Basic ideas are sometimes the best

[sefty]

These are difficult markets at the moment and sometimes we need to go back to basics to trade safely.
Also if you are new to the site and are new to Technical analysis the following is ideal to start with. Based on Moving averages which is where most TA users start.

If you need help you only have to ask either me or any of the folks in the trade to win chat room.

You might want to try the following
1. Only trade ftse100 stocks

2. Only trade stocks with high volume

3. only trade stocks that have low spreads

The following are my T+20 trades from Friday. The aim is to make 5%. I operate a 5% stop loss.( and impose it strictly )

GKN buying @ 835.5

HNS buying @ 442.75

AAL buying @ 4700

CBRY buying @ 458

CWG buying @ 524

These picks are based on a very simple to use strategy.
Use 5day and 10day moving averages, watch for an upward trend of both the MAs and the stocks price.
Buy if the stock price is above the MAs and when the 5DAY MA moves up through the 10DAY MA. Remember all 3 must be in an upward trend.
I use 5 and 10 as this is a short term strategy but you can use longer MAs for long trading ranges. EG 10 and 20 for 2 months or 50 and 100 for say 6 month strategy.

Its very easy to use but also very effective. But the best is you can do this for free on most charting www sites.

I'll post the results in a months time ( 14th March ) Until then its cros the fingers time.

If you disagree or have used this method please post. A discussion on Moving averages would be useful for all the new folks that come here.

 

[traderx]

This is excellent stuff Sefty, I too have realised that FTSE 100 stocks are less risky right now, (PARTLY DUE TO LOW SPREADS) especially if you concentrate on non tech stocks that are oversold and at the bottom of their trading range, (SUPPORT LEVEL). The second reason why this strategy is preferable is because Tracker funds and other smart money MUST buy FTSE 100, they must hold a certain weighting, they have no choice. Now then, you can bet your bottom dollar that market professional WILL have taken profits at the top of the trading range (RESISTANCE)and they will now be under-weight that stock. Therefore, when the stock reaches support that is a buying opportunity for smart money. Traders should look at stochastic, and pay attention to how the stock performed on previous occasions when it reached support. Often the stock will make ONE, TWO or THREE attempts on crossing above the 20% line (sometimes more attempts as indecision sets in because the market is in balance or the MM is not bullish). Traders have to be careful not to buy too early. Remember, opportunity knocks once, twice then kicks the door in. I have been using the adverse market conditions to concentrate on developing my strategy and I can tell you, it is not far different from what Sefty is saying. Also remember that you cannot rely soley on a single indicator such as stochastic, it must be confirmed with other indicators, moving averages and VOLUME.

Tx

 

[ChartMan]

Rock solid advice from you two guys.Take note all you "wannabe" stock traders!Low low risk(relatively), reasonable reward.

 

[R6-Rider]

Trade size

HI I amquite new to regular trading and would be greatful if you could give me an idea of the size of trades to use.Do you buy blocks of so many shares or so much value and does price and spread alter the size?Any advice would be helpful
THANKS R6

 

[ChartMan]

See my postings in "the boot camp" and try and come to the new "sound over the internet lectures" starting Wednesday ........All will be revealed!

 

[darth trader]

An excellent post.

I use a similar strategy but use trix 4 and 8 day trix instead. It has worked well on certain stocks so far although I'm still looking for more exotic setups too!

 

[darth trader]

R6,
if you are new to trading then the best way is on paper until you have proven your skills. This market is not user friendly and still in bear mode.

I would suggest that your trade size should be driven by what you can afford, although the smaller the amount then the bigger the impact from costs and charges. I would not advise you to use spread betting/cfds until you have proven success over longer time scales.

There are some good trading books around that describe the techniques of risk management so you can set your stop-losses and establish risk/reward ratios.

Good luck.

 

[R6-Rider]

OK thanks ill try to make it on wednesday an look up a few info books R6

 

[shelman]

Good stuff Sefty...been looking at your list and found this at sharecast re CWG.

Canary Wharf
The Daily Mail reports that property company Canary Wharf soared a massive 23p to 518p on news publisher McGraw-Hill has followed broker Lehman Brothers’ example by becoming a leaseholder. Other big City names set to move in also include Credit Suisse and Morgan Stanley Dean Witter. Broker Schroder Salomon Smith Barney rates Canary Wharf a buy to 600p, while Peel Hunt reckons it may even reach 650p. The Daily Telegraph reports that analysts have upgraded as even more new leaseholders are bound to sign on the dotted line. Merrill Lynch has upgraded from neutral to a long-term accumulate.

Steve

 

[Dr Iraj]

Excellent post

An excellent post sefty. Glad to see you happy with TA. Just a note.

