Help...trading plan thoughts!!!

Afternoon all,

I wonder if any of you experienced traders would be willing to lend a helping hand.

I’m fairly new to spread betting (one of many on here!) and have now been researching the markets for about 6 months. My first bet was out of curiosity to see what the buzz surrounding SB was all about- expensive mistake, £600 down on gold.

Anyway, since then I have become hooked on the whole stock market concept. I no longer swindle money down the drain and am in the process of piecing together a trading plan.

I initially focussed all my resources and efforts on the joy of indicators, namely MACD, Stochastic, RSI. However, I soon realised that these really were too good to be true and that I would need to delve deeper into the charts and what they are telling me.

I’ve recently been paying a lot of attention to reading price using Japanese candlesticks and pivot points/ S&R levels.

I’m currently planning on trialling a trading plan using price as the main indicator. I will use pivot points/ S&R levels as possible trend reversals and trade on the 5 minute timeframe, using the 2 minute as a support timeframe and 10 minute as a confirmation of the price direction. I will also use the MACD indicator on the 10 minute time frame as a trend confirmation as I’m convinced that it does have its uses although it cannot be wholly relied upon.

Please let me know your thoughts on the above and your recommendation for improvement…if you may. I’m trying to keep in mind the KISS theory as I do not want to have to over complicate the decision when looking to enter/ exit a trade.

Also I’m struggling knowing where to position stops???

You guessed it, money management yet to be thought through.

Thanks all….good bunch of guys are you!

Seanyboy123 said:

Afternoon all,

I wonder if any of you experienced traders would be willing to lend a helping hand.

I’m fairly new to spread betting (one of many on here!) and have now been researching the markets for about 6 months. My first bet was out of curiosity to see what the buzz surrounding SB was all about- expensive mistake, £600 down on gold.

Anyway, since then I have become hooked on the whole stock market concept. I no longer swindle money down the drain and am in the process of piecing together a trading plan.

I initially focussed all my resources and efforts on the joy of indicators, namely MACD, Stochastic, RSI. However, I soon realised that these really were too good to be true and that I would need to delve deeper into the charts and what they are telling me.

I’ve recently been paying a lot of attention to reading price using Japanese candlesticks and pivot points/ S&R levels.

I’m currently planning on trialling a trading plan using price as the main indicator. I will use pivot points/ S&R levels as possible trend reversals and trade on the 5 minute timeframe, using the 2 minute as a support timeframe and 10 minute as a confirmation of the price direction. I will also use the MACD indicator on the 10 minute time frame as a trend confirmation as I’m convinced that it does have its uses although it cannot be wholly relied upon.

Please let me know your thoughts on the above and your recommendation for improvement…if you may. I’m trying to keep in mind the KISS theory as I do not want to have to over complicate the decision when looking to enter/ exit a trade.

Also I’m struggling knowing where to position stops???

You guessed it, money management yet to be thought through.

Thanks all….good bunch of guys are you!

Click to expand...

Can't see a lot wrong (if anything) with what you're currently doing. MM is everything, once you've developed an edge which works consistently over a given period etc...

OK stops, I've read your post quickly so apologies for any over sights; if you're trading off ten min TFs then I'd suggest 15-20 pip should be about right. Given you should be aiming for 2:1 RR then 40 pip gain versus 20 loss is good performance TBH. particularly if you have twice as many winners as break even/losers.

I used to be able to manually close a few trades off ten min TFs earlier than the stop as you could clearly see changes in direction etc.. You could place it on the highest high or lowest low of the session you're in but that can often be a bit extreme. However don't forget that with tight (ish) stops you must take the losses on the chin, when I operated off shorter term TFs I'd often have to grin and bear 2 losses in the same trade direction before bagging 50 pips...if that makes sense...

Looking at cable off a 10 min if I were going long now (if looking at the lowest low of the session) I'd be placing the stop at 15130, having gone long (according to my signal/edge) at 15160...

Hope this makes sense.

Oh just one more thing, only risk 1-2% of your bank per trade, it works, endex...Try to limit your total risk per 5 concurrent trades to no more than 5-8% by taking trades at even 0.5% risk if nec.

Many people talk about KISS but then apparently contradict this statement by putting things like:

''I will use pivot points/ S&R levels, trade on the 5 minute timeframe, using the 2 minute as a support timeframe and 10 minute as a confirmation. I will also use the MACD indicator on the 10 minute time frame.''

To me that's not KISS. Your TF's don't make any sense to me? What's the point of the 2min TF if your trading from the 5min?

You need to be able define your plan and the reasoning behind it in a much clearer manner. So for example: How will you use the MACD? What will you look for around pp's and S&R?

Just my thoughts.

R

Rossini said:

Many people talk about KISS but then apparently contradict this statement by putting things like:

''I will use pivot points/ S&R levels, trade on the 5 minute timeframe, using the 2 minute as a support timeframe and 10 minute as a confirmation. I will also use the MACD indicator on the 10 minute time frame.''

To me that's not KISS. Your TF's don't make any sense to me? What's the point of the 2min TF if your trading from the 5min?

You need to be able define your plan and the reasoning behind it in a much clearer manner. So for example: How will you use the MACD? What will you look for around pp's and S&R?

Just my thoughts.

R

Click to expand...

Alright Ross, I took it to mean that he was looking up/down the nearest TFs to make a decision/get multi TF confirmation before taking a trade? Makes (even more) sense on the shorter TFs...but...ah well...this thread will probably get trashed...

Completely agree BS, as you say on the lower TF's keeping an eye on a longer TF can stop you getting tunnel vision. My point was that a trading plan should leave no stone unturned. It should include everything and anything that will be of relevance when trading that plan, but it should still be simple and concise.

Hi Black Swan,..
Just thought I'd jump in and explain why your stop at 15130 would have been, and was a mistake,.
look back at 31/03/10.
That price was bang on a low ( there were two I was watching) 15130 and 15118 !,.. : )
Hope you find this helpful

Guys thank you very much for the rapid responses…. Its get to get feedback whilst the logic behind my thinking is still fresh in my mind.

The purpose off multiple time frames is as follows;

5 minute TF will be used to enter trades and exit trades. This will be the heart of the operation if you like.

The 2 minute TF is, as you said, maybe over the top but this will further enforce my confidence in the trade and will also let me know what the market is doing before the 5 minute has had time to digest this and show it on the price chart. Why don’t I trade the 2 minute TF you may ask? Simple- far to inexperienced at the moment, too quickly paced, too many decisions to make…the list is endless.

10 minute TF- this will allow me to have further confidence in my decision and also give a wider perspective of the market view and where it’s heading over the next hour or two.

The MACD- brilliant tool if used beneficially and to its full. Ill use the common crossovers as signals to buy and sell, in conjunction with the readings of the 5 min and 2 min TF and will also look at convergence/ divergence for possible signals.

Before you become too critical, you have to remember I AM new to this and I am learning by the hour, so there’s a lot to take in and digest.

I’m aged only 21 so you may think I’m too young for something of this calibre, but its something I’ve always been interested in. My uncle trades profitably using arbitrage techniques, however states “ill help you, but only when you’ve helped yourself…nothings a free ride…you have to find your own feet in this cut throat world”…fair enough I guess.

Money management….thats exactly along the lines of what I was thinking. Keep risks to a minimum.

Stops make sense- thank for that!

Lastly, do you think any other indicators would be beneficial to have? I don’t want to overlook the natural talent of reading price that’s required and rely solely on T.I’s so don’t want to many on my charts.

If you don’t mind me asking (and please don’t reply if you think I’m being intrusive) what kind of strategies do you guys use?

Thanks again all that contributed!

Guys thank you very much for the rapid responses…. Its get to get feedback whilst the logic behind my thinking is still fresh in my mind.

The purpose off multiple time frames is as follows;

5 minute TF will be used to enter trades and exit trades. This will be the heart of the operation if you like.

The 2 minute TF is, as you said, maybe over the top but this will further enforce my confidence in the trade and will also let me know what the market is doing before the 5 minute has had time to digest this and show it on the price chart. Why don’t I trade the 2 minute TF you may ask? Simple- far to inexperienced at the moment, too quickly paced, too many decisions to make…the list is endless.

10 minute TF- this will allow me to have further confidence in my decision and also give a wider perspective of the market view and where it’s heading over the next hour or two.

The MACD- brilliant tool if used beneficially and to its full. Ill use the common crossovers as signals to buy and sell, in conjunction with the readings of the 5 min and 2 min TF and will also look at convergence/ divergence for possible signals.

Before you become too critical, you have to remember I AM new to this and I am learning by the hour, so there’s a lot to take in and digest.

I’m aged only 21 so you may think I’m too young for something of this calibre, but its something I’ve always been interested in. My uncle trades profitably using arbitrage techniques, however states “ill help you, but only when you’ve helped yourself…nothings a free ride…you have to find your own feet in this cut throat world”…fair enough I guess.

Money management….thats exactly along the lines of what I was thinking. Keep risks to a minimum.

Stops make sense- thank for that!

Lastly, do you think any other indicators would be beneficial to have? I don’t want to overlook the natural talent of reading price that’s required and rely solely on T.I’s so don’t want to many on my charts.

If you don’t mind me asking (and please don’t reply if you think I’m being intrusive) what kind of strategies do you guys use?

Thanks again all that contributed!

Hey,

One thing I would say is that trading off of a 5min chart to start with is very dangerous. When you do not know what type of trader you are yet, the shortest timeframes tend to be the most error inducive. Not only technically, but also psychologically.
In fact, you mention that you are 21 but trading 5min means trading full-time, so you need to make sure that you can do that without compromising other (safer) income-generating activities, like school or your job.

Anyways, best of luck to you!

Hilarymannah said:

Hi Black Swan,..
Just thought I'd jump in and explain why your stop at 15130 would have been, and was a mistake,.
look back at 31/03/10.
That price was bang on a low ( there were two I was watching) 15130 and 15118 !,.. : )
Hope you find this helpful

Click to expand...

Sorry bud the LOL is 'cos some cheeky tw@t PMd me asking if that was a lesser spotted Black Swan live call...In ref to your point I politely disagree; at approx 11:20 (off a ten min TF) the session low was 15130. ...if it was a call it was spot on for a cracking 50 pip gain, which off a short term TF is great trading in my book ...

Not that I disagree with the above (post number 9), but TF is like trading style, its totally unique and personal. Its a decision you and only you can make. There are no dangerous TF's only dangerous traders.

Hi Black Swan,.
My mistake,.I thought you meant your stop was at that price,.which would have been mighty unfortunate,..
I wasn't challenging you Swan,.I just see more than most,..keep your chin up, and good trading!

Hilarymannah said:

Hi Black Swan,.
My mistake,.I thought you meant your stop was at that price,.which would have been mighty unfortunate,..
I wasn't challenging you Swan,.I just see more than most,..keep your chin up, and good trading!

Click to expand...

No offence taken bud, I've got thick skin not feathers... Not sure if the HH/LL of the session is the best place for stops, bit obvious come to think of it, still it beats telling folk to pick round numbers...