Running on the spot

[danpayne]

Ive been learning "trading" now for about a year or so , started with a small account
and use cmc markets I have had some fantastic trades and some dogs (havnt we all)
however I seem to be going nowhere , over the last year my account stands £100
down on the year , now I know considering I have only 1 years experience alot of
people would say thats not bad for the 1st years trading I accept there is alot to learn and like they say"every days a school day" but i am now thinking that perhaps I would be better off buying the shares rather than spread betting them .
Problem with spread betting the trade crystalysis on a daily basis, forcing a nimble trading aproach any thoughts ?

 

[amnonco]

spend some time learning a bit money management...
you can really maximize your trading using some basic rules that will help trade more efficiently - moneywise.

and BTW - a first year with no loss - IS a great achievement - be glad, and move on.

 

[demeanor]

hi there !!

I think you still need to spend some time learning as experienced traders are being tumbling down in this recession,

so since you are learning, its better to learn to become perfect and then try investing...

 

[danpayne]

thinking out loud

hi there !!

I think you still need to spend some time learning as experienced traders are being tumbling down in this recession,

so since you are learning, its better to learn to become perfect and then try investing...

When I started trading live so to speak, I knew I would always be learning for the rest of my time trading days (years hopefully) and money management is one aspect I totally understand , whenever I look to enter a trade I insist on a 4 to 1 ratio at the very least and the maximum risk is religiously 1% Never chase the market blah,blah,blah dont want to drive you mad with my criteria long and short of it is my money management in my opinion is 2nd to none . I guess when all things considered starting trading at the begining of global credit crunch didnt help my trading , started with a shares isa pre-crunch and the concept of going short had never occured to me by low sell high was my game plan back then and did have a few losing trades to say the least, lost 65% of my initial investment
Then quickly swicthed from buying shares to spread betting and quickly with my new found choices of short and long the market have over the last 7 monhs got my account back to a situation where I am actually £100 up on the year . I know that isnt no get rich quick time frame but Im happy wiyh it and considering I only trade 1 day a week at the moment I like to think its now going in the right direction (for the moment)

I think the key is accept We will all be learning this buisness every day for as long as we trade none of us totally know everything , if we did we wouldnt come on these chat boards We either come here to learn or attempt to thump our chest, the latter is easy to spot fortunately
asking questions looking for a response its good to be prepared to learn together
I look forward to talking about and sharing opinions and phylosophy on peoples trading
Even if it may be something , no especially if it is something a little different from the norm after all we are all looking for an edge arnt we ?

 

[tomorton]

Hi danpayne - First thing to do is ensure your losses are minimal: chase them down, don't try to chase profits up, not yet. Yes, you must ne able to go short as well as go long in order to make money consistently.

Your money management sounds well informed, but I have one slight quibble on your r:r ratio of 4:1. You don't say how you identify this - it really should be something the TA tells you, you can't just decide you will only take profits when price reaches 4 x the distance to your stop loss. The TA will tell you the probable profit target, the stop should be at the closest point to entry that will confirm the probability has shifted such that you are no longer likely to reach the profit target. Clearly, there is no point me saying to myself that I will be short on the FTSE100 with a -2,000 pt target and therefore a +500pt stop, as the TA does not support my r:r plan.

Now, if you seek out only TA situations that give you 4:1 or better, that is fine, though it seems very demanding. Do you find that many of your losing positions do go into profit, only to be closed later when they trigger your stop?

 

[Pound foolish]

For what it's worth, I have bought shares low and my current holding, even allowing for a Woolworths toatl wpie out and another suspended I am £2000 up on six months on a 7.5k total investment.

Not bad for a novice!

