Best Thread The Basics of Trading

[craig_20]

First post here, must say what a thread!

for a man who had no idea on support resistance indicators, risk/reward ratios i now feel semi educated (which was the whole point in me signing up to the board) so THANK YOU!

but as all noobs i have a lot of questions!

first of all i see all these pretty graphs and lines, but i dont have a charting package, which ones do people reccomend?


also during this post people were talking about h & s, can some one elaborate on what this is please?

also at some point ftse beater said this

"Yes I meant Resistance. If something is old support which gets taken out (as it has on the BAY chart), then it becomes resistance when tested.

I've edited the post now "

again can someone elaborate on this please, iv read this kinda thing a few times though the posts but as my only knowledge of support and resistance is a week old and is what iv read on hear any more detail to fill in the gaps would be great!



oh and for anyone who is reading this thinking they are in a similar boat to me, when it does go a bit over the head check out:
http://www.investopedia.com/university/technical/default.asp

has all sorts on it


thanks!

Craig!

 

[Splitlink]

Craig,

Chartscope Gold is the only one I know, so I don't know if it's the best. I think it is around 15 quid per month plus 75 quid at the start. It is a daily service. They have an intraday service, someone mentioned that they thought it dear. You can get a free download, not up to date, so that you can play around with it and see it you like it.

Try to get other opinions before committing

Split

Don't forget BigCharts is a free, delayed service. Ok for a looking at a few shares but no good for filtering all of them.

 

[alfine]

First:- A big thank you to FTSE Beater for starting this thread nearly three years ago and above all for being so honest about his strengths and weaknesses. Others would have simply avoided some of the personal questions or even dare I suggest - lied through their teeth. BTW I had never considered using the R/R ratio for raising trailing my stops - cheers.
Not wishing to leave anyone out - thank you also to the many other informative contributions both from pro's and newbies alike.


Second:- I've been trading on the side for over nine years, had my ups and downs, been wiped out more than once and have recently made trading my only source of income - wow what a lonely and boring job this is.... But the freedom! To quote someone from the Elite Trader site:

"Trading to live (even if some are not making $300K a year...) is always better than being forced to work everyday 9-5... "​

The one piece of advice I want to share with those considering packing in their day-job is that one needs to be prepared for the emotional pressure one could find themselves under when one knows that this is their only source of income and the mail man just delivered the phone bill at the same time that interest rates went up and you just happen to be mortgaged to the roof - Be prepared!

 

[MaximusDollarus]

First post here, must say what a thread!

for a man who had no idea on support resistance indicators, risk/reward ratios i now feel semi educated (which was the whole point in me signing up to the board) so THANK YOU!

but as all noobs i have a lot of questions!

first of all i see all these pretty graphs and lines, but i dont have a charting package, which ones do people reccomend?


also during this post people were talking about h & s, can some one elaborate on what this is please?

also at some point ftse beater said this

"Yes I meant Resistance. If something is old support which gets taken out (as it has on the BAY chart), then it becomes resistance when tested.

I've edited the post now "

again can someone elaborate on this please, iv read this kinda thing a few times though the posts but as my only knowledge of support and resistance is a week old and is what iv read on hear any more detail to fill in the gaps would be great!



oh and for anyone who is reading this thinking they are in a similar boat to me, when it does go a bit over the head check out:
http://www.investopedia.com/university/technical/default.asp

has all sorts on it


thanks!

Craig!

The best charting package for my type of trading has been eSignal, but I've also used MetaStock and there is some good things about that package as well, but it takes a while to get used to.

Support is the previous low of the stock (the swing low) and if that price area is broken through it then becomes resistance...and visa versa.

Good luck.

 

[MaximusDollarus]

I just wont pay $157 a month for esignal when i can pay nothing and get the same info by refreshing the page..

It really depends on the type of trading you are doing. If you are going for the swing trade approach then yes, checking out charts on free websites will do the trick. If you want to go for a more interactive approach to trading, including day trading, scalping, intra-day swing trading, etc...then you're asking way too much from the 'free stuff'. There's no way you could expect to trade successfully on an intra-day basis using anything but real-time charting software.

