a plan you will miss out on all the major moves.............. day trading is a highly risky endeavour and should be done only with purely speculative capital- that is money you can afford to lose.

But scalping in my personal opinion,is a largely uneconomic activity. new order handling rules regulating the Nasdaq make scalping profitably much much nore difficult.....and scalping involves much higher risk...it is sad that scalping holds such an allure.............the traders most eager to scalp and trade the most volatile and hardest to trade stocks often are the newest to trading................................avoid get rich quick thinking.........scalping in todays market really requires skill; you have to fully understand the order execution systems and have split second decision making powers......................scalping for an eighth in todays markets is uneconomic for those brand new to trading..............it may enrich your broker and seminar instructor...............you probably will be the one getting scalped . "

Kinglatfan

 

[Naz]

Kinglatfan

I am one of those Nasdaq scalpers mentioned.But you know talking about eighths.

(Oh how i loved the fractions,capture the spread and it was $62.50 for every teeny and $125 for every eighth) That was all a while ago you know.I think it finished in April 91.

Yesterdays Scalpers have honed their skills.Yes they're mustard on the level 2 screen,because thats what they did.But if you listen to Trader Pattern and myself what we do now is look for scalpers entries or exits on longer moves.Check my major trade out today in the first steps board.My entry was diabolical but my first exit was a scalpers one using the level 2 screen.My trailing stop was managed by using the level 2 screen.I then managed the econd part of the trade using a fib grid and an auto stop with the software,to go and have a break.It made $1215 profit.So i used a little of everything.It was over 1/3 risk /reward so thats great by me.

I think the thing is not to pigeon hole various things.Just because a trader is using a level 2 screen does not make him an out and out scalper.But those skills can sure help him get out of trouble and add to his bottom line trade after trade after trade.

Finaly. WOW i cannot believe that market chat has just hit 20,000 views.FANTASTIC

 

[Naz]

When i started this thread and it started growing,i thought i wish i could have a pound for every view.In just over a year i would be £20,000 up now.

That is the same with short term trading.Little by little you keep adding to your account.For me i'm always doing my homework everyday looking for those short term oppertunities.But along the way i find stocks in nice up and down trends, and i think yes i'm going to tuck that in a folder in my end of day package.

When they pullback i'll stalk them then pounce and hold them for a short time for the next leg up/down.IMHO becoming a short term trader opens your eyes to the market and gives you a view not only over the short time frame but in the bigger picture as well.

Whatever we learn from sites like this and others is knowledge that we hold for life.When i talk to people at seminars/shows i'm suprised at how they keep hanging on to shares in their pep's etc. where a short term trader would have the skill to have said thats hit my stop i'm out.Short term trading skills can help trade the larger picture as well.

A couple of years ago on tv they asked me if i had any long term holdings.I said you must be joking the markets are going down aren't they.Why would i want to be long right now? 2 years later that still stands.My long term holdings hit my stop and i was out.Plain and simple.Thanks for the tech boom,i'll enter again when the major trend changes.

An amazing thing is that many just cannot manage a trade.I have been shocked at the little tests with people i've done at shows.Their conditioning means that they just dont know when to get out and find it difficult to pull that trigger.Short term trading can give you that skill.It becomes a subconcious thing that you can take into managing your long term holdings,whilst making your daily bread and butter.

________________________________________________

This is only a personal opinion and trading any instrument can result in loosing all or some of your capital.

 

[Helenqu]

Hi Naz,

You comments are interesting to me. I bought my first shares three years ago. I'd had nothing to do with the markets at all, never had the money to do anything. I started off on the TMF site with a Beating the Footsie portfolio and watched in horror as it fell. I quickly realised I wasn't tolerant of such drawdowns for my precious money and started looking for something else. I found the TA board on there and began to learn from the one or two traders that frequented the board and I got hooked

The point I am trying to make (badly) is that I think if people tune into their own feelings about risk/drawdowns they will find the trading style that suits them. I know I have, and I don't have any long real share holdings either

 

[Naz]

Helen

Its when i've been with groups of people and i've had a flip chart and gone through various scenarios,that i find that up to 80% of people cannot manage their positions.These are clever people who have made a success of their lives that believe that they are fully in control of things,but the fear,gread and denial that takes over them when they trade ruins their positions.It happens time and time again.

Years ago at a small meeting of traders we went around the room and mentioned what style we traded.I'm at heart as you know a Nasdaq scalper.They looked at me with derision when i mentioned it.So i mentioned that we help supply the liquidity to a stock for others to enter or exit a little later.

Because of the nature of our trading style our management of a trade has to be spot on.Do this 200 times a day (in its hey day) and you get conditioned to do it automatically.So when you take trades over longer time frames that same mentality is still there.This is why i think any type of short term trading can help people trade the bigger picture.

It also shows that an awful lot of people out there need a little help.

 

[Naz]

Many people look at a move afterwards and say i knew it would do that. But even if people know this they still have trouble handling their position because they cant manage the trade and their emotions.So even if your good at t/a.Know what patterns to look for etc.You wont get as much out of any move because you cant manage the trade correctly.

Its something thats not talked about that much.what i'm saying is that having the skill of a very short term trading style can help people manage trades in longer time frames.

 

[Helenqu]

Yes I think you are absolutely right, it's a transferable skill to other time frames. Personally I love the security of my nice neat little index trades, in a for a few minutes for each trade is perfect for me and my low level of risk tolerance. The idea of buying real shares with real money and paying tax/commission on it and running the results/news lottery that goes with it scares me to death. Feels very uncontrolled and dangerous now.

 

[Naz]

Helen,

I think everyone should try and learn a little of how different people trade it can only give them a rounder perspective on the market.Like that call on the bottom of MSFT yesterday.A scalper can hit it in the blink of an eye.Other trading methods have you thinking is it?maybe,i'll just leave it a little longer to make sure.Thats why i feel extreme short term traders if they can take their skills into longer term time frames can do very well.Scalpers are still here they've just learnt to adapt.

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I also enjoy the little bits and pieces that pop up every now and then.Especialy the different US web sites that are mentioned.So if anyones a little bored how about a few more.