 

[danpayne]

seeking them out is demanding, but dont get me wrong I never neccesarily take profit at that point thats my min profit look , I always try and let them run I did used to get stopped out and the it ran on to what would have been profit until I discovered confluence trading I do use t.a various styles cause like I said I really am still learning at the moment Im like a sponge trying to take all on board and filter out what doesnt suit my personality and remembering always th kiss rule At the moment one of my favorite set ups is to trade based on confluence also looking for the appropriate candle as part of the trigger signal with my stop the other side of confluence there are other criteria that if present with confluence levels such as a pivot point or resistance level etc,that make for a safer stop loss . my r/r of 4-1 I have strict rules and try to remain as emotionally detached as I also pattern trade and have recently finally accepted the best way(in my opinion) to trade patterns is always trade the retracement rathet than the the breakout ( would like your thoughts on this) this allows a much better r/r than tradibg the breakout how many times have we all traded the b\out and then it imediately retraces to allow a much calmer more thought out entry point
The only time I may drop the r/r is if I trade live on the intraday cause I see a quick move
the set ups I trade at the moment are divergence,patterns,breakouts and since one month ago started looking to trade trends.
If there is any other trading styles you woul suggest I would certainly like to look at that style

 

[tomorton]

Hi danpayne - Nothing wrong with seeking confluence to help identify a low risk entry point. It should also, as you say, help identify the stop position if things don't go your way. Yes, I am also averse to trading break-outs as if it is from resistance, you are automatically buying at a new high, vice versak if from support - I think the old rule should be observed, buy low, sell high, rather than buy very high, hope to sell even higher.

But I do think going short on a retracement from a reistance level is high risk. All trends have retracements, but most retracements exit into ther original trend. So its probably just a retracement, not a reversal. On the other hand, if you mean going long after a retracement but below the resistance, yes, I would agree with that. But I would look to be out before the resistance so that makes a 4:1 r:r unlikely.

I never trade on divergence, though I look for it to confirm direction when there are otherwise opposing signals, and to size position. This is because I only trust my money to price and price patterns, which usually means trading with the trend. For several months I have only been trading the FTSE100 index, both daytrading and swing trading. Swing trading is where I am making money and I have almost completely abandoned the intra-day stuff. It is certainly viable to monitor just one market for one pattern and just trade that, long or short.

 

[danpayne]

Hi danpayne - Nothing wrong with seeking confluence to help identify a low risk entry point. It should also, as you say, help identify the stop position if things don't go your way. Yes, I am also averse to trading break-outs as if it is from resistance, you are automatically buying at a new high, vice versak if from support - I think the old rule should be observed, buy low, sell high, rather than buy very high, hope to sell even higher.

But I do think going short on a retracement from a reistance level is high risk. All trends have retracements, but most retracements exit into ther original trend. So its probably just a retracement, not a reversal. On the other hand, if you mean going long after a retracement but below the resistance, yes, I would agree with that. But I would look to be out before the resistance so that makes a 4:1 r:r unlikely.

I never trade on divergence, though I look for it to confirm direction when there are otherwise opposing signals, and to size position. This is because I only trust my money to price and price patterns, which usually means trading with the trend. For several months I have only been trading the FTSE100 index, both daytrading and swing trading. Swing trading is where I am making money and I have almost completely abandoned the intra-day stuff. It is certainly viable to monitor just one market for one pattern and just trade that, long or short.

Excuse me ,visitors arrived will answer anon

 

[HaloTrader]

Dan - My trading turned around when i stopped trying to get 3:1 risk reward...I would enter for 60 target: 20 stop loss... I use to think that was smart. I use to think, 50/50 chance, winner 3, loser 1

Then i realised by doing that, i greatly reduce the 50/50 ratio against me... So instead now i usually do traders with 1.5 risk for 1 reward, 1 risk 1 reward and occasional 2 risk 2 reward - Swing trading obviously i go for lots more reward than risk but thats much longer term for me.

By having 1 reward 1 risk. I have a 50/50 chance on entry. Furthermore i am using a high probability setup as my entry... Something proven, backtested, demo'd and shown to have a high rate of success. Thus a winning strategy with good money management.
Now as you learn your setup and your entries and create a nice folder, after the month you can review and say - If i aimed for an extra 10 pips would this have been realistic and consistantly more profitable... Then you can have a higher reward than risk.

x Hope that helps, it changed me from loser to winner

 

[danpayne]

Hi danpayne - Nothing wrong with seeking confluence to help identify a low risk entry point. It should also, as you say, help identify the stop position if things don't go your way. Yes, I am also averse to trading break-outs as if it is from resistance, you are automatically buying at a new high, vice versak if from support - I think the old rule should be observed, buy low, sell high, rather than buy very high, hope to sell even higher.

But I do think going short on a retracement from a reistance level is high risk. All trends have retracements, but most retracements exit into ther original trend. So its probably just a retracement, not a reversal. On the other hand, if you mean going long after a retracement but below the resistance, yes, I would agree with that. But I would look to be out before the resistance so that makes a 4:1 r:r unlikely.

I never trade on divergence, though I look for it to confirm direction when there are otherwise opposing signals, and to size position. This is because I only trust my money to price and price patterns, which usually means trading with the trend. For several months I have only been trading the FTSE100 index, both daytrading and swing trading. Swing trading is where I am making money and I have almost completely abandoned the intra-day stuff. It is certainly viable to monitor just one market for one pattern and just trade that, long or short.

Morning tomorton

no I think you misunderstood I dont go short on the breakout retracement I wait for retracement and then make a decision as to the direction , for example price breaks out from say,,,a flat top triangle I wait for retracement to breakout point and then make a decision to either pull the trigger or not , I have the same phylosophy as yourself Itry not to by higher highs and hope for higher highs
Iwait for retracement look for the potential breakdown of pattern before entry
does that sound right ?

 

[danpayne]

Dan - My trading turned around when i stopped trying to get 3:1 risk reward...I would enter for 60 target: 20 stop loss... I use to think that was smart. I use to think, 50/50 chance, winner 3, loser 1

Then i realised by doing that, i greatly reduce the 50/50 ratio against me... So instead now i usually do traders with 1.5 risk for 1 reward, 1 risk 1 reward and occasional 2 risk 2 reward - Swing trading obviously i go for lots more reward than risk but thats much longer term for me.

By having 1 reward 1 risk. I have a 50/50 chance on entry. Furthermore i am using a high probability setup as my entry... Something proven, backtested, demo'd and shown to have a high rate of success. Thus a winning strategy with good money management.
Now as you learn your setup and your entries and create a nice folder, after the month you can review and say - If i aimed for an extra 10 pips would this have been realistic and consistantly more profitable... Then you can have a higher reward than risk.

x Hope that helps, it changed me from loser to winner

Hi Halo trader

Thanks for input alw\ys apreciated

I understand where your coming from I will bear what you said in mind I have tried several different techniques and have had some limited success with most and I feel I am slowly improving after all several months ago I was 65% down and now give or take back to original stake.
A couple of people have said If you find a system that works stick with it and they are probably right ,But I do believe all traders need to be in a position to change how they trade overnight if need be, after all the market and the way it behaves can change pretty radically so I suppose on reflection Im trying to be ready for most eventualities
I decided that when I first started trading I would probably lose money the first year maybe more, I decided like most adult education there would be a monetary price to pay and I excepted that . Luckilly the first year is now over and I consider my self to have understood the various ways I expect to trade the market and now the next year will be the education of (hopefully) harnessing and fine tuning those techniques
Getting back to what you said about using only a simple moving average to take trades how exactly do you make that work for you ?
Personally I use pretty standard ema for trend clarification,etc

 

[tomorton]

Hi danpayne - yes, all sounds well reasoned and similar to my own thoughts and methods, except still say I almost never see 4:1 r:r.

So.......... if you look back over your trades, why are your losers losers? Why is your equity curve not positive?

 

[danpayne]

Hi danpayne - yes, all sounds well reasoned and similar to my own thoughts and methods, except still say I almost never see 4:1 r:r.

So.......... if you look back over your trades, why are your losers losers? Why is your equity curve not positive?

Hi tomorton
so are you saying maybe i should stop being so demanding on my r/r ?
What I try to do is wait for the market to come to me sounds like a cliche I know
I think now I have learned to do that and remain strict about it is one of the reason Ive turned it around recently I rarely achieve the 4-1 but thats what Ilook for initially
problem with the market at present its very twitchy and some times that rubs off on me
Ithink maybe I may be trying to develop to many strategies at a time possibly,
think maybe its time to tweek the stuff that is working for the near future ?

