How do you select your trades and other advice please

This is a discussion on How do you select your trades and other advice please within the First Steps forums, part of the Reception category; Alex, I use deal4free to swing trade indices as well, mainly the S&P 500 and Nasdaq Composite as they seem ...

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Old Sep 19, 2003, 4:56pm   #46
 
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Alex,

I use deal4free to swing trade indices as well, mainly the S&P 500 and Nasdaq Composite as they seem to suit my current system well at the moment. (I say 'at the moment' cause as far as I know no system works for very long, unfortunately! But it's on my website if you're interested.)

Anyway, like you say it takes a wee while to bend your brain around the initially intimidating d4f platform but it is one of the best out there and designed with common sense to the fore. You'll need a reasonably specified PC and ideally broadband internet to run it smoothly though.

A couple more random warnings, sorry if they sound patronising, but I made all these mistakes when I was learning:

Watch out for your stops triggering unwanted trades - this can happen if you close a position and forget to remove the stop that was associated with it as the stop will not automatically disappear when you close a position. This applies to limit orders as well.

Keep an eye on the notional size of your positions as the quotes can be a touch misleading.

e.g Vodafone is quoted at say 125.50 and you buy £10 a point. If it goes up to 126.50 bid you win £10.

But if the S&P 500 is quoted at say 999.5 and you buy £10 a point and it goes up to 1000.5 you win £100, not £10, despite the decimal point being in the same place.

Or in other words before betting £x a point make sure it's not a much larger or smaller position than you intended.

Be aware of the difference between controlled risk stops and normal stops.
A normal stop is not guaranteed, i.e in a fast moving market the price can plough through your stop, causing a fill at a price less favourable than you had planned for. A controlled risk stop, for which you pay a small spread premium, is guaranteed to be filled at the level you chose, even if, say, the market drops 500 points overnight on catastrophic news.
In markets that are quoted by d4f 24 hours, such as the FTSE, Dow and S&P normal stops are generally safe as any news will trigger an immediate movement in the quote. But in markets that are only quoted during trading hours you could get yourself into a lot of trouble with a normal stop as the market could open ("gap") up or down a massive amount, miles from your stop.

Avoid the temptation to overtrade. All those flashing prices on the d4f screen can be addictive and lead one into foolish, impulsive trades out of boredom. If you are swing trading and not spending every day in front of the PC this shouldn't be such a problem.

Avoid taking a market view. Instead ask "What is it doing now?" If it is trending jump in until it isn't trending anymore. Follow its lead, don't try to make it follow yours.

And for what it's worth a few of my favourite aphorisms -

Look after your losses and the profits will take care of themselves.
Do not confuse intelligence with a bull market.
Be patient and wait for the market to come to you.
Trade well, not necessarily often.
Cut losses quickly and enjoy it. A small loss often results from a good trade. Take profits slowly, but lock part of them in with trailing stops.
Never let a profit become a loss.
Never increase a loss by moving stops.
If in doubt get out.
Risk and money management are more important than trading systems. Paper trade until you have a proven track record.
Ignore technical analysis at your peril, but be aware it sits awkwardly somewhere between art and science.
Do not let ego and emotion cloud judgement.
Though you may strongly feel otherwise, the market is always right.
Don't believe the rubbish peddled by the financial services industry and media.
The trend, often just a rough, obvious line scrawled on a chart, is a lifelong ally - always try to tag along with it.
Read 'Trading for a Living' by Dr. Alex Elder.
Although it is occasionally acceptable to ease into a position in small chunks (e.g buy £2 a point at 100, 97 and 95) provided of course you have stop loss (e.g at 90 in this example) do not ever be tempted to average down. "Economic history is a never-ending series of episodes based on falsehoods and lies, not truths. It represents the path to big money. The object is to recognise the trend whose premise is false, ride that trend, and step off before it is discredited." (Soros)
"Markets can stay irrational longer than most of us can remain solvent". (Keynes)

Phew! Sorry to overload you with yet more information. Keep us posted as to your progress, questions, thoughts etc. - tis what this fine site is for after all.

