Tubbs's Blog

MY FTSE Rules

Welcome to my journal. This is the first entry in which I will explain some basic principles I follow, as well as what I have learned up to this point.
If anyone wants to contact me regarding anything in this journal I would welcome mail to:
[email protected]
I started trading in about October last year. Initially I started by buying a number of shares of different companies, hoping that the value of those shares would increase over time. I did not have a great deal of experience, but I had read alot of literature on the subject and watched alot of CNBC, so I was not starting as a complete novice. I initially chose my companies to invest in using resources like Investor's Chronicle and the broker recommendations. This I believe to this day gave me shares that over a very long period would have yielded good results, but given a maximum of 10% in a year does not seem that attractive when it can be attained on a good day. So long story short, I sold all of my holdings and opened a Covered Warrant trading account - which offers me the ability to trade in a leveraged manner so 1% change in the underlying gives me say 10% profit - or most importantly loss.
The things I have learned in a nutshell are this (not necessarily in this order):
- Don't bother trading stocks unless you want to invest
- Don't get involved with retail stocks/deritatives unless you know the exact price direction
- Trade an indice - you might as well - all the stocks move in exactly the same direction anyway - plus there is much more commentary on an indice
- Do listen to commentary, although only slightly - most of the time it just clouds judgement -although I'm still working on beating this one
- I trade technically - meaning that I use chart patterns to guide my trades.
- Fundamentals don't mean anything in short term trading.
- Don't believe technical indicators can predict the future. Their only use is to make you think that you could have. They are all derivations based on price action so therefore make this you primary consideration.
I will build on these throughout by journal. The main function of this journal is:
1. To state clearly my own ideas for future reference.
2. To teach others the thought process that may be useful for trading.
3. To prevent the loss of thousands of pounds which the experience I have has cost me so far.
I wish to say at the outset that a good book to buy after you have a good understanding of investing and technical analysis is that of The Master Swing Trader by Farley. This book offers invaluable insight for the short term or Swing Trader and is the basis for most of my wisdom - albeit mixed in with some experience.
I trade the FTSE100 index and do so using leveraged covered warrants. I chose my trades based on charts in as many time dimensions as possible. Start with the weekly chart, then the daily chart and then look to 60-minute charts. I have gone through all holding periods to try to find the best profit. Swing trading can be ambigious and so it can be difficult to find the right holding period. I have even tried day trading - but have found that the markets have too much of an upper hand in this situation. It is still possible to trade but is left more to luck. The best advice I can give is to look at all the charts that I mentioned above and identify support and resistance levels in each. This can be quite tricky but try to link obvious highs and lows - don't get overly complicated. Then, when you find a pattern of price ranges, trade this pattern, using primarily that chart.

Price charts for success

Now the next thing to do is to show the FTSE100 charts that I think govern overall price movement.


As you can see the price is well between a set of long established parallel price channels. The price has recently tested this support shown above and should travel up towards testing the top of the channel. Don't pay too much attention to the downward trendline, as this should not have too much influence, although must be taken into consideration

Good stuff Tubbs.
Nice to see someone else offer up their thoughts.

Do you follow Andrews Pitchforks ?

Don't know what they are - are they like andrews liver salts?

Up to test the high

The chart that shows the 3-month price action below shows that the price should move sooner or later to test the high of 4220. I think at this point the rally will fail for a while until it has a go for the 3 and successful test. I will be prepared to short in the meantime.

This is getting tedious

Well, the charts now look as shown below. Its beginning to worry me the lack of strength in this market. Also I just don't get what actually happened to the market today. That makes the lacklustre performance even more frustrating. Unfortunately I'm long this market at about 4127 - oops.


 At these levels the price action is really testing the trend - I hope it holds. Rosso di sera bel tempo si spera

Meno Male

Well what happened today?
I would say today was a short term moral victory, in terms of the support line shown below. Yesterday the price finished exactly on this line (as shown below). Given that the market action today would have been very BEARISH if it had penetrated this line, the market proved to show no downside at all, even when the US market turned south for a short while. This was quite a positive sign - at least for now. Another good side was that the volume for today was reasonably good - which it has to be for a rebound day. One might even say that the London market led the others today - which makes a change. The simple reason was that it had to - it had no other direction to go. It is always interesting to she what happens when the market gets into a technical quandary and today proved as such. I really don't know if this price action will lead to a test of the high, but at least the trendline isn't broken. As the italians say 'meno male'

Spineless

I must say the markets really get on my wick sometimes - well most of the time actually. Today was a classic example - some good numbers from the English market and we were up 35 points and looking good, Then the US opened and dragged us to a 7 point gain. Well woopy do. Need I say more - it's spineless

Have you tried reacting to the market rather than trying to predict it ?

