technical analysis

[rossored]

Hammer -

There is only one indicator you need worry about that told you the drop was likely to come on Wednesday (imho), and that's price (forgive the gap in my data, ECBOT was a bit funny on Wednesday)

 

[BBB]

Good one Rossred.

Correct observations like that can make a lot of money. Once people learn how to look at price like this instead of looking for triangles, h&s etc the better for them.

 

[Skimbleshanks]

Out of interest, BBB, where would you enter on the above trade?

 

[eureka]

hammer - imo - first, dont look at any OTHER markets - until you learn to trade one market well - meaning, make money - one thing a time, right - second, i read you "didn't have a chance to keep an eye on the market"? - what were you doing? - do you trade part time? - it's like, if you are driving and there are a million other people driving, but you dont have a chance to look at the road - do you think you or they will get to the destination first? - dont kid yourself, trading is a harsh biz - YOU CREATE THE CHANCE, if you lose that chance, too bad for you - also, re. your initial capital - i have not read this whole thread - you must have enough - the math is simple - you have a trading plan - you have stop losses - multiply your stop loss by the maximum number of stopped trades - yes, you can have 10 losers in a row - that's you max drawdown - then assume you will do below average in terms of profitability of your planned trades for the first couple of years - quantify this - add it up - kick in technology costs etc. - that's how much capital you need - remember, trade only with money you can "afford to lose" - why? - because if you are worried, it will distract you - there are plenty of guys out there who are not worried, hence they will have an edge over you in that case - good luck

 

[BBB]

A short just below the spike that made the low of the last (lesser) high. It also looks to be at the last natural support on the way up which makes its break more significant.

How you enter the trade isnt the key though. Its the management that counts.

 

[BBB]

...but its easy in hindsight as we know! However making lesser highs is one of the things I look for to get in/think about the next trend. same for lows.

 

[hammer]

rossered - cool i can see that, i guess in learning about oscillators i forgot about the main indicator - price!

eureka - yes i only trade part time at the moment, im still at uni. I have to trade by phone which is why i concentrate on swing trading rather than day trading. I understand that there will be loads of trading opportunities that i will miss but i wanna learn as much as i can before i can even think about taking it up full time. I am currently concentrating and only trading on the dow but i look at a few other markets like the forex cos i figure it will help in my trading education. Well im currently trading at just £1 so im not really making any money that i would count but everyone has said to not trade with any more until you know what you are doing so who am i to argue with the majority!

Im currently swing trading which im sure ive already mentioned and as i said that i actually went almost 60 points in the wrong direction but i have held my long position. I opened at 10510 and now im 17 points down. I didn't have a stop loss in place for this trade which i probably should have but i figured after the major tank on Wednesday it would recover and i didn't want to get stopped out. Should i have closed the position or was holding on to it a reasonable decision? I guess its up to me but im curious to know what others would have done in similar circumstance i.e. phone trading, swing trading.

Well i guess im gonna keep going forward!

thanks :cheesy:

PS. Prediction for next week? New high?

 

[TheBramble]

Im currently swing trading which im sure ive already mentioned and as i said that i actually went almost 60 points in the wrong direction but i have held my long position. I opened at 10510 and now im 17 points down. I didn't have a stop loss in place for this trade which i probably should have but i figured after the major tank on Wednesday it would recover and i didn't want to get stopped out. Should i have closed the position or was holding on to it a reasonable decision? I guess its up to me but im curious to know what others would have done in similar circumstance i.e. phone trading, swing trading.

Hammer - in your situation (trading by phone, at uni and swing) you really should IMHO be using a stop. Maybe £60 (you're doing £1/pt right?) is not a significant fraction of your total trading capital, but either way, you'd be better off establishing a stoploss as part of your on-going trading strategy.

What would have happened if the Dow had carried on tanking down another 200 pts...?

 

[hammer]

Thx bramble, well i used to have stop losses at 25 points but that was when i was able to watch the markets. With phone trading at uni I found that alot of the times i traded in the right direction but because of whipsaws i would get stopped out alot of the time. I guess i could put like a 60 or 70 point stop loss just in case it does decide to fall 200 points.
Do you know where im coming from? Is there any other way around this stopping out problem?
I use cantor index mobile software now to keep an eye but even then i can usually only check it every couple of hours.

Thanks :cheesy:

 

[TheBramble]

Hammer - based on the instrument you're trading (whichever instruments you're trading) work out a stoploss and apply it - and stick to it - whether your able to monitor the market or not.

In fact, especially if you're not able to monitor the market.

There are many opinions on how to calculate a stoploss. I'm still evolving my approach (probably always will be), but anything using ATR based on the last couple of days should keep you in the majority of those you want to stay in and get you out of the majority you don't want to be in.

But there are a lot of different opinions out there - check them out and work with one that YOU feel comfortable with. My risk and money management might well be quite different to yours.

 

[hammer]

ok thanks bramble. I guess im still in the testing phase. Usually i aim for a 50 point profit on each trade with a limit at that point. So i guess a stop at a third or half that would be good. Maybe 20 points. However im trying 100 point trades now prob with a 40 point stop loss. See how that goes. At the moment i guess its just a case of listening to what everyone has to say and then seeing what i feel most comfortable with.

