Newbie - FTSE & DOW – DAY TRADING

[OlympicBlue]

Hello,

I have been ‘paper trading’ the index’s above using live feed charts and charting tools provided by ADVFN’s site - with all small degree of success (shhh! don’t want to tempt fate) .

Naturally, I now want to translate this into actual trading and I am looking at Spread Betting in order to capitalise on the movement that I identify and back accordingly.

I will probably end up using IG Index for the spread betting, trading platform etc. as they have very a useful introductory ‘trade-sense’ programme that will allow me to start very small should I wish to do this (from 10p point) .

If anyone uses Spread Betting to ‘trade’ the FTSE and DOW, I would very much welcome any advice and input that you may be able to give about your methods, experiences, or the spread betting firms that you use.

Many Thanks

(London based)

 

[UKtradergirl]

Hello,

I have been ‘paper trading’ the index’s above using live feed charts and charting tools provided by ADVFN’s site - with all small degree of success (shhh! don’t want to tempt fate) .

Naturally, I now want to translate this into actual trading and I am looking at Spread Betting in order to capitalise on the movement that I identify and back accordingly.

I will probably end up using IG Index for the spread betting, trading platform etc. as they have very a useful introductory ‘trade-sense’ programme that will allow me to start very small should I wish to do this (from 10p point) .

If anyone uses Spread Betting to ‘trade’ the FTSE and DOW, I would very much welcome any advice and input that you may be able to give about your methods, experiences, or the spread betting firms that you use.

Many Thanks

(London based)

Hiya, and welcome

I have several spreadbetting accounts,.. my latest one is with IGIndex and i am very impressed. They have excellent charting facilities and the prices are much more accurate than the company i was using previously (easy2spreadbet). Being a big company also i trust them more. The spreads are a little larger than some of the other companies though, but in my opinion it is worth it.

Its good that you are paper trading at the moment. When i started i didn't do this and lost money. (i still now go back to paper trading from time to time). All i can say is, if you are doing OK paper trading, then just give it a go- but only with money you are prepared to lose. It is different doing it for real- psychology really comes into play with real money. You probably will lose to start with and you need to be prepared for that, and may have to go back to paper trading, but hopefully you will be able to evaluate and learn from your mistakes.

As for methods i am using to trade. I use support/resistance lines, chart patterns, sometimes bollinger bands, CCI or moving averages. Nothing complicated. Actually some of my best trades have come from identifying a setup using a support line and my eyeballs on the price action alone. I am not a pro and do not make a fortune but my account is heading in the right direction (mostly). What method are you using?

A word of warning about spreadbetting: occasionally you will not get exactly the price you click on when buying/selling... the deal will get rejected for whatever reason and you will be requoted. This has never happened to me yet with IG (i've been with them 2 months)- but it's worth keeping in the back of your mind... as when it happens you can lose a few points off your trade. This doesn't make much difference as long as you are not trying to scalp. Like i said before, this has never happened through IG though.

Good luck

 

[OlympicBlue]

Thanks for the info UKtradergirl.

Similarly, I am not using anything complicated to gauge ‘trend’ patters. Apart from keeping myself briefed with news/data that may affect the index, I will look at the FTSE within a chart and try to establish a moving trend, or a breaking reversal. I would l then apply some banding lines and monitor this in live time. If a direction establishes itself and gets stronger (taking into account some ‘sentiment’, I will then opt for the direction of travel whether this be long or short.

As for other tools, I picked up some information which stated that Slow Stochastics, Relative Strength Index and MACD are useful tools - although I have no experience of applying these myself. The information I read stated that an RSI and Stochastic of 20 or less plus MACD crossover upwards would equal a Strong Buy, whereas an RSI and Stochastic level of 80 or more plus MACD crossover downwards would equal a Strong Sell. Any comments on these tools and assumptions would be welcome as this is totally new to me?

However, as you have said, it is quite possible to identify a strong trend in the FTSE (or the DOW) without these tools (not the banding lines though).

I have a friend who consistently makes £2/300 a day (often in short period) trading nothing more than the FTSE / DOW by Spread Betting with CMC. He actually does this using nothing more than ‘gut instinct’ and will even chase his losses by ‘doubling up’ to cover his position when the index goes against and wait for it to reverse. I suppose this is what is meant by scalping? If so it works for him and I have witnessed this first hand where he will be content to ‘bank’ small profits but consistently. But saying that he also leaves positions open overnight or may take a position on the FTSE after it has closed.

It is interesting what you say about not getting the quoted price – because I am lead to believe that Spread Betting firms can inflate the offer/bid price so that it may not correspond with the actual (live) index reading.

Have you experienced this?

You say you have several accounts, is this so you can go long with one and short with another at the same time?

Are you mainly a day trader?

Thanks

 

[UKtradergirl]

Thanks for the info UKtradergirl.

