UK versus US markets

[timothyclarke]

Hi all,

I've been reading about day trading for a while now, and just starting to paper trade. ANL on the 25th was my first trade and is not yet closed.

Anyway, I've read a few books (re-reading The Market Maker's Edge at the mo) and realised that perhaps it would be a good idea to trade US stocks instead of UK. Why? Because most of the books (certainly the few I've read) give tips and advice on the US market:

• the different stock excanges (go NYSE for beginners because it is less volatile);
• use the Dow for an indicator of which way the NYSE is going;
• the S&p futures; and
• I'm sure I read somewhere about The Big Five (?).

I'm sure there are others I've missed, but my point is...is there such information available for the UK market? Or is the information these indicators provide just not available? Commissions may be more expensive but commissions is just another word for loss. Any information and views on this would be appreciated, I'd like to paper trade in the market I'll trade in and get to know a handful of stocks well.

Incidentally, after so many good reviews of IB on this board I intend to use them for when I do trade. I don't understand the commissions though! Could anyone give me a brief rundown of the costs involved for both UK and US markets?

Thanks folks for all information,
Tim

 

[ardhill]

Hi Tim

I trade the US - primarily the Nasdaq, but then again I like the volatility.

You may want to paper trade a while longer before making these decisions as your trading style can have a lot to do with the markets you choose.

The US markets...

- More volatile
- Different trading hours - 2.30pm - 9.00pm UK time
- More information (though that is not always important depending on how you trade. I trade very short term, sometime I haven't even a clue who the company is that I am trading, let alone anything else)
- More choices of direct access brokers
- I believe the commission costs are lower (mine are certainly low, 0.01c per share per side up to 500 shares, then it gets cheaper!)

The big 5 you mention is probably from Pristine.

Technical Indicators can be used on any stock no matter where it trades.

And I have difficulty understanding IB's website too.

If you decide to trade longer than intra day, then you may want to start with a spread bet account. This means that you can trade your plan with a low outlay. You can open a SB account with as little as £100 with Finspreads, but you do need more in reality, I would think a minimum of £500. You can trade from as little as 50p a cent move, which is the approximate equivalent of 50 shares.

To day trade stocks in the US you need at least $30,000 to open an account. Well actually $25,000 with IB, but as soon as your account is less than that, you need to top it up before opening another position. If you only trade 2-3 times a week or less, then you can open with a smaller account size.

The problem is, that until you have an idea what style of trading you are planning, it is difficult to answer your question fully.

How do you determine the style of trading - try a few. Find out what you are most comfortable with and fits your personality and schedule.

Many people trade the US market because they can trade after work at home.

Oh yes as for costs, If you trade via a broker, you may need to pay for data feed and software on a monthly basis. Even if you trade using a SB company, you will probably want a charting package. I feel that www.Prophet.net is a decent priced company which offers good value.

If you are just starting, there is lots to learn. I wish you success

 

[timothyclarke]

Hi Ardhill,

Thanks for the great reply.

Hi Tim

I trade the US - primarily the Nasdaq, but then again I like the volatility.

You may want to paper trade a while longer before making these decisions as your trading style can have a lot to do with the markets you choose.

I think you're right, and I was considering the same this morning --- that I should paper trade for longer before I make decisions such as which market I should focus on. It was the books that made me think that I should go for a market with less volatility to begin with, but perhaps my style suits the more volatile markets! The only way to find out whether or not that is the case is to (paper) trade them. I'll work a matrix of some of the indicators/oscillators/markets etc and make a comparson of how each paper account manages. Of course that still wont provide me with a definitive answer, but will give me more information about my ability (if any!) than I have at the moment!

The big 5 you mention is probably from Pristine.

I think you're right. I'm pretty sure it was from Tools and Tactics for the Master Day Trader.

If you decide to trade longer than intra day...

Unfortunately I don't have much choice in this as I have to travel quite a distance for my work and although I'd be home before nine, I'm verging on being too tired for the faster pace of intra-day trading. However, it is something I'd hope to take a look into some time in the more distant future.

...then you may want to start with a spread bet account.

I really don't know why it is, but I've been quite put off this way of trading. However, it may be because when I begun to investigate trading I envisioned the more purer form. Again though, I think it's another thing to add to the "matrix" I mention above.

Oh yes as for costs, If you trade via a broker, you may need to pay for data feed and software on a monthly basis. Even if you trade using a SB company, you will probably want a charting package. I feel that www.Prophet.net is a decent priced company which offers good value.

I've had a look at a couple of packages. The first was Sierra Charts which I know plenty of people seem to like. Unfortunately I don't feel comfortable with it. That's probably because I design, code and review software for a living and my mind keeps saying to me "no, no, no....it should never have been designed like that!" :!: I just can't shut it up! What's more, I'm very put off by the poor documentation to go with it. I found a couple of posts that mentioned AmiBroker and I've been trying out the demo version. This is a package I'm far more impressed with and feel more comfortable with --- I'm surprised there is no forum on this site dedicated to it. It does cost more but I think it's worth it. At the moment I'm downloading the eod quotes from Yahoo, and verifying the ohlc prices on www.bigcharts.com for any stocks I'm interested in. I will investigate prophet though.

I think, all in all, I need to formulate a plan and I'm trying to do that too quickly. I have to investigate all the paths available to me before committing myself to just one of them. Your reply has certainly made that clear to me. Thank you very much.

Tim