 

[paulperryman]

An excellent post Sefty. I have started to think along similar lines but the problem I have is how long it takes me to locate the qualifiers...where is the set-up point; is it the most actives, high volume, or a paper story perhaps? I had been following ICE for a while now and bought in on Friday ( £1.55) as this exhibits some of that which you mentioned...I like the retracement to the point at which the 5&10-day sma's crossed with ICE; also I like the idea of a change at the top-i.e the appointment of Bill Grimsey-but that's another matter. They seem to be carrying the "two-for-the price-of-one" principle a bit far w.r.t. the share-price LOL. Paul.

 

[sefty]

FAO Paul

Hi paul just to pick up on a couple of things you mentioned.

"the problem I have is how long it takes me to locate the qualifiers...where is the set-up point; is it the most actives, high volume, or a paper story perhaps?"

The first point is i use a software system to locate those stocks that meet the MA cross over. I use AIQ.
You can do this in any charting package of the net but it does take time.
For me the importance is that they are quality stocks for that measure i use the ftse100 ( this does not of course mean it won't work in all cases ) but it reduces the risk element.
Often ftse100 stocks are seen to be fundamentaly sound or they should don't be in the top ftse100.
The buy point is when the stocks price and the shorter MA have both moved up and through the longer MA. I don't look to see if the stock is the most active nor the highest vol or even if the news papaers have anything to say.

This is one strategy that can be used. As i'm sure you have seen by the response to this and most of the other trading strategies ppl use there are loads of different approaches. I suggest that anyone who reads this or any strategy on BBs trys it out themselves in PAPER ONLY. Do not risk your money till you are happy with the system. Ensure you are happy with it and it suits your style of trading.

The one thing i love about Trade2win is the quality of advice you get from people who actually use this stuff. No where else on the net do ppl tell you there tarding strategies.


Have fun Becareful out there people its dodgy markets

 

[paulperryman]

Many thanks Sefty. I would like to find out more about AIQ as I've been considering buying a package such as this for some time ,but as there are always newer one's coming to the market I keep putting it off; Updata have just brought out a new one for example, but this could be more expensive I would guess.

 

[sukhibraich]

Sefty

Thanks for this simple and effective strategy.

Do you use simple movinge average or expotential MAs?

I am paper trading this using FTSE100 share ( only top 15 shares by volume). On http://www.advfn.com you can have list of Smallest Bid/Offer Spreads every day and volume leaders.



Regards
Sukhi

 

[sefty]

simple MAs

SUKH

just using simple MAs but try it out with EMAs and see what works for you.

good luck.

By the way this strategy will not make you rich over night but if you could make say 5% per month clear profit and you started of with £5000, instead of taking that profit you compounded it by rolling it onto the next months pick (s) then in 2yrs time your 5K would be worth about £15,350
3yrs £27,500 4yrs £49,380 5yrs £88.600

Makes you think!

sefty

 

[sukhibraich]

Sefty

Is there any site on the net where you can scan for this ?

i.e. rather than doing manual check to see if all three have crossed up, can you do scan for FSTE100 shares.

Thanks

Sukhi

 

[sefty]

hhhhmm

not to sure if you can

i might start to post the ones that fire up on a weekend.

 

[sefty]

test

test

just a test folks

 

[sefty]

IT WORKED

Ok i'll try to post up the cross over report that i have created from the AIQ system every week. ( hopefully on friday nights so you get the weekend to have a good look )
It shows ( or will ) those stocks that in the last 5 days have crossed MAs ( the 5 day over the 10 day ) These are only ftse100 stocks and only those that do over 300k per day vol.

The other things to bear in mind with this report are the following,

Trend Score and Delta Trend Score

AIQ’s two special trend indicators, Trend Score and Delta Trend Score, appear on all group and sector reports. These indicators are explained below.

Trend Score (TS)

Trend Score is an extremely useful indication of the overall technical strength or weakness of each group or sector. It is derived from six technical indicators (MACD, Directional Movement, ADXR, Positive Volume, Volume Accumulation, and On Balance Volume). Trend Score is designed to give a quantitative measure of the current trend of these indicators.
A special expert system computes the Trend Score from the values of the six indicators. The indicators are all trend-following and the expert system consists entirely of trend-following rules. Trend Score values are similar to Expert Ratings in that they range between plus and minus 100, with large positive values indicating an uptrend and large negative values a downtrend.

Delta Trend Score (DTS)

Delta Trend Score measures the rate of change in the Trend Score from the previous day’s value. A large DTS value can be an indication of significant change and is often an early sign of improving technical conditions.


Don't forget to look for the TS and DTS for the group that the stock belongs to.


have fun
sefty

 

[sukhibraich]

Thanks Sefty. This is brilliant.


Sukhi