The Spread Betting Plan

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jdubya

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Hi,

I am currently developing my trading plan whilst trading on a capitalspreads demo account. Hoping to prove to myself that I can generate some consistent profitability before going live with real bets.

I would like to share a rough outline of my plan and would appreciate any constructive feedback and advise from experienced traders.

I have been focusing on the FTSE 100 (Or the UK rolling daily contract in spread betting terms).

I scan the hourly chart trying to identify trend lines and support and resistance levels.

If the market looks to be range bound (in a channel) I will buy on what looks to be a bounce off support or sell on a bounce off resistance. If the market is trending I will wait for a retracement and trade in the direction of the trend.

I always trade with a 26 point stop and 39 point target. The theory here is that I want to run profits and cut losses, but don't want to get stopped out too often - hence not going for a three to one ration.

Let me know if you think this sounds sensible or is doomed to failure. Is the plan too simple? If so how should I get more sophisticated? Should I be looking to trade on the publication of results such as GDP and inflation? Is this even possible without a reuters / bloomberg terminal? Also - any advice around how to backtest my strategy without expensive software? The biggest problem seems to be getting data which is more granular than daily high, low close.

I have been keeping an eye on the news (fundamentals) but don't really have a good idea of how to incorporate it into my trading decisions at this stage.

I understand that there are no short cuts and that it will take a lot of hard work to get good at this - but that's exactly what I intend to do. Please let me know if you think that I'm heading in the right direction or not?

Thanks.
 
jdubya said:
Hi,

I am currently developing my trading plan whilst trading on a capitalspreads demo account. Hoping to prove to myself that I can generate some consistent profitability before going live with real bets.

I would like to share a rough outline of my plan and would appreciate any constructive feedback and advise from experienced traders.

I have been focusing on the FTSE 100 (Or the UK rolling daily contract in spread betting terms).

I scan the hourly chart trying to identify trend lines and support and resistance levels.

If the market looks to be range bound (in a channel) I will buy on what looks to be a bounce off support or sell on a bounce off resistance. If the market is trending I will wait for a retracement and trade in the direction of the trend.

I always trade with a 26 point stop and 39 point target. The theory here is that I want to run profits and cut losses, but don't want to get stopped out too often - hence not going for a three to one ration.

Let me know if you think this sounds sensible or is doomed to failure. Is the plan too simple? If so how should I get more sophisticated? Should I be looking to trade on the publication of results such as GDP and inflation? Is this even possible without a reuters / bloomberg terminal? Also - any advice around how to backtest my strategy without expensive software? The biggest problem seems to be getting data which is more granular than daily high, low close.

I have been keeping an eye on the news (fundamentals) but don't really have a good idea of how to incorporate it into my trading decisions at this stage.

I understand that there are no short cuts and that it will take a lot of hard work to get good at this - but that's exactly what I intend to do. Please let me know if you think that I'm heading in the right direction or not?

Thanks.
Click to expand...

Well you're spread betting for a start which puts you at a disadvantage. You shouldn't attempt to trade news with SB, the slippage will kill you.
 
pboyles said:
Well you're spread betting for a start which puts you at a disadvantage. You shouldn't attempt to trade news with SB, the slippage will kill you.
Click to expand...

Play around on your demo account and try and actually get that Slippage Mr Boyles talks about (and many others for that matter).......
I experience no Slippage ever to my knowledge. Then again I'm not looking at scalping at outset....

The Demo is there to play around with "ideas" until you're more confident in what you are doing....
 
jungerns said:
Play around on your demo account and try and actually get that Slippage Mr Boyles talks about (and many others for that matter).......
I experience no Slippage ever to my knowledge. Then again I'm not looking at scalping at outset....

The Demo is there to play around with "ideas" until you're more confident in what you are doing....
Click to expand...

Demo accounts and live accounts are two different things. Why would they give you slippage on a demo account? It might only put you off depositing funds.
 
On the UK rolling daily contract the spread is just 1 point. I think that's the same for demo and live accounts. On crude oil there is a 5 point spread so slippage is more of an issue there.

I can work out how much of an issue slippage will be quite easily, what I was more unsure of was whether I would be able to get the news quickly enough to trade it without reuters or bloomberg. Any thoughts on that?
 
pboyles said:
Demo accounts and live accounts are two different things. Why would they give you slippage on a demo account? It might only put you off depositing funds.
Click to expand...

Your cynicism really pishes me off Boyles and new posters on the forum. Why you are tolerated only you must know....

To the OP I was referring to live accounts with Zero Slippage not Demos....
 
jdubya said:
On the UK rolling daily contract the spread is just 1 point. I think that's the same for demo and live accounts. On crude oil there is a 5 point spread so slippage is more of an issue there.

I can work out how much of an issue slippage will be quite easily, what I was more unsure of was whether I would be able to get the news quickly enough to trade it without reuters or bloomberg. Any thoughts on that?
Click to expand...

