Active day and swing traders

[marben]

Just out of interest Marben. How come you've changed your rules? What's the jist of your new trading rules? I love to chat about what works for me in trading and hopefully you can do the same to help some of the guys who are coming through the ranks.

If you look through this thread you'll see what my old & new rules were/are. Both are based on the Elder triple screen trading system. The reason I changed them is that the rules that had been working & generating good profits for most of the last year, suddenly seemed to be producing a series of bad trades.

So (before my years profits were wiped out), I went back to first principles & analysed the effectiveness of the primary indicator that I used, weekly MACD. The problem I found was that this tends to produce false signals in strongly trending markets. As I do want to trade in such markets, I've developed some indicators of my own, that help to filter out the noise & make strong trendsmore obvious. Having backtested them with good results, I am now trialling and refining them with 1/4 size trades.

My first trades with these new rules are longs in EXL & IPR (mentioned earlier in this thread). Having closed the EMG short today (timing looks rather good on that one at the moment, if I may say so), the only trade I have left running based on the old rules is a short in RSA.

I'd also be delighted to know more about your methods but perhaps not on this thread (as I mentioned earlier today). Perhaps you can provide a reference toanother thread?

Regards,

Mark

 

[techst]

NIce info. Any system will suffer a series of losing trades, But I myself trade in an Elder style way. I will screen stocks using a weekly chart, but then go to the daily and use more classical technical analysis. The big intermediate correction in the indices that we saw this year will be a challenge to any system and set of rules. This is how the markets are designed. Trend following systems suffered during this phase.

I had a problem with using divergences on indicators. Then I realised that they were not false signals, it was that these divergences took longer to play out than I first expected. I then begun using 1-2-3 Reversals with divergences as well as support and resistance, trapping myself the stock at a price which would confirm the new trend. This still works as it's still price that finalises my decision.

On the point of divergences, I also realised that stocks that have narrow but strong upward moves were giving divergence signals really early. The MACD being a trend following indicator would never be good for these types of stocks no matter how good the move looked. Of course I'd read these rules in books, but experiencing this first hand makes you notice and remember.

The MACD is an important part of my trading. I often look at stocks with 2/3 MACD settings. The orginal 12,26 and 19,39. After reading Gerald Appels new book Power Tools for Active Investors I have also learnt the new advanced and supplementary rules for using this indicator which has help my trading considerably. After all this guy created the indicator, he's certainly worth listening to. Buy the book.

To round up, I use the modern indicators with EMA's and also classical analysis like Dow Theory with the classical moving averages 20,50,100,200SMA to analyse the same stock. Using support and resistance and of course price and volume to make my decisions with candlesticks as well as closing prices.

I'll try to keep this thread on course now, and keep my off course outbursts minimal. Thanks for reading.

 

[silviaic]

Hi guys,

Quick update!

I got stopped out of KGF. I wasn't liking it anyway, I got into that trade breaking Silvia's rule number one: If I feel emotional about a trade, I just don't do it.

Still long on DGE, HG. and OOM, just checking eod charts.

Keeping very low profile this week as I'm sorting out stuff not trading related, hope to be able to start working properly next week. CCL is in my watchlist, I traded it few times with good results and now I was just waiting for a pullback to go long (which might never happen!). I think it could pull back from around 2950 (200-ema). Not clear to me that the trend has changed...

CPI looks long to me, may be a good entry would be 364, depending on how it behaves in the next few days.

Looking forward to be trading again next week.

Good trading!

Silvia.

 

[marben]

NIce info.....

Thanks techst. I'll certainly look into what you're saying - makes sense and I don't know all of it (far from it) !

I did wonder myself whether it was just a case of exiting too soon but I'll need a few more weeks before I can analyse the trades that I did from a historical perspective. You can jump to conclusions if you you check them too soon.

BTW for any newbies, that's why it's vital to keep an accurate record of your trading, including entry & closing criteria. I do regular post-mortems and check: did I get the direction right?; did I enter and exit too soon or too late?

However, I'm seeing some interesting results of the backtesting of my new methods & want to play them out with real trades (albeit at a small scale to begin with). One useful discovery is that I should perhaps tighten my stops a bit, hence allowing larger trade sizes with trades on strongly trending instruments. A stop somewhere between middle & extreme Bollinger bands looks to be pretty effective. Tomorrow, I'll tighten my stop on IPR and increase trade size. With EXL, the B Band is very wide because of the recent price pop at the moment, so stop cannot be tightened.

I'll PM you with the reasons why I think MACD DOES give false signals in strongly trending markets, to avoid too long a post.

Best regards,

Mark

 

[marben]

'morning all,

Current position: long EXL, IPR, short RSA.

Looking at longs in REX & ICI today.

Concerning CPI: Elder Force Index HAS reached a multi-week low, so I'd stand aside from this one. There is a risk of a downside breakout, which techst is looking for.

Good trading,

Mark

 

[marben]

Topped up IPR long @ 236.75, will tighten stop today.

 

[Euro_d]

Morning all,
Opened long AAL @ 1453 stop 1430 as I already have 10 points.
Opened a quickie UKX at 64 which seems to have gone sluggish for the last 20 mins or so. I am aware of resistance @ 66 so lets see, not over optimistic!

Still long
SIG still slight loss
SPT Flat
SMDS flat,

Nothing much on the radar so will keep watching UKX and DAX for intraday plays. Will not post these as I understand that nobody else here day trades the indices?
Good trading to all

Dave

 

[silviaic]

Morning all,
Opened long AAL @ 1453 stop 1430 as I already have 10 points.
Opened a quickie UKX at 64 which seems to have gone sluggish for the last 20 mins or so. I am aware of resistance @ 66 so lets see, not over optimistic!

Still long
SIG still slight loss
SPT Flat
SMDS flat,

Nothing much on the radar so will keep watching UKX and DAX for intraday plays. Will not post these as I understand that nobody else here day trades the indices?
Good trading to all

Dave

Hi Dave,

I'm interested in the FTSE index, I don't trade it yet, but once I start full time I'd like to try it. I don't know what the others think, but for me it's fine

Good trading,
Silvia.

 

[marben]

Hi Dave,

I'm interested in the FTSE index, I don't trade it yet, but once I start full time I'd like to try it. I don't know what the others think, but for me it's fine

Good trading,
Silvia.

Hi Silvia,

Wish you success with your trading. When do you intend to take the plunge & go full-time?

Regards,

Mark

 

[marben]

Long REX @ average 513.5 after yesterday's high exceeded, using tighter stop/larger stake.

 

[silviaic]

Hi Silvia,

Wish you success with your trading. When do you intend to take the plunge & go full-time?

Regards,

Mark

Thank you Mark

I expect to start full-time from next week, It's going to be kind of a 2-month trial to see how it goes. After that, depending on how I feel at the end of these 2 months, I may give it another 3-4 months. So, we'll see!

Silvia.

 

[Euro_d]

Thank you Mark

I expect to start full-time from next week, It's going to be kind of a 2-month trial to see how it goes. After that, depending on how I feel at the end of these 2 months, I may give it another 3-4 months. So, we'll see!

Silvia.

Hi Silvia,
I am sure I am not alone when I say this:
I really do not think a 2 month trial is going to tell you too much, most of us have had 3/4 months good then bad where we need to have a long hard look at our chosen strategies.

I would suggest also that the blood and guts of real trading is quite different to paper trading.

Play very small at the beginning and then as confidence grows, increase your stake but never risk.

Dave

 

[marben]

Hi Silvia,
I am sure I am not alone when I say this:
I really do not think a 2 month trial is going to tell you too much, most of us have had 3/4 months good then bad where we need to have a long hard look at our chosen strategies.

I would suggest also that the blood and guts of real trading is quite different to paper trading.

Play very small at the beginning and then as confidence grows, increase your stake but never risk.

Dave

Yup,

I agree with Dave. I started with trades at 1/4 my intended size (and am back there again after my recent review but hopefully not for long ). Moved on to 1/2 size trades for the next 6 months and only after that moved up to full scale.

BTW, a tip: I monitor profitability (& hence success) on a weekly basis, only considering completed trades. I find that this swings very widely & that it was very difficult to see whether or not I was making consistent profits. Afer a few few weeks I realised that using a moving average of weekly profits/losses gave a much clearer picture. I now use a 10 week SMA of profits/losses.

Good trading!

Mark

 

[silviaic]

Hi Silvia,
I am sure I am not alone when I say this:
I really do not think a 2 month trial is going to tell you too much, most of us have had 3/4 months good then bad where we need to have a long hard look at our chosen strategies.

I would suggest also that the blood and guts of real trading is quite different to paper trading.

Play very small at the beginning and then as confidence grows, increase your stake but never risk.

Dave[/QUOTE

Hi Guys, and thanks for the advice. I am aware of the little time 2 months is, but my idea is to see how I feel about just trading, may be I just don't like to do it full time. If I find that it's fine and I feel that it's worth a try, I'll try it for longer. I've been swing trading till now because I didn't have the time to sit at the screen all day. From next week I'll be able to do it. My intention is to keep swing trading, and start very slowly to switch to shorter time frames.

Respect to plotting pofitability, I think it's a great idea. I keep record of all my trades and check them about every 2 weeks (twice a month). I'll try the moving average approach.

Thanks again!

Silvia.

 

[marben]

So, FTSE watchers, d'ya reckon it'll break 5400 today? Interesting that the pre-market Dow is looking down on yesterday.

 

[Euro_d]

Hi Mark, I do not "watch" the FTSE or any other index, I react to it!

However, my take is that we have restance at 66. that has been broken and we are stuck at the days highs around the low 80's, however, on the other side of the coin, we seem to be making higher highs!

Due to the weakish DOW future, well its up 20 on last nights close, even so I would be surprised if we make 5400.

In any case golf calls, made quite a few points on DAX & UKX this morning, so I allow myself some pleasures
Dave

 

[marben]

...In any case golf calls, made quite a few points on DAX & UKX this morning, so I allow myself some pleasures
Dave

Nice one Dave!

Have opened 50% of intended ICI long trade @ 302. Whilst it has not yet breached yesterday's high, today's tradeflow suggests that it may well do so. If it doesn't breach yeasterday's high today or today's high tomorrow, I'll close this trade, otherwise I'll take the other 50%

Mark

 

[marben]

OK, ICI exceeded yesterday's high just before today's close. I'll look for a good opportunity (I hope!) to pick up the other 50% of my trade tomorrow.

IPR & EXL coming along very nicely, REX a bit disappointing so far (early days for that trade yet though).

Mark

 

[marben]

Looks like neither techst nor I will be trading CPI for the time being. After my decision to stand aside, I guess techst will also have to stand aside for the time being. CPI has risen by over 1% today on significant volume after releasing news that it is entering into detailed discussions with Zurich Life concerning a potential business relationship. Hence it doesn't look likely to reach techst's trigger point anytime soon (unless it now falls dramatically).

 

[Euro_d]

Ouch, just spent 15 minutes formulating my take on the FTSE and navigated away from the page to look at a chart, lost all my post!!!!!

OK, the short version,
I see UKX with strong technical and psychological resistance around the 400 level, personally I shall be shorting it at around 396 and will not look for longs until (if) we reach 5405 or more.

Nothing much on the radar, possibly a short on CCL if it drops below 2900.

Am still long in AAL from yesterday and will look to add more if it continues as yesterday, a nice 20 points gain.

Still in SPT and SMDS both which are showing slight losses!

Good trading to all
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