 

[tomorton]

It all sounds good danpayne. I do think actual gains outweighing losses by 4:1 on an on-going average basis would be exceptional. I would think that insisting on the 4x gain would often lead a decent profit at a lower ratio to go back into the market. Keep in mind that there are many ways to win but the one way to not win is to get wiped out - so its what you lose and how you lose that makes the successful trader into the retired rich. As long as you can stay in the game you will find a way to win big, but winning big is not the objective, it is losing small.

Too many strategies can work against you. Be the expert on one or two and you will have it made.

 

[danpayne]

It all sounds good danpayne. I do think actual gains outweighing losses by 4:1 on an on-going average basis would be exceptional. I would think that insisting on the 4x gain would often lead a decent profit at a lower ratio to go back into the market. Keep in mind that there are many ways to win but the one way to not win is to get wiped out - so its what you lose and how you lose that makes the successful trader into the retired rich. As long as you can stay in the game you will find a way to win big, but winning big is not the objective, it is losing small.

Too many strategies can work against you. Be the expert on one or two and you will have it made.

Hi tomorton
Good advice , :smart:

So tell me what markets do you trade ?
how long you been trading. do you trade full time or part time like myself ?

I find the most frustrating thing about trading par time (fridays) is waiting for the market to come to me is one thing waiting for it to come to me on a friday is something else
Yeah ..I know I can set up automated trades only problem there is you not there riding shotgun over criteria for trade once in a trade mangaing is alot easier than entry(automated) so I try to save my entries to the day im in front of platform and charts wich makes a good trade more difficult to find .
I will take on board what youve shared with me and thank you for advice
I intend to book a week off work later in the year and spend the week trading see how I get on, will let you know what happens .
My goal with trading is not to search for "the big one " ut to sustain a reasonable ratio in my favour eventually replacing my current position to one of trading full time thus freeing me from 9 to 5 hell on earth once im independantly trading i will be free to trade from whatever location takes my fancy,any way thats my goal watch this space

 

[tomorton]

For last few months I have exclusively traded the FTSE100, both daytrading/scaslping and swing trading. Have given up the daytrading as it took up too much time compared to profits - which were zero anyway. At leat I have taken time with a few days off and a lot of evening sessions to prove to myself that I can follow and enhance a daytrading method, though I still can't recommend scalping.

The swing trading makes money around my day job. If you can be long or short, only one market is necessary. Eventually I will be trading two non-correlating markets so that if one is ranging I can trend-trade the other, but its not essential or urgent.

Managing positions is a key skill - I like to apply the simple approach to any open position on a daily basis - would another trader looking at the same charts as me open a position here in the same direction as me? If the answer is no, question 2 is what am I waiting around for?

My goal also is to escape the salary treadmill. There is nothing unrealistic about this. I have broken the ambition into realistic and (hopefully) achievable stages -
Phase 1 – consistent return of minimum living expenses over consecutive 2 month periods
Phase 2 – increase capital, make salary in each of 6 consecutive months
Phase 3 – increase capital, make double salary in each of next 6 consecutive months
Phase 4 – resign job, trade, enjoy life more
Of course, I am still in Phase 1 - but if a person can't visualise where they want to be and how to get there, they probably will never set off.

 

[danpayne]

For last few months I have exclusively traded the FTSE100, both daytrading/scaslping and swing trading. Have given up the daytrading as it took up too much time compared to profits - which were zero anyway. At leat I have taken time with a few days off and a lot of evening sessions to prove to myself that I can follow and enhance a daytrading method, though I still can't recommend scalping.

The swing trading makes money around my day job. If you can be long or short, only one market is necessary. Eventually I will be trading two non-correlating markets so that if one is ranging I can trend-trade the other, but its not essential or urgent.

Managing positions is a key skill - I like to apply the simple approach to any open position on a daily basis - would another trader looking at the same charts as me open a position here in the same direction as me? If the answer is no, question 2 is what am I waiting around for?

My goal also is to escape the salary treadmill. There is nothing unrealistic about this. I have broken the ambition into realistic and (hopefully) achievable stages -
Phase 1 – consistent return of minimum living expenses over consecutive 2 month periods
Phase 2 – increase capital, make salary in each of 6 consecutive months
Phase 3 – increase capital, make double salary in each of next 6 consecutive months
Phase 4 – resign job, trade, enjoy life more
Of course, I am still in Phase 1 - but if a person can't visualise where they want to be and how to get there, they probably will never set off.

