Megamuel's Money Making Journal

[timsk]

Sam,
2 Questions:
1. Can you add Average True Range (ATR) to your charts?
2. What's the smallest amount your broker will permit you to trade?
Tim.

 

[Rossini]

1. How do I find and determine a strongly trending stock?
2. At what point do I enter?
3. Do I only trade in the direction of the main market?



Hi Sam!



1. Just give MA's a go, you could try a 7 & 20 EMA and wait for the stock to pull the EMA's apart by a given amount of pips? Or just look at the PA?



2. I don't like to do this but I think the most common way is to buy/sell on a pull back against the trend, however if you are looking for a very strong powerful move you might miss most of the good trades because you are sitting on your hands waiting for a pull back that never comes.



3. If you are looking at the price so closely I wouldn't be to concerned about the daily trend for instance, but it is best at all times to be aware of it, and maybe this might give you a bias to trade in one direction rather than the other. E.g. If I take a signal to go long on the 5 min TF and the Hr TF trend is up too, then I will trade at a size that is twice as large than that of trading against the higher TF.

 

[megamuel]

Hi guys,

Good evening to you all. Firstly, I'd just like to thank you all for your advice and support. I'm flattered that you have all taken your time to help me. Very much appreciated...

Pitbull - Thanks for the pointers. Yes I realise I am at a huge disadvantage trying to day trade via spread betting. In fact, if it was any other company other than microsoft I probably wouldn't have come out with a profit. I am looking into swing trading as an alternative. I don't know much about about direct market access but I am guessing £2000 would get me nowhere! Thanks for the links, downloaded that document and will read it later and I've also bookmarked the newsletter 🙂

Timsk - Thanks also for the advice. No I can't get ATR on my charts but I am thinking of trying IG Index and I think they do... And the smallest I can trade is usually 50p. Also, thanks for the heads up on that other matter 😉

TraderDante - I was hoping you would drop by. Its seems you have a LOT of respect on this forum so your input will be very greatfully recieved! I love reading your posts, especially your philosophical ones! You've made me think long and hard about my relationship and I hope I will never loose track of my priorities. Hope things work out for you. Look forward to your future input.

PokerBrat - Thank you. Sorry my communications skills are not the best! I realise I am contradicting myself a bit there! I just meant that because it has taken me a while to save this £2000, I don't want to put any more money in to trading at the moment, I want to but myself a few things I've wanted for a while etc. Although I don't mind loosing some of the £2k on trades as long as I learn something from then, but obviously I'd rather win! Also I am not ruling out the Mr Spread Betting system, I just don't want to spend the money yet. I was also waiting to see if TraderDante was able to test it with success but he has been unable to as yet. In relation to the trade, I did not specifically look for a retracement. I was looking for a strongly trending stock, the fact that the retracement was relatively small (perhaps people taking profits) and then the trend continued was my reasoning for entering. You are right however, a better entry would be as soon as the trend continued.

MrCharts - Thanks for dropping by! My mistake, I thought I followed the setup properly. I will re-read the thread and I will also save all of your images and study them all. Thanks for pointing this out.

Rossini - Hello again... Thanks for the suggestions. I will have another play around with MA's... Although in the past, I seem to play around until they look perfect.... Goes down after a short signal and up after a long signal.... I then move the chart accross a bit and it no longer works! I would like a system with MA's though as I want something that is more mechanical than discretional.

Ccclarett - I don't care what anyone says or who it is fashionable to believe, it is ALL about the money... If it wasn't then it would just be a game, and all games get boring after while.

If I missed any questions out just ask again! I'd also like to thank BBMac for sending me some documents and offering his support. Cheers mate.

Take care all,

Sam.

 

[timsk]

'Ere, what you doin' on 'ere at this time of day? You should be pulling my pint; I've been stood at the bar waiting for 20 minutes now, so stop reading T2W and get your arssss down 'ere pronto before i die of thirst!
:cheesy:

 

[ccclarette658]

Hi guys,

Good evening to you all. Firstly, I'd just like to thank you all for your advice and support. I'm flattered that you have all taken your time to help me. Very much appreciated...

Jouney from the Basement

I hope this is helpful to you in your endeavours to attain Market Mastery via Mastery of Self.
I now have to take time off from all of this as I have much to attend to in the next 5 - 8 months, as a
consequence of having had to make time for all this, but I assure you that if you consider all of what
I have explained to be of benefit, then I feel gratified by the excercise, to your benefit and my satisfaction.

Kind Regards,

....huge disadvantage trying to day trade via spread betting....

For spreadbetting, with the games played by the spreadbetter companies aganst the public betting their pennies, crystal balls are needed, because you need to have extra pairs of eyes all the time.

....I probably wouldn't have come out with a profit....
....I don't know much about....
....but I am guessing....would get me nowhere!....

A risky market is one in which you are guessing or gambling....and one you should not be in because you don't know what you are doing.

Also, thanks for the heads up on that other matter 😉

...my ears are burning ..😆

TraderDante - I was hoping you would drop by.

...It seems you have a LOT of respect on this forum....

I don't care what anyone says or who it is fashionable to believe

so your input will be very greatfully recieved!

Much of it is theoretical and impractical nonsense that is very detrimental to newbies, who, because they are newbies do not have the correct yardstick to be able to properly evaluate what is nonsense and what is not

I don't want to put any more money in to trading at the moment

....Although I don't mind loosing.... some of the £2k on trades....
....as long as I learn something from then....
....but obviously I'd rather win!....

You may choose to gamble.

Not everybody is like you.

Rossini - Hello again... Thanks for the suggestions. I will have another play around with MA's... Although in the past, I seem to play around until they look perfect.... Goes down after a short signal and up after a long signal.... I then move the chart accross a bit and it no longer works! I would like a system with MA's though as I want something that is more mechanical than discretional.

Yes, exactly, indicators and that sort of stuff is ideal for you and you should not abandon them....ever.... ...good thinking.

Ccclarett - I don't care what anyone says or who it is fashionable to believe, it is ALL about the money...

And actually the size of the profits in the end analysis do not matter. What matters is consistency......, and sustainable consistency .......and then everything else takes care of itself. But what happens on these boards it that a headlong rush for profits obscures the fundamental truth that consistency is what matters, what really matters.

This headlong rush........ this preconcieved stampede to chase profits, I will add........ is only a perception. It is and cannot be a reality.This perception serves to misdirect the newbies from the task ahead, which is trading proficiency and sutainable consistency.

If it wasn't then it would just be a game, and all games get boring after while.

Gamemastership is the highest level of proficiency because it includes accurate future expectation plus rapid execution to enter and exit as necessary as market conditions dictate plus total absence of any emotion whatsoever plus the ability to hold that emotionless state indefinitely,on command - at will.. All of this is the consequence of knowledge, self mastery and a cluster of skills as a result of having natural faculties which the individual is able to develop internally, and is able to manifest externally as a modus operandum.

Gaming on the other hand is guesswork, in which there is a significant element of gambling.
Gambling implies the opposite of the above, in which there is no accurate future expectation to rely on, not the correct reflexes (as a result of doubt and uncertainty) to execute efficiently, the trader is emotional and the risk is disablement by its presence, deep knowledge does not exist but superficial knowledge exists instead, self mastery and the cluster of skills to enhance and strengthen all of the above have not been attained.

I hope and expect this satisfies your enquiry.

:smart:

 

[counter_violent]

Megamuel

If you decide that a certain poster is contaminating your journal with unhelpful regurgitated copying and pasting....then please advise the mods and we will do something about it.

 

[megamuel]

Ccclarette/Socrates,

Thats very impressive! Have you ever been a journalist?

I only have issue with one of your points - when I said "I don't care what anyone says or who it is fashionable to believe" it was clear that I was refering to trading being about the money and not advice in general. You have taken that out of context. If anyone wants to offer advice on trading then I care what everyone says - including you! Thats what I am here for after all.

Also whats with all the copy and pasting? Is your keyboard broken? If not, next time can you just type what you want to say because it is easier for my simple mind to understand 😉 ....and I am sure you have some very useful advice.

Thanks again,

Sam.

 

[megamuel]

Thanks CV,

I am hoping that a 'certain poster' is just trying to be helpful, allbeit in a quite annoying way! Hopefully next time they will be so kind as to type their message and share some of their knowledge with me 🙂

Timsk its my night off tonight! Everybody says that to me when I'm not in work!!!

Sam. 🙂

 

[Rossini]

''Rossini - Hello again... Thanks for the suggestions. I will have another play around with MA's... Although in the past, I seem to play around until they look perfect.... Goes down after a short signal and up after a long signal.... I then move the chart accross a bit and it no longer works! I would like a system with MA's though as I want something that is more mechanical than discretional.''



MA's will not work if you take every cross, but I think they are a good tool to see the beginings of a potential trend. I was simply suggesting that if you are looking for powerfull moves/trends than an EMA cross will allert you to this. Maybe use it as part of some sort of screening process?

 

[PitBull]

Hey Mega

Got a really simple swing strategy that you might like.
Want stocks at 52 week highs (lots of free software provides this), look for bearish divergence on a 7 period RSI, look for decreasing volume at the highs (running out of steam), short the stock the day after it closes below the previous 52 week high, stop above all time highs, exit when high of a 60 min bar taken out. Obviously opposite for short. It's up to you on what you decide on, don't want to keep jumping from strategy to strategy, master one first. Check the link out www.trade2win.com/boards/first-steps/22305-advice-loser-4.html#post292065

 

[megamuel]

Hi guys, bit reluctant to take any trades at the moment as I thought I understood Mr Charts technique but it seems I do not. I'll try and get to grips with it but in the meantime I'll also being trying to develop my own swing trading strategy. Thanks Rossini and Pitbull for the ideas. Pitbull, was that link supposed to be about the strategy? Also, in the document you gave me the link for 'Base and Breakout', how do you define your intraday base? Thanks,

Sam.

 

[PitBull]

Hi Sam

That link was just a bit of wisdom. Bases can be subjective, but what I tend to look for, after a strong move, the base goes sideways and all the candles are clean, not spiky, meaning don't want upper and lower tails and the base gets tighter, i.e inside bars, I like 4 bars as a minimum for a base, some bases may form a cup or ascending wedge. Again all bases will be different but if you look at Richards charts you will begin to recognize. The only way to get familiar is to look at hundreds of charts of strongly trending stocks, they move, consolidate then continue the move.

 

[timsk]

The only way to get familiar is to look at hundreds of charts of strongly trending stocks, they move, consolidate then continue the move.

Sam,
I don't want to depress you, but when Lee says "to look at hundreds of charts" - I think that's very conservative. Thousands would be nearer the mark! Both he and Richard are old hands at this; they'll spot what they're looking for in an instant and can flick through charts like they're flicking through a stack of old photos looking out for the particular one they want. So, be prepared for the long haul and, hey, If you get it sussed in a matter of months, then it's icing on the cake!
😉
Tim.

 

[candles]

Thats a great analogy Timsk. I like that. So true.

Megamuel - I would also suggest that spreadbetting isn't the way to trade this method. If it was, i'd be doing it too. Ive been staring at charts for more hours per day than you would believe for about 8 years, and have demo'd direct access platforms using a mr. charts type methodology with great success, but with the spreads and the games SB companies play, it is indeed a losing battle. Id look into a swing trading type strategy, personally.

Good luck

 

[megamuel]

Candles I think you are right! I am going to read all of the stuff I have been sent on here and then get back to the drawing board. Stay tuned!

Off to pull some pints now, have a good evening all. Timsk, see you at the bar!

Sam.

 

[megamuel]

Ok so I am trying to work on a swing trading strategy. Writing down all my ideas and going over and over charts. I think I am making some progress but don't want to give too much away yet! I want it to be a trend following strategy as supposed to trading specific candlestick patterns or reversals as I think following trends is a slightly easier concept for a newbie like me to grasp. I only have one question at the moment - if someone is looking to enter a trade with the aim of holding for approximately 1-5 days, how long would you like the stock to have been trending for? I know this is a very vague question as there is no correct answer but what is a reasonable minimum amount of time you would want the stock to have been trending for. Oh and also how could you define this? I know a trend can be identified visibly but as I already have Sharescope Gold I would like to set a filter to help me quickly find trending stocks for potentially setups. Thanks guys 🙂

Sam.

 

[PitBull]

Hi Sam, hope you are well.
Good question. Understanding Dow theory and the 4 stages of the Market will help. Here's a link explaining it. Stan Weinstein?s ?Four Stages? Methods Ilmu Saham | ISX Stock Market Resource Center

IMO we could well be in the early stages of 2. A nice stock that has just based and broken out it's range is POT. I will be looking to get long at a pullback to prior resistance. Another good way to get in early on a trend would be a moving average crossover, simple but effective.

 

[megamuel]

Thanks Pitbull,

Could you suggest a suitable moving average cross for use on daily charts? This is not for entry criteria just for me to quickly scan for trending stocks that I can then look at more accurately for potential setups. My main problem is that I don't know how long the trend should have been established for before I look for entries...

Sam.

 

[PitBull]

10 crossing a 20 and have 50 and 200. Check where the latter two are as if overhead then good resistance. However the faster the moving averages may give you more false signals, therefore try a 20 and a 40.

 

[timsk]

I only have one question at the moment - if someone is looking to enter a trade with the aim of holding for approximately 1-5 days, how long would you like the stock to have been trending for? Oh and also how could you define this? I know a trend can be identified visibly but as I already have Sharescope Gold I would like to set a filter to help me quickly find trending stocks for potentially setups.

Hi Sam,
You've said that you want to trade the trend which is fine. As you've already identified correctly, the first question to answer is: how do you define a trend? The answer is that it doesn't much matter, so long as it makes sense to you! I realise this sounds unhelpful, but it took me a long time to cotton on to the fact that there are very few rights and wrongs in trading. However you define a trend, someone else will define it differently. LTBH investors tend to pay minimal attention to TA but, nonetheless, will look at charts of stocks in their watchlists. For them, the trend is up if price is above the 50 day moving average which itself is above the 200 day moving average. However, if you use such a simple definition as this, you're unlikely to get in near the start of the trend. More importantly, those two periods (50 and 200) are far to long for a 1-5 day swing trader. If it were me, I'd use a 10 day EMA or possibly even shorter. Take a look at the attached chart of GOOG. In line with Lee's suggestion, it has a 10 EMA (black) and a 20EMA (red, dotted). In the downtrend, you'll notice that the green pullback candles occurred when price became temporarily oversold. The safest short entries will always be the ones that are closest to the MA. The further away price gets from the MA (above or below) the greater the likelihood that price will ping back towards it. (Read the current article about rubber bands on the front page.) I suggest you have a play with trendlines and moving averages. (A moving average IS a trendline, its just not straight and may not neatly go through the swing lows and highs.) Consider basic Dow theory of trend change, i.e. a head and shoulder pattern, and then come up with a simple definition that works for you. If in doubt, stick up some charts here and I'm sure you'll get lots of feedback. Although, in my case, I can't promise it'll be very helpful.
😉
Tim.