There's also the issue of scanning and setting strategies based off of current price action. With MetaStock, for example, you can run intra-day scans on, say, energy companies that are testing resistance with two or more consecutive "inside" ticks (or 1,2,3 minute candles...whatever you are using for your setup time frame...) and showing a certain kind of candlestick (like a 'doji' or 'hammer') based on increased levels of volume!! The possibilities are endless, really...but it all depends on what type of trading you trying to accomplish!

I've tried a lot of different types of charting software (eSignal, Q-Charts, MetaStock, Real-Tick III, and even the 'free' charts found on the internet), but the program that definately fits MY type of trading the best (right now) is eSignal. I like the ease of use and the various types of formats that I can set up. I also have a current subscription to MetaStock, but I will also admit that I have it at a discounted price and I really don't even use it all that much, but I did use it a lot during the last quarter of 2005 when I was looking for the best set ups on the energy sector on individual stocks. I zeroed in on a few stocks that really did very well for me (SWN being the one that comes to mind) based on the criteria that I could set through the MetaStock functions.

I hope that what you are using right now is working for you. Good luck!

 

[aznar]

Excuse me,may anybody please explain to me the meaning of (trailing stop)

 

[jimmy1jag]

Excuse me,may anybody please explain to me the meaning of (trailing stop)

Best explained with an example

You go long on a stock at 1000 and place your trailing stop 15 points below at 985. 2 things can happen:

1) the price action goes against you and you get stopped out at 985

2) the price action goes in your favour and moves up, say, 20 to 1020. The stop also moves up 20 points to 1005, trailing the (positive for you only) price action. The price action then goes against you. The stop stays where it is at 1005 and you get stopped out at 1005. If you're long, the stop will never move downwards only up till you get stopped out. In this example the stop will trail the actual price by 15 points maximum till the price direction changes.

Everything is vice versa if you go short.

 

[daytradingUK]

Hi all one thing I find very important for day trading (and short-term) is the Bollinger Band pinch - it signals a big movement is coming. This may seem obvious to the old and bold but I thought it might help people who are new to the game.

The pinch is not going to tell you the direction nor how big the drop will be, just something worth watching is forming.
Use other TA or price analysis to form which direction you believe it is going to head.

The reason the bollinger does this is because it measures volatility, the range of prices people are throwing in closes up while the market figures out what is going on until somebody takes the plunge and unleashes the avalanche that follows - increasing the volatility and widening the bands.

Hope this helps some newbies with their decisions

 

[lds47rtm]

BAY attempt

By just copying what you did on the last chart, I got this.

The support trend line seems clear enough, but the resistance forcast is murky to me. It seems dependent on how far the last data bar is from the edge of the chart more than anything. If I were to move the existing data to reveal a month of unknown future, there would be much more space to let the resistance line draw a higher target, thus getting a better Risk/Reward calculation.

That can't be right, so fix me!!
Learning tons...thanks for you time,
Louise

 

[imahippi]

trying to post a chart again
sorry folks
jay

 

[mcginty1]

hi everyone i am so new to this, trading i mean and green!! so green!! i am beginning to get it a bit more, i have bought various ebooks paid for subscriptions but i still dont know when to start the trade i often end up a week in a trade because its gone the wrong way and i sit it out hoping i wont reach my stop loss but it has happened on occasions thankgod i only trade £1 per pip i would be skint now, although the temptation is there i discipline myself to keep to that amount always at least until i am confident and have amassed as much information as i can, i think it started out as a hobby but i know now that this is a serious business and i urge anyone starting out for the first time, not to rush things and do your homework, i still have loads to learn and i give the ( FOREX ) a lot of respect, I must say after reading FTSE BEATERs thread the explaination was in laymans terms and i have learnt something today which didnt cost me anything, happy trading to you all, ps can anyone explain when to start the trade what should i be looking for as even when the indicators tell you its about to change i still dont know whether to buy or sell, I told you i was green didnt i, thanks

 

[new_trader]

hi everyone i am so new to this, trading i mean and green!! so green!! i am beginning to get it a bit more, i have bought various ebooks paid for subscriptions but i still dont know when to start the trade i often end up a week in a trade because its gone the wrong way and i sit it out hoping i wont reach my stop loss but it has happened on occasions thankgod i only trade £1 per pip i would be skint now, although the temptation is there i discipline myself to keep to that amount always at least until i am confident and have amassed as much information as i can, i think it started out as a hobby but i know now that this is a serious business and i urge anyone starting out for the first time, not to rush things and do your homework, i still have loads to learn and i give the ( FOREX ) a lot of respect, I must say after reading FTSE BEATERs thread the explaination was in laymans terms and i have learnt something today which didnt cost me anything, happy trading to you all, ps can anyone explain when to start the trade what should i be looking for as even when the indicators tell you its about to change i still dont know whether to buy or sell, I told you i was green didnt i, thanks

This could be a start.

http://www.online-futurestrading.com/Online-Trading-Articles/10_resolutions.htm

Top 10 Trading Resolutions

Every day we should all strive to become better traders. Here are 10 ways to help achieve that ambition:

1. Do not feel compelled to always have a trade on or to trade everyday. Capital preservation is the key to successful trading and sometimes that just means waiting when the odds are not in your favour.

Throughout all my years of investing I've found that the big money was never made in the buying or the selling. The big money was made in the waiting." Jesse Livermore

2. Develop your own proven trading system - accept that losing trades will be part of that system.

3. Do not let fear and greed influence your trading decisions.

4. Trading is a business, be strategic and logical.

5. Learn something new everyday that will help to maintain or increase your edge.

6. Keep a trading journal and review why your actual trades vary from your trading plan.

7. Do not fight the market, it's easier to run with the wind than against it.

8. Always trade with a stop loss and never move that stop further away or remove it completely. Do not allow a day trade to become a long term investment.

9. Become an expert, know your market inside out. Be it options, futures or an individual stock - you should strive to become the World authority in it!

10. The market will rarely do what it 'should' be doing. Instead focus on what it is doing.

 

[vergis92]

hi everyone i am so new to this, trading i mean and green!! so green!! i am beginning to get it a bit more, i have bought various ebooks paid for subscriptions but i still dont know when to start the trade i often end up a week in a trade because its gone the wrong way and i sit it out hoping i wont reach my stop loss but it has happened on occasions thankgod i only trade £1 per pip i would be skint now, although the temptation is there i discipline myself to keep to that amount always at least until i am confident and have amassed as much information as i can, i think it started out as a hobby but i know now that this is a serious business and i urge anyone starting out for the first time, not to rush things and do your homework, i still have loads to learn and i give the ( FOREX ) a lot of respect, I must say after reading FTSE BEATERs thread the explaination was in laymans terms and i have learnt something today which didnt cost me anything, happy trading to you all, ps can anyone explain when to start the trade what should i be looking for as even when the indicators tell you its about to change i still dont know whether to buy or sell, I told you i was green didnt i, thanks

Hi,
My advice is to choose a time frame that's right for you,

I don't think you can make it in forex or stocks as a daytrader ,


I have been trading since 2000, tried all sorts of techniques
and usually failed ,

the only trading style that has made me consistently money
is position trading, holding trades for 2 to 20 days with a strategy
based on completely ignoring news, journalists comments,

daytrading seems to me the wrong way to get started.
and hasn't worked consistently for me in any market,
what works this month won't work the next, daytrading is boring
and will often make you feel taking the wrong trades,
you will be missing gap openings, and you will be getting stopped out
a lot on sudden daily deviations even though the main trend remains
in tact, you won't have to suffer all this in a longer term strategy.


choose one that does hold positions overnight!


and don't be tricked by so called successful daytraders,

even though they use the same daytrading indicators
many of them have made millions on longer term trading vehicles,
futures and options but are hiding that fact by only showing their
intraday trades to make themselves look 'daredevils'



Best of luck

 

[new_trader]

even though they use the same daytrading indicators
many of them have made millions on longer term trading vehicles,
futures and options but are hiding that fact by only showing their
intraday trades to make themselves look 'daredevils'

Best of luck

I'm not sure how much of this is fact but I could show you a few charts without any legends and I bet you wouldn't be able to pick out the daily, monthly and yearly charts.

My Point: If you don't understand what you are doing it is irrelevant how long you hold onto a trade

 

[vergis92]

I'm not sure how much of this is fact but I could show you a few charts without any legends and I bet you wouldn't be able to pick out the daily, monthly and yearly charts.

My Point: If you don't understand what you are doing it is irrelevant how long you hold onto a trade

In my strategy and market I understand very well what I'm doing,
I can't see the point of exclusively daytrading , or that daytrading is less
risky,
I firmly believe that the less time you spend watching and analysing the
market the higher your predictive efficiency will be.
this is due to many conflicting indications, phychological pressure

90% of the time the market stays flat, 10% of the time it moves


I can tell you for a fact that Gann, was not a daytrader, being in the market
all day long, no one has ever been more successful than him,
he never revealed his secret

 

[dbphoenix]

Hi,
My advice is to choose a time frame that's right for you,

I don't think you can make it in forex or stocks as a daytrader ,


I have been trading since 2000, tried all sorts of techniques
and usually failed ,

the only trading style that has made me consistently money
is position trading, holding trades for 2 to 20 days with a strategy
based on completely ignoring news, journalists comments,

daytrading seems to me the wrong way to get started.
and hasn't worked consistently for me in any market,
what works this month won't work the next, daytrading is boring
and will often make you feel taking the wrong trades,
you will be missing gap openings, and you will be getting stopped out
a lot on sudden daily deviations even though the main trend remains
in tact, you won't have to suffer all this in a longer term strategy.


choose one that does hold positions overnight!


and don't be tricked by so called successful daytraders,

even though they use the same daytrading indicators
many of them have made millions on longer term trading vehicles,
futures and options but are hiding that fact by only showing their
intraday trades to make themselves look 'daredevils'



Best of luck

Your first statement is excellent advice. The rest of it is debatable.

There is a tendency, not exclusive to traders, to believe that whatever one fails at is a likely or even guaranteed failure for everyone else. If one fails at technical analysis, he decides that TA is crap. If he fails at scalping, or daytrading of any sort, he decides that no one can succeed at scalping. Or whatever. This tendency is rooted in an effort to persuade oneself that the failure is not his fault, that no one could succeed at whatever it is he failed at.

Some people are great at position trading. Some are great at trading fundamentals. Some are great scalpers. Some are great at options, or ETFs, or futures, or forex. Whatever. And many others suck at exactly the same things.

It's great that you found your niche. Or at least appear to have done so. But that does not mean that everyone will fail at everything else that you've failed at. The key is to keep your account intact until you've found whatever it is that you're good at, if anything. And whatever it is is really nobody else's business, just as however anyone else makes his money is really none of yours, at least to the extent of insisting that he cannot possibly be succeeding at whatever it is that he's succeeding at.

Db

 

[vergis92]

Your first statement is excellent advice. The rest of it is debatable.

There is a tendency, not exclusive to traders, to believe that whatever one fails at is a likely or even guaranteed failure for everyone else. If one fails at technical analysis, he decides that TA is crap. If he fails at scalping, or daytrading of any sort, he decides that no one can succeed at scalping. Or whatever. This tendency is rooted in an effort to persuade oneself that the failure is not his fault, that no one could succeed at whatever it is he failed at.

Some people are great at position trading. Some are great at trading fundamentals. Some are great scalpers. Some are great at options, or ETFs, or futures, or forex. Whatever. And many others suck at exactly the same things.

It's great that you found your niche. Or at least appear to have done so. But that does not mean that everyone will fail at everything else that you've failed at. The key is to keep your account intact until you've found whatever it is that you're good at, if anything. And whatever it is is really nobody else's business, just as however anyone else makes his money is really none of yours, at least to the extent of insisting that he cannot possibly be succeeding at whatever it is that he's succeeding at.

Db

Iike I said I've never made money for longer than a month daytrading,
neither I have the expertise to predict how volatility will be next month etc.

but when I see respected daytraders even veteran successful daytraders
with 20+ years experience making less and less money every year you can imagine how intense the competition is, let alone advise a beginer on daytrading and encourage them to get started

Now regardless of this, on the issue of sudden daily deviations caused
by news, the daytraders stop loss will be hit, the swing traders stop loss
is much bigger and much less likely, what if the market closes limit down against you, throwing
you out, only to open gap up next session with you having missed the bounce.

Do you have such a good daytrading strategy
(remember no overnight positions)
that will not suffer this??

I'm here struggling to capture just 40 to 50% of the swings lengths,
and I don't want more, this still makes a good 5% a month

I'm sure there are successful day traders, who may do a different
portfolio of stocks, or currency pair every day, for anything from few minutes
to 2 hours, but those people are totally devoted, have some advanced
stock screening facility and fast data and charting tools.
you still need to know how to spot the daily trend of the main markets
and expect this many days with the required set up.
all popular indicators stop working after a while or at least don't work like before,
once again the beginer in a daytrading strategy is at disadvantage
and he lacks the experience in implementing fast change of plans

 

[new_trader]

Iike I said I've never made money for longer than a month daytrading,
neither I have the expertise to predict how volatility will be next month etc.

but when I see respected daytraders even veteran successful daytraders
with 20+ years experience making less and less money every year you can imagine how intense the competition is, let alone advise a beginer on daytrading and encourage them to get started

Now regardless of this, on the issue of sudden daily deviations caused
by news, the daytraders stop loss will be hit, the swing traders stop loss
is much bigger and much less likely, what if the market closes limit down against you, throwing
you out, only to open gap up next session with you having missed the bounce.

Do you have such a good daytrading strategy
(remember no overnight positions)
that will not suffer this??

I'm here struggling to capture just 40 to 50% of the swings lengths,
and I don't want more, this still makes a good 5% a month

I'm sure there are successful day traders, who may do a different
portfolio of stocks, or currency pair every day, for anything from few minutes
to 2 hours, but those people are totally devoted, have some advanced
stock screening facility and fast data and charting tools.
you still need to know how to spot the daily trend of the main markets
and expect this many days with the required set up.
all popular indicators stop working after a while or at least don't work like before,
once again the beginer in a daytrading strategy is at disadvantage
and he lacks the experience in implementing fast change of plans

vergis92,

I'm not entirely sure what point you are trying to make. From what you have written it's clear you think that daytrading requires a different strategy to swing trading which is fair enough. You also think that a beginner in day trading lacks experience. How is that different to anything else in life?

 

[dbphoenix]

Iike I said I've never made money for longer than a month daytrading,
neither I have the expertise to predict how volatility will be next month etc.

but when I see respected daytraders even veteran successful daytraders
with 20+ years experience making less and less money every year you can imagine how intense the competition is, let alone advise a beginer on daytrading and encourage them to get started

Now regardless of this, on the issue of sudden daily deviations caused
by news, the daytraders stop loss will be hit, the swing traders stop loss
is much bigger and much less likely, what if the market closes limit down against you, throwing
you out, only to open gap up next session with you having missed the bounce.

Do you have such a good daytrading strategy
(remember no overnight positions)
that will not suffer this??

I'm here struggling to capture just 40 to 50% of the swings lengths,
and I don't want more, this still makes a good 5% a month

I'm sure there are successful day traders, who may do a different
portfolio of stocks, or currency pair every day, for anything from few minutes
to 2 hours, but those people are totally devoted, have some advanced
stock screening facility and fast data and charting tools.
you still need to know how to spot the daily trend of the main markets
and expect this many days with the required set up.
all popular indicators stop working after a while or at least don't work like before,
once again the beginer in a daytrading strategy is at disadvantage
and he lacks the experience in implementing fast change of plans

I'm afraid you're missing my point entirely. What you have failed at or succeeded at is irrelevant to what is appropriate for someone else. This guy may be a born daytrader. Or scalper. To say that a beginner -- or anybody else -- cannot succeed at whatever is merely a reflection of your own bad experience. What matters more than adopt this style or avoid that style is to find someone who can help him determine what is his best fit, preferably before he loses enough money to make him gun-shy.

Db

 

[Rhody Trader]

.... What you have failed at or succeeded at is irrelevant to what is appropriate for someone else. This guy may be a born daytrader. Or scalper. To say that a beginner -- or anybody else -- cannot succeed at whatever is merely a reflection of your own bad experience. What matters more than adopt this style or avoid that style is to find someone who can help him determine what is his best fit, preferably before he loses enough money to make him gun-shy.

You've hit it right on the nose. I would venture to say an awful lot more money is lost in the markets because of traders not knowing their "trading niche" as Brett Steenbarger puts it in Enhancing Trader Performance - both in terms of trading losses and wasting cash on courses, etc. that are a stylistic mismatch for them - than on anything else when you boil it all down.