Your goal sounds very similar to mine did you see my thread on the ftse recently
"ukx where from here "?
be interesting to get your opinion
Have had my fingers burnt a few times on the ftse in the early days
what would be your typical set up on the ftse on a swing trade set up ?
I as I said before trying various styles but find my self being drawn toward swing trading
more and more

 

[HaloTrader]

Hi Halo trader

Thanks for input alw\ys apreciated

I understand where your coming from I will bear what you said in mind I have tried several different techniques and have had some limited success with most and I feel I am slowly improving after all several months ago I was 65% down and now give or take back to original stake.
A couple of people have said If you find a system that works stick with it and they are probably right ,But I do believe all traders need to be in a position to change how they trade overnight if need be, after all the market and the way it behaves can change pretty radically so I suppose on reflection Im trying to be ready for most eventualities
I decided that when I first started trading I would probably lose money the first year maybe more, I decided like most adult education there would be a monetary price to pay and I excepted that . Luckilly the first year is now over and I consider my self to have understood the various ways I expect to trade the market and now the next year will be the education of (hopefully) harnessing and fine tuning those techniques
Getting back to what you said about using only a simple moving average to take trades how exactly do you make that work for you ?
Personally I use pretty standard ema for trend clarification,etc

By the way, my risk:reward ratio is based on day-trading and scalping. I only try to take 10 pips out of the market at a time, Even if its a breakout on the daily chart that i'm playing on a 5-minute chart... I only want 10 pips. This is due to my personality, i'm impatient. I'd prefer get my 10 pips and move onto looking for the next setup than sit watching whether i make profit or not in a trade.

I think in terms of swing trading, risk:reward should be 1:2 + - Simply because you should be trying to catch larger moves, all depends on your strategy... But for example, if you swing the FTSE100 using a trendline, buying the bottom and selling the top of the trendline... Then your target should be significantly more than your stop loss but you will be trading less probably. All depends what you like

I daytrade/scalp for 1:1 and 1.5:1
Swing trade (3-7 days ish) Uk shares for atleast 1:2
Also long-term holds (which for me is 1 month +) which i am looking to get a risk reward of 1:10

All depends on the strategy your using. 1:10 can work because i am trying to enter momentum, enter a breakaway, predicting market direction not just going into the volatility... So the momentum will carry me in huge trends, or will close me out very quickly the minute it stops, even for a small pullback and i'll look for re-entry.

I agree that traders should be able to change strategies the next day. Personally i find setups which frequently work, apply discpline, my own rules, money management and trade them. If i find another setup i will add this to my trading too - Recording the results of specific setups so that i know which are performing or not.

Risk 1 : Reward 3 is fine especially if you are trading reversals... For example a support line you could enter long with a 10 pip stop and the resistance 30 pips away - Its all about your strategy

Personally though, i just take my 10 pips off the support and leave. Because i find that even if prices don't reverse, 10 pips can easily be attained through volatility at such areas.

I will pm you my three SMA strategies if you like, i use them quite uniquely - My dad taught me and he uses the strategy for Daily and hourly, i use it for 5-minute and 1-minute charts... Its very high probability and can catch some very big moves, however personally i just take 10 pips a time My psychology is better when i win more, i know thats bad but...

Best thing about the strategy is you don't need to be too smart about the market conditions, if its ranging it simply won't generate a setup.

 

[tomorton]

Hi danpayne -

I put daily posts here - http://www.trade2win.com/boards/uk-indices/49208-swingin-ftse-2009-a.html
and recently a nightly FTSE TA commentary. Favourite set-up would be the 3-day swing as described by Marc Rivalland, but such signals can be infrequent and have distant stops so I also look for various other swing signals - 2-day swings, ID/NR4, 3-day unfilled gap reversals, hole-in-the-wall gaps, whiplash and key reversals. Its really a lot simpler than it sounds.

Right now I'm long, looking for upward move within range (or break-out from an ascending triangle or bounce off uptrend line), depending on which way you look at it.