Thanks :cheesy:

 

[hammer]

still holding long position at 10510. Limit set at 10600. Is this optimistic? Over the next couple of days at least? Currently at a 5 point loss. Thought it might hit 10600 yesterday but it peaked at 10568 and then fell. Well im gonna hold on prob until the end of thurs to see what happens.

Someone told me once that usually the dow drops on a Wednesday. Is this true? If it is think i might get out now!

Thanks :cheesy:

 

[jsd]

hammer, well the futures at this time have the dow already at 10450 , now support zones i see are 10460 of yesterday but it may well take that out and test 10430-40, and likely then to test 10400/390 ish that may be the established bottom looking forward, bit more volatility today i think, but its difficult tracking and having positions short term if you are tied up elsewhere in that case i would say you need to get firm understanding of suuport resistance levels and these can be hundreds of points apart and maybe use tight stops at these levels but again an eye on the action around these levels i feel is important.

otherwise smaller value positions with bigger stops, depending on your account size.

jd

 

[oatman]

I might have missed this, but what was the reason for entry and what was the objective?

 

[neilcharlton]

Another good web site for technical s (us only) www.buysellorhold.com , does all the analysis for you so really good for newbies. As my business partner wrote the software i can personally vouch that it does work - good luck

 

[hammer]

Oatman - Well it dropped from 10640 to 10430 then started climbing again. I jumped in at 10510 thinking it would retrace itself back up to 10560 or thereabouts. Also as RSI was low and the momentum showed that it was heavily oversold. I usually enter trades with a 50 point target.
Jsd - Im already trading at £1 a point the minimum. Dnt wanna invest more capital at the moment as i figure it might give me temptation to up the stakes. Even though im still learning im still up 126 points. I think this week has been a difficult week to trade.
Well back to the charts!

Thanks :cheesy:

 

[sandpiper]

Bit of a random question but if say i've got £1000 capital for instance. What kind of bet size should i use on the dow without risking too much?
It's been mentioned in places that you should only risk 1% of your capital per trade. So that means sort of £1 a point with a 10 point stop loss. Don't think that would give me many profitable trades!
Im thinking £2 a point with a maximum loss per trade of £50 or 25 points. What do you guys think? I don't day trade, my trades usually last a few days maybe a week. (i've been told that im a swing trader, dunno if thats right)

Let me know :cheesy:

hammer,

Sorry, I missed this thread somehow otherwise I would have chipped in earlier.

The advice from Skimbleshanks regarding stake size spot on as usual. imo 1% is certainly a reasonable enough figure to start off with. When you are starting, it's a fine line between a stake size that is small enough to allow you remain suitably detached and one that is large enough that you take it seriously when you lose.

Obviously (if you want to be scientific about it) stake size (money management) should be related to the probability of winning or losing streaks based on your system/method.

So, roughly speaking, if you have a success rate of 50% then it's likely that you are going to get a losing streak of 10 in a row at some point. 60% and a losing streak of 8 is likely. 30% and the likelihood of 16 losers on the trot is not beyond the realms of possibility. Combine, these probabilities with the probabilities of strings of losing streaks coming closely together and you probably end up with a rational stake size somewhere near 1%. (I could work 'em out but frankly I can't be bothered... and anyway, I'm sure Grey1 could give you the figures off the top of his head were you to ask).

Imo, better info on the various aspects of money management can usually obtained from professional gamblers (it's a fine line since I suppose you could call traders that anyway..... but you know what I mean). Anyway, it's a widely touted statistic that 80% of traders are under capitalised and 80% (if not more) are unsuccessfull so I guess you can draw your own conclusions.

I still believe that when you start, preservation of capital should be the primary consideration. As has been said it isn't very glamorous just "staying in the same" and not being able to tell everybody about how much money you've made, but, that's what it's about. If you can preserve your capital long enough you WILL learn and you WILL find a trading style and a market that suits you. Most people don't learn simply because they don't stay in the the game long enough.

Anyway... that my two bobs worth... off to watch the footie..

 

[hammer]

Hi,
I couldn't attach the chart so i have attached it as a file. Its a 5 day chart of the dow. I've done some simple analysis on it and i was wondering if anyone could tell me if it makes sense or not. Well here goes.

According to price action of last week and i think that the price is currently at the top of its range. Therefore on first impression i would say that the dow is going to fall to about 10500 at least over the next few days. Is there an example of a triple top here? Also the RSI has is falling and has hit the line. MACD is now falling with increasing divergence. And last of all the momentum has negative divergence which says to me that the rally over the past couple of days is coming to an end. Can anyone tell me if this makes sense?

Much appreciated
Thanks :cheesy:

 

[rossored]

Momentum and RSI are the same thing. RSI measures momentum.

Other than that, the chart looks like an okay interpretation to me. The Dow, however, has been looking toppy for ages, so the "correction" that everyone has been on about for months (since about August, I think) could be just around the corner, or.... not quite here. Dont try and be too predictive ... and that MACD could snap back and prove everything wrong in no time at all :|

PS - Your chart is uploaded below : the website prefers .GIFs and .JPGs to .BMPs

 

[hammer]

thanks rossored, im still learning and practising my TA so its good to have someone comment on my suggestions. Haven't finished reading 'the bibile' yet! Gonna sit back and see in what direction it goes then.

thanks :cheesy: