How To Make Money Trading The Markets.

This is a discussion on How To Make Money Trading The Markets. within the Stocks forums, part of the Markets category; Originally Posted by ely37 I take it that you weren't too successful with this trending strategy? It looks simple enough, ...

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Old Oct 18, 2008, 5:48pm   #106
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Originally Posted by ely37 View Post
I take it that you weren't too successful with this trending strategy? It looks simple enough, but it still seems like a 50/50 chance to me. L2 might give some insights, but I don't know if it would help that much. Perhaps the trending was going for too long before you jump in? Or were you having second thoughts and made you take longer to pull the trigger? I know I have that issue. Doubting myself, only to see that my guess is accurate, jump it and BAM! I get taken.
Hi ely,
Apologies, my last post was misleading. I meant to say that I've always struggled with trend trading in general (although I'm getting better at it, slowly), not that I've struggled with this particular strategy as presented by Richard. This is a reflection of me and my trading skills (or lack of them) and not Richard's strategy! If executed properly and with discipline (two very big 'ifs'), the probability of success ought to be much greater than 50%. There are a number of reasons for this:
1. A trending instrument is more likely to continue trending than it is to reverse (in spite of the comments in my last post). In other words, continuation is more likely than change.
2. There are trending stocks and there are trending stocks. What I mean by this is that Richard is very clear that only stocks with the strongest and cleanest of charts should be traded. Retracements must be shallow, consolidations short lived. There should be little or no evidence of any long upper shadows / spikes (in up trending stocks) and the low of each candle should be higher than the low of the previous candle etc.
3. Your point about joining the trend too late is a very good one. To help avoid this problem, I now look at the daily ATR of the stock. If it's already moved in excess of 70% of it's daily ATR - I leave it alone. Attempting to join the trend when the stock is at or beyond its daily ATR will reduce the probability of a successful trade.
4. Only take trades where the stock is moving in tandem with its sector and the main market. Richard prefers to monitor the futures for this purpose, Grey1 and subscribers to his 'Technical Trader' forum follow $INDU and I prefer SPY - the index etf. Make sure the market is on side.
5. You'll notice that many of Richard's trades are taken soon after the stock has breached the previous day's high or low (indicated by the heavy black line on his charts). The thinking here is that if the stock is trending down - for example - then all those people who are long from the day before are in a losing position and starting to hurt. As their stops are hit, the strength and momentum of the trend builds, adding to the selling pressure.
If all the above 5 boxes are ticked, the probability of a successful trade should well exceed 50%. Perhaps others can add to the list of what they look for before attempting to jump on board a trend?
Tim.
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Old Oct 18, 2008, 5:59pm   #107
 
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Good points well made Tim.

The other thing is people may imply that these trades are only 50/50 but.............

i believe (others may dispute this)

Most trade will only have a 10c (or smaller) stop but may run for over $1 so even with 50% success

thats still +$4.50 per share over 10 trades on average.
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Old Oct 29, 2008, 11:07am   #108
 
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I took Richard's course last year. Yes - Level 2 is very important and is very powerful at timing your entires and as Richard does, exits. 10c is fine for a stop, sometime 2c esp around whole numbers with the MMs having a lot of stock to sell/buy at these levels. I have been in many a stock - tried for a breakout and reversed against me. What happens - hits my 10c stop and move on. I see time and time again a stock which goes against me contuning to go against me and if it wasn't for the stop then bye bye account. The R:R however can be very large and do not worry about getting over 50% positive trades, the R:R will take care of itself. Typically 2.5:1 upwards.
The main market is very important, the power of the market moving up and the a stock about to break out goes well in your favour. If you can antipiate the breakout then even better - there are soemtimes that we can use this to gain a few cents even if the stock doesn't break out. The main thing is to wait and respond when the setups appear.
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Old Nov 1, 2008, 9:56pm   #109
 