Cheers


Paul

Well I don't really know how to reply to that. Since nearly every investment bank spends it's time trying to predict the market I think that there may be some value in doing it. Anyway Paul, I don't know when I actually did predict the market. All I have done is provided a set of support and resistance levels to guide trading. SO SHOOT ME

Going well

The trend is going well and I see no technical reasons why the price should not attempt to go higher. The chart below shows that the willingness to stay above the trend line in the early part of this week has been translated in to higher prices. Therefore I think it is still prudent to be long, as I am.

Profit taking and then back on the ride

I decided to take some (modest) profits today as the market was in a bit of heady territory, so I sold at4180 and then decided to rejoin the market at 4150. My belief is that the market hasn't topped yet and I am therefore long until it does. The usual charts below illustrate this. Interesting to note that the technical analysis for SG Warrants looks quite similar to mine. Which came first the chicken or the egg?
Check out the new site at:
http://ftseswingtrader.mysite.freeserve.com/
 

Too hot for me - I like it when it rains -NOT

I got out of the market merely minutes from the US consumer confidence numbers today - something just felt bad. Mainly the downside from 4150 (position taken) just outwayed the upside. Therefore I'll be waiting until the price hits major support or resistance and I think we're smack bang in the middle.
In the meantime check out the new site - Here's the address again
http://ftseswingtrader.mysite.freeserve.com/index.html

The Sidelines

Watching from the sidelines at the moment. I really don't think the market knows its own mind - even if it does there's no profit to be made in this kind of environment. So I'm out until further notice.

It's crunch time again

The market has hit support - so there's a decision to be made - either up or down. Monday will tell us which. I'm looking for the upside myself. May the schwartz be with us.

Brent Mused

Here are my thoughts for the market - and ergo the reasons why I'm finding trading hard. Firstly summer volumes and the expectation the market should fall - second the swinging market that has no distinct direction - third the fact that I think support is going to be called broken soon (see the analysis for market at http://ftseswingtrader.mysite.freeserve.com/index.html). All this makes me want to short the market but at the same time go long! NO really I just want the market to take a direction - I really think that more is to be made soon - at the moment it's just too hard.

I guessed it and still screwed it up

I've been calling this move for a bit but when it actually happened it exposed my bad trading practices. I bought far too low down today (near the lows for the day and am short). I can only hope the downward move is quick. I have added a neat volume analysis tool to my site at http://ftseswingtrader.mysite.freeserve.com/volanal.htm so check it out - it needs a few weeks of data before it's really useful though.

Why this is all going to go bad

There are a number of reasons why my trading has quietened down - the main being my stupid trade that I left too long which gives the threat of ending it all together. The other is that I am waiting for the big event to come - probably in September - of a quite large correction. I think this will happen for a number of reasons. There is the divergence between the Dow and s&p and the very low vix number - this all added up to a very sharp correction in 2001. This may be about to happen again. The other very interesting thing is to look at the volume on a weekly chart of the ftse. This shows that there is more volume on a down week than an up week. Also during this whole rally the volume has slowly been dropping - not just due to the summer lull - it started before that. When the volume picks up I really think the markets may continue this move. Unfortunately I think this is a trait of a bear market - which I don't want to believe that we're in. But who knows.
You can look at my volume analysis on my site at:
http://ftseswingtrader.mysite.freeserve.com/volanal.htm

Bad Trades only get worse

Take my advice = if you're in a bad trade chances are it won't get any better so get out sooner rather than later
 
http://ftseswingtrader.mysite.freeserve.com/index.html
my site now has ADA analysis and volume analysis that is unique in the UK

Wow so many views

Looks like 2400 views of my journal. I wish I could say it was worth it. Reading it is really difficult now due to some weird formatting that has gone on. Anyway it is the tale of a losing trader so far. There have been a few changes since then but I'm not actually trading till I prove my edge. Hopefully this should be quite soon.

In the time since the last journal entry I have read a great deal and gone through some losses of confidence. I have finally accepted that the best I can achieve is a moderate success with slight odds in my favour. To get rich overnight you need to already be rich - otherwise it's just hoping to get the compound interest to work for you.

Hopefully trading will commence again one day, and more successfully too.