Most SB providers have live Squawk boxes which I find faster and more accurate...
 
jdubya said:
On the UK rolling daily contract the spread is just 1 point. I think that's the same for demo and live accounts. On crude oil there is a 5 point spread so slippage is more of an issue there.

I can work out how much of an issue slippage will be quite easily, what I was more unsure of was whether I would be able to get the news quickly enough to trade it without reuters or bloomberg. Any thoughts on that?
Click to expand...

I think you are confusing slippage with spread. You've no way of working out slippage in advance. You won't know until your order is filled.

If you pay for a squawk feed, in fact some may be free, you'll get the news soon enough. The problem will be that your order will not get filled at the price you want it to. The market can move faster than you can hit buy or sell, you could end up getting in at a much worse price.

That's before we even consider any funny business by the broker.
 
jdubya said:
On the UK rolling daily contract the spread is just 1 point. I think that's the same for demo and live accounts. On crude oil there is a 5 point spread so slippage is more of an issue there.

I can work out how much of an issue slippage will be quite easily, what I was more unsure of was whether I would be able to get the news quickly enough to trade it without reuters or bloomberg. Any thoughts on that?
Click to expand...

The tighter the theoretical spread, the more slippage will affect the outcome. Being slipped by a point on a 5pt spread is far less important than being slipped by a point on a 1pt market.
 
jdubya said:
Hi,

I am currently developing my trading plan whilst trading on a capitalspreads demo account. Hoping to prove to myself that I can generate some consistent profitability before going live with real bets.

I would like to share a rough outline of my plan and would appreciate any constructive feedback and advise from experienced traders.

I have been focusing on the FTSE 100 (Or the UK rolling daily contract in spread betting terms).

I scan the hourly chart trying to identify trend lines and support and resistance levels.

If the market looks to be range bound (in a channel) I will buy on what looks to be a bounce off support or sell on a bounce off resistance. If the market is trending I will wait for a retracement and trade in the direction of the trend.

I always trade with a 26 point stop and 39 point target. The theory here is that I want to run profits and cut losses, but don't want to get stopped out too often - hence not going for a three to one ration.

Let me know if you think this sounds sensible or is doomed to failure. Is the plan too simple? If so how should I get more sophisticated? Should I be looking to trade on the publication of results such as GDP and inflation? Is this even possible without a reuters / bloomberg terminal? Also - any advice around how to backtest my strategy without expensive software? The biggest problem seems to be getting data which is more granular than daily high, low close.

I have been keeping an eye on the news (fundamentals) but don't really have a good idea of how to incorporate it into my trading decisions at this stage.

I understand that there are no short cuts and that it will take a lot of hard work to get good at this - but that's exactly what I intend to do. Please let me know if you think that I'm heading in the right direction or not?

Thanks.
Click to expand...

I like the bounce moves in between S & R levels .......

try to be less rigid on the Stop losses and instead place them where price patterns dictate you are wrong at that point......will save some points ?

If the 1 hr is your TRADING TIMEFRAME........then I would recommend you add the 4hr TF to identify the higher and more important main S & R levels and also to assist in the prevailing trend for your 1 hr TF signals

you could also add the 15m or 5m TF as a confirming trigger TF for the 1hr but now I am perhaps complicating matters

Lance Beggs is the master of this technique.......read up on him

N
 
Thanks N. That sounds like sensible advice. Will definitely read up on Lance Beggs to help refine my S & R technique.
 
I have been spread betting for years. Never has slippage or the spread been an issue (especially on the FTSE). Yes it happens, but not nearly enough for it to be a problem.
 
I always trade with a 26 point stop and 39 point target. The theory here is that I want to run profits and cut losses, but don't want to get stopped out too often - hence not going for a three to one ration.
Click to expand...

based on what
 
Hi Rawrschach. The 26 stop 39 point target was based on money management tactics. This keeps profits at 1.5 x losses so if I get anywhere near a 50% success rate I will make money. Plus a run of 26 point losses would not be too pianful psycologically so I would be less likely to give up after a bad run.

I've seen prfit to loss ratios of three to one recommended in some of the books, but my reasoning was that this would increase the likelyhood of a painful loosing streak which could be hard to take.

I appreciate that 26 and 39 may be a bit rigid and arbitrary, so this is something that I will work on.
 
Hi Jdubya,

"....I always trade with a 26 point stop and 39 point target. The theory here is that I want to run profits and cut losses, but don't want to get stopped out too often - hence not going for a three to one ration...."
I find it is always good to aim for a higher Risk / Reward (RR) ratio in the beginning simply because you will be trigger happy (no matter what you say to yourself) and not let the winners run. Hence setting such a low RR means you get less than planned on the average.
I prefer to find a technical reason to get out of a trade than using a RR target. Although using RR target is the norm to exit when scalping.
 
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