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Originally Posted by timsk View Post
Hi ely,
Apologies, my last post was misleading. I meant to say that I've always struggled with trend trading in general (although I'm getting better at it, slowly), not that I've struggled with this particular strategy as presented by Richard. This is a reflection of me and my trading skills (or lack of them) and not Richard's strategy! If executed properly and with discipline (two very big 'ifs'), the probability of success ought to be much greater than 50%. There are a number of reasons for this:
1. A trending instrument is more likely to continue trending than it is to reverse (in spite of the comments in my last post). In other words, continuation is more likely than change.
2. There are trending stocks and there are trending stocks. What I mean by this is that Richard is very clear that only stocks with the strongest and cleanest of charts should be traded. Retracements must be shallow, consolidations short lived. There should be little or no evidence of any long upper shadows / spikes (in up trending stocks) and the low of each candle should be higher than the low of the previous candle etc.
3. Your point about joining the trend too late is a very good one. To help avoid this problem, I now look at the daily ATR of the stock. If it's already moved in excess of 70% of it's daily ATR - I leave it alone. Attempting to join the trend when the stock is at or beyond its daily ATR will reduce the probability of a successful trade.
4. Only take trades where the stock is moving in tandem with its sector and the main market. Richard prefers to monitor the futures for this purpose, Grey1 and subscribers to his 'Technical Trader' forum follow $INDU and I prefer SPY - the index etf. Make sure the market is on side.
5. You'll notice that many of Richard's trades are taken soon after the stock has breached the previous day's high or low (indicated by the heavy black line on his charts). The thinking here is that if the stock is trending down - for example - then all those people who are long from the day before are in a losing position and starting to hurt. As their stops are hit, the strength and momentum of the trend builds, adding to the selling pressure.
If all the above 5 boxes are ticked, the probability of a successful trade should well exceed 50%. Perhaps others can add to the list of what they look for before attempting to jump on board a trend?
Tim.
TIM

AN excellent thread,,

During my LIVE seminars I have called the market direction and few times asked people to get a dart and throw at any stock they wish and still make $$$ why ? simply because where ever market goes stocks will follow,,,

SO what is the point of stock trading and not just stick to Futures,, SIMPLE *** RISK management *****

The correlation between futures and cash is 1.. any move in cash results in the same amount of move in futures,, Therefore the risk is proportional to reward at any given time ,, As a result one cannot reduce risk ( except using his stop ) to control the losses if market goes against him
Stocks are different ,, you can choose stocks that are weaker/stronger than the general market ( this is why you have fund managers to stock pick , ) and hence you could even be wrong on calling the EXACT top and bottom and still the stock does not move against you by much ( due to low correlation ) ,, SO by choosing stocks that are weaker/ stronger than the market you can offset your losses against the market's direction ( depending on the degree of correlation between stock and the market )

In short you can reduce risk by choosing correct stocks and hence reduce risk to capital ,,

Example

lets say I called DOW short @ 8000 and short RIMM @ 50.. Lets say DOW went against me by 30 points,, RIMM probably would hardly move against me if RIMM on the day was weaker than the market ( you can use irajN minute code on the TT to choose the correct stocks )

Now if you choose 3 stocks ( diversification ) instead of 1 then you can reduce the risk even further which basically means you HAVE RISK IN YOUR MIND AT ALL TIMES.

I shorted 3 stocks in my 24th Oct Live seminar and as a result we took around 3$ run or more ( not sure ) in 1 trade and the stocks hardly went against us ,,

grey1
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Old Nov 1, 2008, 9:58pm   #110
 
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Originally Posted by DiscoPete View Post
The main market is very important, the power of the market moving up and the a stock about to break out goes well in your favour..

spot on ,,, In fact it is VITAL in risk managment

Grey1
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Old Nov 3, 2008, 10:59am   #111
 
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Mr. Charts started this thread
Quote:
Originally Posted by DiscoPete View Post
I took Richard's course last year. Yes - Level 2 is very important and is very powerful at timing your entires and as Richard does, exits. 10c is fine for a stop, sometime 2c esp around whole numbers with the MMs having a lot of stock to sell/buy at these levels. I have been in many a stock - tried for a breakout and reversed against me. What happens - hits my 10c stop and move on. I see time and time again a stock which goes against me contuning to go against me and if it wasn't for the stop then bye bye account. The R:R however can be very large and do not worry about getting over 50% positive trades, the R:R will take care of itself. Typically 2.5:1 upwards.
The main market is very important, the power of the market moving up and the a stock about to break out goes well in your favour. If you can antipiate the breakout then even better - there are soemtimes that we can use this to gain a few cents even if the stock doesn't break out. The main thing is to wait and respond when the setups appear.
Spot on, DiscoPete
I remember you taking my course very well.

If there is anything I can do to help - advice, questions, whatever, please feel free to email me.
In fact, email me anyway and let me know how you are getting on.

Very best wishes,
Richard
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Old Nov 5, 2008, 5:10pm   #112
 
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Mr. Charts started this thread I spent an afternoon last week with someone I’ve trained and he traded for himself using several of my set ups and triggers. I simply watched and commented afterwards.
One of those trades was this rising/falling candle set up and he has sent me the image taken at the time of exit. The red cross hairs are at the time of entry using this set up and the exit on the trailing stop as shown.
He followed the rules I’ve mentioned earlier in the thread and did rather well with $1.38 per share off that trade alone.
You can see why I like strongly trending stocks that show momentum.
Not bad for an 11 minute trade
Richard
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Old Nov 25, 2008, 4:59pm   #113
 
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Mr. Charts started this thread To Alex in Poland,
I've sent you two emails about your question, but both have bounced back.
If you have another email address, try sending me that, or maybe post your question here.
Richard
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Old Nov 25, 2008, 5:25pm   #114
 
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Mr. Charts started this thread Someone has made a comment on another thread about CAL being a good trading stock.
It is sometimes, perhaps not as good as UAUA which produced a fistful of $$$ for me this afternoon as a simple break out swing trade.
The point is the airline stock price movements intraday are often inversely related to the oil price. Just something to tuck away at the back of the mind.
Richard
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Old Nov 27, 2008, 8:49am   #115
 
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Mr. Charts started this thread As already mentioned and explained repeatedly in this thread, I do NOT respond to PMs.
If you have a question, go to the top left of the post where it says, "Mr. Charts", click on it and it opens some choices; click on "send email to Mr. Charts" and write your message.
I'll do my best to answer it as soon as I can.
Richard
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Old Nov 27, 2008, 10:17am   #116
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Richard,

You could turn off the ability to receive PMs and then no-one would send one expecting a response.


Paul
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Old Nov 27, 2008, 7:52pm   #117
 
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I'm currently a student, and I initially invested 2k in the stock market of 2006 with a 'buy and hold' frame of mind. I didn't really focus on it until it dipped 20 percent. I then vaguely looked into swing trading and thought.. ahh what the heck, might as well give it a try. That was a bad idea. I am now at 700.

I have been reading more in depth trading material for the past few weeks now and learned much. Many of the example trades I read about are geared towards trades backed by significantly higher bankrolls and an ample risk to reward ratio. BTW, I am currently using Scottrade as my broker (7$ per trade). I have made two trades so far (I know, this sounds wayy noobish); and in both scenarios, I bought at around 10 o clock based on a few technical indicators and the price saw a trend of around 2 dollars (around 6% ROI had I sold), and I held on while disregarding all indicators to sell because I would have been selling at a loss when taking commissions into consideration.

My Goal: Increase my knowledge in all possible facets of trading: gaging news and upcoming events, price action, technical indicators, investor psychology. Also, of course, preferably increase my bankroll so that I wouldn't have to reinvest.

My Questions: Is there anyway I can either decrease commissions or increase ROI so that intra-day bumps can become a gain? Should I use another trading strategy while trading paper? Should I throw in the money management towel and put in all funds into single trades?

Thanks

Also, just out of curiosity, are you the Richard from Move the Markets?
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Old Nov 29, 2008, 1:29am   #118
 
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Hi Mr. C

I am new to trading and like reading your messiges. I have question since I am new do you suggest going to live trading seminar to learn more about this or read certain books or...I am open to any input.Thanks
Crni
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Old Dec 1, 2008, 12:01pm   #119
 
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Mr. Charts started this thread Hi Paul,
I hadn't thought of that !
Happy Holidays to you,
Richard
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Old Dec 1, 2008, 12:13pm   #120
 
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Mr. Charts started this thread zbenjii,
I use interactivebrokers and their commission for a round trip is $2 for 200 shares, $10 for 1000 shares and so on.
I don't know what you mean by an "intra-day bump".
"Another trading strategy whilst trading paper" - test whatever you like on paper before trading for real, but remember real trading is always different to paper trading; having said that, if you can't make a CONSISTENT profit paper trading, there is no way you will succeed in the real world.
"Throw in the money management towel" ? Are you serious?
The first law of trading is protect your capital and minimise risk and you're even thinking of blowing your money on one trade? !
I don't even know what Move the Markets is.
I only post on my own private (invitation only) subscription site, occasionally here on t2w and rarely on MoneyAM premium site.
Richard
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