Similarly, I am not using anything complicated to gauge ‘trend’ patters. Apart from keeping myself briefed with news/data that may affect the index, I will look at the FTSE within a chart and try to establish a moving trend, or a breaking reversal. I would l then apply some banding lines and monitor this in live time. If a direction establishes itself and gets stronger (taking into account some ‘sentiment’, I will then opt for the direction of travel whether this be long or short.

As for other tools, I picked up some information which stated that Slow Stochastics, Relative Strength Index and MACD are useful tools - although I have no experience of applying these myself. The information I read stated that an RSI and Stochastic of 20 or less plus MACD crossover upwards would equal a Strong Buy, whereas an RSI and Stochastic level of 80 or more plus MACD crossover downwards would equal a Strong Sell. Any comments on these tools and assumptions would be welcome as this is totally new to me?

However, as you have said, it is quite possible to identify a strong trend in the FTSE (or the DOW) without these tools (not the banding lines though).

I have a friend who consistently makes £2/300 a day (often in short period) trading nothing more than the FTSE / DOW by Spread Betting with CMC. He actually does this using nothing more than ‘gut instinct’ and will even chase his losses by ‘doubling up’ to cover his position when the index goes against and wait for it to reverse. I suppose this is what is meant by scalping? If so it works for him and I have witnessed this first hand where he will be content to ‘bank’ small profits but consistently. But saying that he also leaves positions open overnight or may take a position on the FTSE after it has closed.

It is interesting what you say about not getting the quoted price – because I am lead to believe that Spread Betting firms can inflate the offer/bid price so that it may not correspond with the actual (live) index reading.

Have you experienced this?

You say you have several accounts, is this so you can go long with one and short with another at the same time?

Are you mainly a day trader?

Thanks

All respect to your friend if he is able to make consistent profits, but it strikes me that the way he is trading is unnecessarily risky. I hope he doesn't get wiped out by a few losses in a row.

Doubling up to chase losses is called the 'martingale technique'. I won't go into it here but needless to say, it isn't a smart idea. Imagine if you have 5 losses in a row? Starting at £1 a point, that is a £32 a point.. then £64 a point. Might be fun when playing roulette or blackjack, but trading!? You would have to have a massive account, and nerves of steel.

Yes spread betting companies are quoting a price that is only based on the underlying market, not the market itself. (at least this is how they word it). Which is also why i follow the charts that IG Index have with their platform, since the charts show their prices rather than the exact FTSE prices. In reality, the price is usually spot on compared to the FTSE though.

I use one account for trades which i hold for several days, and i have another account which i use to day trade. I like to keep them separate so i can see how well (or not) i am doing. I have a couple of other accounts that are just doing nothing too for no particular reason.

Can't comment on the strategy you write about. MACD is seriously lagging though. I think perhaps this strategy would get you in on a large up/down trend. Rubbish in sideways markets though. Most strategies seem to fall to pieces in a sideways market (which occurs 80% of the time).

 

[OlympicBlue]

UKTradergirl - thanks.

Fortunately, friend has mostly been able to recover from the larger - almost heart stopping positions (10k in a day!) that have turned against him – purely using the method described to average his position out when reverses. As you say risky and nerve racking for sure!

This is basically why I am here in this forum – to pick up any bits of advice etc. that can assist me and to do as much homework – without getting too absorbed - as I can.

In this respect do you have any experience using CFD’s?

I only mention this because one of the companies I initially contacted about spread betting - Accendo Markets - suggested that these were a better instrument to trade with as I would have better access to the market place when trading - although not sure how this will benefit me initially?

Any thoughts on this or preferences?


Thanks again.

 

[UKtradergirl]

UKTradergirl - thanks.

Fortunately, friend has mostly been able to recover from the larger - almost heart stopping positions (10k in a day!) that have turned against him – purely using the method described to average his position out when reverses. As you say risky and nerve racking for sure!

This is basically why I am here in this forum – to pick up any bits of advice etc. that can assist me and to do as much homework – without getting too absorbed - as I can.

In this respect do you have any experience using CFD’s?

I only mention this because one of the companies I initially contacted about spread betting - Accendo Markets - suggested that these were a better instrument to trade with as I would have better access to the market place when trading - although not sure how this will benefit me initially?

Any thoughts on this or preferences?


Thanks again.

CFD's are not tax free. So you need to check the tax laws if you want to trade these. I don't think you have to pay unless your profit is over £9k though (i really don't know though i'm just guessing here? anyone help?). Better market access, yes. Otherwise almost the same as Spreadbetting.

Risking up to £10k to gain just £200-£300?! Shocking! I'm scared for him- he is going to get wiped out for sure. Well, it sounds like you are on the right path- stick at it and you will get there .

 

[OlympicBlue]

Put like that - I think I will tranquilise him and remove all the alcohol from his house the next time I see him!

Now to get an account open, do one or two more rehearsal's with the FTSE & DOW on ADVFN’s site or similar and then i'll be ready to take the plunge.:clap: