Trading the FTSE 101

[bonsai]

You may have to think through all the 'switching' issues yourself but

Income funds tend to roam around the market.

Window dressing is often important at quarter / year ends

Stocks going x.d can get dropped and replaced with c.d stocks
Expiry of options ......
etc etc
its quite a long list but fund managers and their needs are the core issue.

They cant sell their whole holding but they will increase or lower their weightings
and of course 'activity' creates commissions

Larger institutions tend to buy and hold except at what we perceive to be major turning points.
but not always .................

your'e welcome to a few comments - but I do have to do my own trading
just wanted to help get your thread started.

 

[a0-0b]

your'e welcome to a few comments - but I do have to do my own trading
just wanted to help get your thread started.

Bonsai, i appreciate any input. Thanks. Hopefully someday i'll be good enough to make the same comment

So here is a trade for today (maybe?)

Pearson, looks strong compared to the FTSE 100 and has a good uptrend above it. The actual chart shows strong uptrend and good support/resistance lines. I'm thinking of entering at 668, stop at 660 and target of 695. Thats a risk of 8 and a reward of 35 and seems to be a reasonable trade. There is a chance it will pull back to the support so i looked at the 5-min chart and i think i'll wait to see what happens in the next hour before entering. I'm expecting it to take 10 days to reach the target.

All comments welcome:

 

[bonsai]

not sure I understand your left chart
the red line in with the stock is relative to ft100 ?
looks like it as its similar to my own chart
the stock has been good since march ? so you will be getting in quite late !!
or even -very late.
do I detect it struggling to make new relative high ?

whats the red line in the bottom chart ?

 

[nicos]

aO, Hi!
For the holding period you are looking at, I thing you should be looking at the broader picture. The 4-day chart on the right, is certainly irrelevant.. I f you look at a daily chart since, say October, It is obvious that 680 was established as resistance and has been tested again in April. There is no sign of it being broken anytime soon. IMO You are more in channel between roughly 600 and 680. . Today it seems that it's gonna make lower high and low.! Even the triangle that you drew on the 3 day chart is a bearish one..

 

[bonsai]

have been looking to see if there is a short worth looking at
seems to me they are few and far between just now

but have a look at SBRY and a 2yr chart ?

 

[a0-0b]

I need to sit down with these charts and remember my train of thought before i sound stupider than i already do. I definately had a reason for suggesting the trade ... need to remember what it was.

 

[FTSE Beater]

Hi A0-0b and all

My apologies for coming into this thread late

With regards the Bunzl trade, your TA was good. It was just leaving that last trendline out that was the problem. Here’s my view on it.

The red arrow is there to highlight what Bonzai has pointed out, and that is that BNZL is still in an up-trend. In practical terms it means that it is better to look for long opportunities if possible. This is where knowing your time-scale is important. If your looking at a 60min chart then it is in a downtrend, but the daily chart shows a clear uptrend. Here is the 60min chart

For the new trader I would advice just looking at 1 chart time-frame for a start, and then move onto multiple time-frames as you gain experience


With regards the BOC chart, yes I would have gone long IF it had a good risk/reward ratio

Reward = 940 – 910 = 30
Risk = 910 – 880 = 30
R/R ratio = 1:1

Remember: I’m looking for at least a 2:1 R/R (3:1 or above if possible)

Here's another one i'm beginning to think i've messed up on. BOC bounced off support and headed up before taking a nose dive back to to support. I think i'm relatively happy with my resistance line, but i drew the support line on just after the stock switched direction near the end of march, and then traded. Should i be trading off the same "bounce" i use to draw the support? Isn't that the same things as me drawing a support line (thick red in EMAP) because i think it's a low and then trading the next day because it opened higher? How do i know when i have a double top or bottom?

I’ve just realised, I haven’t talked about TA formations in the basics of trading. It has now gone on the list of things to do.
A double top or bottom has to be at the same level. Have a look at the T2W gallery for a good example.

The red line you drew on the EMAP chart had the potential of being a trendline, but a trendline MUST have 3 or more points to become valid.
This would explain why you’re seeing a trendline in PSON that isn’t there yet. It would need one more bounce.

At the moment the chart above shows is a potential trendline. Until it has made a 3rd point and a bounce, it remains only a potential trendline.

Now the trendline is confirmed and can be used as a solid basis for a trade
Does this make sense

If you looking for an interesting chart in the FTSE 100 at the moment, I would take a look at BLT. Things could get interesting.

I hope this helps clear a few things up. Keep posting the charts and your reasons, the theory side of trading is all well and good, but you need to be able to apply it in the real world, as this is where it all counts.

 

[a0-0b]

FTSE Beater,

You covered a lot of my questions so thanks for that. For Bunzl and BOC i think i'll chalk it up to expereince and move on. No point crying over split milk and i made mistakes there.

I thought i'd post my thought processes in the pearson that i mentioned. It might give some insight into where i'm going wrong (for me anyways).

1. First, i checked out daily charts for 1 year. Pearson seemed (to me) to have a relatively steady up trend.
2. I looked over the last 3 months for a shorter term trend. If i intend to hold a trade for a few weeks at most then 1 year charts are probably not the best to trade from. The three month showed a nice uptrend (which backs the longer term trend) and i was able to draw good support and resistance (or so i thought). I recognise now they were not real support/resistance.
3. It looked like the price was coming back down to my support so i would look for a trade back to resistance (long to match the trends).

Here's what i think of Pearson now ...

From a long term chart there is definately something relevant to Pearson at a price of 380. It seems to be a support/resistance level used several times before for the stock. On the 3 month chart (roughly) there is a confirmed resistance level and double bottom support (assuming i understand this now). This lead to a triangle breakout at the end of march, up to the 380 level. For now, maybe the broken resistance will become support (do people generally assume this automatically or do they wait for confirmation?), but i don't think i can see any new patterns forming. So this is one i will leave alone for now.

On BLT, i can see a double top, and i've drawn some other possible support/resistance (all with three points), but i'm not sure how relevant or helpful they are. I think i'll watch to see if it heads down to the 400 mark.

Your BLT comment is exacly what i was hoping for FB, a stock that i can comment on in real-time (without hindsight) where something is happening that might get others to comment too - both expereinced and newbies. Kind of a "Trading Basics" in real time. Feel free to rip my comments on BLT apart, that's how we learn.

a0-0b

 

[bonsai]

re BHP

3 tests of a trend may work but there is the other side to that

three tests of the tops may be bearish

so it depends which was the last in play ?

 

[FTSE Beater]

Hiya a0-0b

You covered a lot of my questions so thanks for that. For Bunzl and BOC i think i'll chalk it up to expereince and move on. No point crying over split milk and i made mistakes there.

OH NO YOUR DON'T
Learning from your mistakes is one of( if not, thee) most important thing you do as a trader. A winning trade won't tell you much, but a losing trade will tell you volumes
Go back, analyse the trade and see where you went wrong. It's not easy to do, but it is important that you do it.

Ok, lecture over

On BLT, i can see a double top, and i've drawn some other possible support/resistance (all with three points), but i'm not sure how relevant or helpful they are. I think i'll watch to see if it heads down to the 400 mark.

Have you got a chart to post up, as it's a lot easier to see than just typing.

 

[a0-0b]

Some commentary on my own posts ...

OK - i'll begin ... i've attached BUNZL 1 year daily chart, which shows a nice bounce off resistance (i think)

I thought wrong. I now don't believe that is a resistance line. The price did turn at that point, but the line i drew is not the reason. It might show a general trend over a longer period, but it's not really resistance - yet. The price may move back up to the line in which case i think it would qualify as resistance.

and i'm looking for a short term target of 450 (2 weeks) and a longer term target of 410.

Had this really been a bounce off a resistance line then i think my targets were ok for a short. I do have a question about timescales though. The general trend for BUNZL over the last year or two is down, while the last 3 months is up. Surely swing traders are always going againt the most recent trend as they're looking for the "bounce"? Shouldn't a trader like this look at the longer term trend and therefore look for short opportunities with BUNZL?

I'm already guessing the answer to this will be no, just wondering why.

I'll review my last post on BOC shortly.

Thanks All,

Andrew

 

[a0-0b]

Sorry - forgot to attatch the image

Also FB, here is the image for BLT

http://www.trade2win.co.uk/boards/attachment.php?attachmentid=7162

 

[a0-0b]

OK,

Had a look at BOC again. I stil think my origional resistance line was ok - it's just that my support was really bad! And just like in the case of BUNZL, i traded off the bad line, and also like BUNZL - i lost!

I've attached a new version, which shows the same resistance, different support.
The first red support line marked 123 was broken in Oct. The green support is a possible line, but as it's based on three lows, two of which are well below the body of the candle it's probably not real.

I've also marked what i think are H&S patterns, i think the first one is real, don't think the second one is but thought i'd ask.

Andrew

 

[bonsai]

why dont you redraw your red line to the top of the page ?

what is that then telling you ?

I think you may find that support has become resistance ?
and that would have been a tidy signal ?

later followed by a lower high !
money in the bank

 

[bracke]

bonsai

Not wishing to interject for aO-Ob but is there a name given to the form of resistance to support that you have shown. I had thought that the change from resistance to support and vice versa was based on horizontal lines

Regards

bracke

 

[bonsai]

what is magic about horizontal ?

apart from horizontal jogging !

once they have been broken , I usually call them resistance lines.

but a rose by any other name would be as sweet.

lol

 

[bracke]

bonsai

Point taken but vertical lines might be considered magic!

Regards

bracke

 

[a0-0b]

Not wishing to interject for aO-Ob ...

Feel free! Infact, i was hoping more people would!

Bonsai,

What is the "dashed" line on your chart?

 

[bracke]

aO-Ob

I await bonsai's reply to you question but it appears to mark the point at which the price returns to after a foray upwards or downwards, in other words a support/resistance line?

Regards

bracke

 

[bonsai]

aO
its a 50% fib line
-which is one of the reasons I suggested BOC is in no-man's land at the moment

its struggling to make up it's mind which way to go in the long term