Good luck :-)

Last edited by frugi; Sep 19, 2003 at 5:07pm.
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Old Sep 19, 2003, 5:25pm   #47
 
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Thanks Gordon8
Nice to have a reply all to my own !!!. Yes this web site is the busness and ive really taken to some of the guys that post here. Iwas lucky to have found a really good bloke called Genti who introduced me to this ( hes on the site) but unfortunatley he had to go back to his homeland. He used to make regularly 200pts a week and i think that if you place orders with D4Free you wont go too wrong( he said niavley (I know ive spelt it wrong, but im a number man !!!!!). Ive just gone long with BP based on the lower support line and its appreciation for some historical support at 420. Ive tried to adopt a RR discipline, thanks to FTSEs thread. Until i can remember how to post a chart ,ill have to rely on text > From one beginner to another, tell me what you think as it might be fun for the big guns to read what the infants are saying.
I dont know about you but i find that FA and TA dont mix for me. What do you think

Halfbutt
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Old Sep 19, 2003, 5:35pm   #48
 
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Sorry to fill up this space with NON trading chat , but >>>>>>>>>>>>>>>>JayGE>>>>>>>>>>>> love the picture !!!!
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Old Sep 19, 2003, 6:50pm   #49
Joined Dec 2002
Also sorry to post non-trading items here, but I could not think where else to put it.

Nice website Frugi!

Must have taken a lot of work.

Regards

David
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Old Sep 19, 2003, 7:23pm   #50
 
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Thanks Halfbutt

.......thing is I'm 33 now & sure I should be getting served down pub's & more than an ''oochy-coochy-coo'' from the ladies by now!

:-)

jay
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Old Sep 19, 2003, 8:04pm   #51
 
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Gordon8 started this thread Halfbut

I must be a novice! - I thought FA and TA were referring to a wierd type of alcohol for a short while there!

Anyway - I am concentrating on Technical Analysis for a while. I started reading Martin Pring's INtro to Technical Analysis, which comes with a CD. Its taking a while because I keep dropping off - Poor Martin is clearly brilliant at his stuff but he is dry as an old fossil. Still if I manage to get through it, I think it will be very useful.

I think that truly understanding the significance of different MA, trend lines, support and resistance lines and volume are vital and I am concentrating on these areas

Bringing in more than a tiny smidgen of FA is way too confusing for me, for now and I am using it to a tiny degree. I have now decided to count FA as a next chapter in my learning, not to be mastered till I can half read a chart correctly!

Personally the more I read, the more I realise I don't know - this is making me extremely cautious but maybe that is a good thing.

I find this chat room far more useful than the books I've read as its much more friendly, interesting and I can ask questions!

Anyway keep me posted on how you are doing and I hope you are doing better than me!

Alex
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Old Sep 19, 2003, 8:15pm   #52
 
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Gordon8 started this thread Frugi

What helpful advice - Thanks

I have just closed my account with Tradindex and moved my funds to Deal4Free but I havn't dared place a bet as yet due to being a wimp and rather nervous of their 'award winning' software!!

I will try to get time to learn the Deal4 free software this weekend but I feel quite scared of trading right now. I do hope I am not getting Traders block this early on in my career but my feeling is that if I don't feel confident about trading then don't do it!

Thanks again for all your advice - Anything else you can think of to tell me will be gratefully received

Alexandra
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Old Sep 22, 2003, 8:21am   #53
mma
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Mada ,

May I ask - do you tend to get stopped out a lot ?
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Old Sep 22, 2003, 8:40am   #54
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mama

I'm using a much modified version of PLDOT from Drummond geometry. This gives very good entries and I have a 3 minute chart with the same point entries as a 1 minute for confirmation..

I'm running about 65% winners and so yes quite a bit but for minimal losses. On swing trades my risk/reward ratio is around 3.5:1 ...

http://www.tedtick.com/Introductiont...ndGeometry.doc
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Old Aug 21, 2008, 4:48pm   #55
Joined Aug 2008
how do you select your traders and other advice please

thanks alot for this thread it helps me alot in gathering many new infromation.
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