Basic Strategy

TBS

Well-known member
385 0
You have to know what sort of orders you are placing and what can happen if your levels are hit.

Limit orders are great for liquid markets but can be very dangerous in iliquid or gapping markets. They can also be used as limit stops in addition to straight stops.

'buy at 100 stop' - would mean that you will be filled if the price touches 100 - remember you will be filled 'in turn' so where you get filled depends on where in the pecking-order your trade is sitting and how much volume is available to sell. This is what usually makes a mockery of backtesting on stocks or other illiquid markets.

'buy at 100 limit' - would mean that you are prepared to pay 100 (or less) if 100 is hit, but no more - this is not a guarantee that your order will be filled. If 100 is hit and never trades again (ie the price moves upwards) then you will not be filled.

' buy stop at 100, limit 105' - would mean that your order to buy is triggered if 100 is hit, or passed. The broker can then work your order up to a maximum of 105. If the market hits 100, then gaps to 110 you will not be filled as the price has exceeded your limit of 5 points.

Limit orders are great if you are entering new positions (rather than closing existing positions) as you have the luxury of picking your price, they can give a false sense of security if used to close positions.
 
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Cockneyw

Newbie
2 0
Starting out

Hi. I've seen your messages, and am grateful for any advice I can get in starting out. I've read a couple of books on Technical analysis (Pring), and about Elliott wave (Prechter). Elliott wave seems interesting, but looks as though you can't tell where you are in the wave counts until after the event. Got any advice??

I've seen a couple of courses/software that seem good on the surface of it: MTPredictor and the Elliottician course: heard anything about how good they are? I spoke to the people at MTPredictor: says that about 40% of trades get stopped out, and out of the rest, about half break even, and the others reach at least the 2-3/1 initial risk level. Elliottician claim to have 85% accuracy. Does this seem realistic/possible to you?

I can't find a lot in the way of impartial feedback or reviews on either of these. :rolleyes:
 

FTSE Beater

Experienced member
1,518 5
Hi Cockneyw

Welcome to T2W :)

I spoke to the people at MTPredictor: says that about 40% of trades get stopped out, and out of the rest, about half break even, and the others reach at least the 2-3/1 initial risk level. Elliottician claim to have 85% accuracy. Does this seem realistic/possible to you?
This is certainly possible. 40% winning trades with a 2-3:1 Risk Reward is what I class as average for a swing based strategy.
My only concern would be the level of risk needed to make Elliottician's 85% work could be quite high - Something to look out for.

HTH :)

Edit:I have just re-read what MTpredictor says, and it doesn't seem so good after all. Here's the outcome of the "average" 10 trades

Trade No. Result
1..................... -1
2 .....................-1
3 .....................-1
4 .....................-1
5 ......................0
6 ......................0
7 ......................0
8 ......................3
9 ......................3
10 ....................3

Average result after 10 trades = 5 profit
...so not as bad as I feared :)
 

Cockneyw

Newbie
2 0
Hi again.

Many thanks for getting back to me. I think I'll look into it a bit further, and probably give their month trial a go.
 

hornet

Newbie
7 0
MTPredictor independent review

Hi Cockneyw /FTSE Beater

With regard to an independent review of the MTPredictor software, Paul has permitted me to point you to a review by the STA (Society of Technical Analysts) last August 2003.

Carried out by David Watts, it is on this link in the Reviews/Press Room at our site:

http://www.mtpredictor.com/pricing/Reviews.html

I hope this helps?

Thanks

Tony Beckwith
MTPredictor Ltd.
(hornet)
 

kr2009

Junior member
12 0
Hi,

I realise this is an old thread, but the points raised are similar to a trading strategy I have been trying and incidentally failing with :( Incidentally I have been using many of the stocks listed here including AAL, RIO, and XTA. The problem I am having is that I am setting up stops a few point above/below previous resistance and support levels. In terms of profit of course as soon as the level is hit then that is the profit I am given. However, during times when the price has broken through previous S/R levels I am sometimes not getting closed out by IG index until several points beyond my stop (30 pts in one case) meaning it is near impossible to work out a risk reward ratio in advance, and subsequently meaning losses when they occur have exceeded gains.

In addition, does your method (inc. risk/reward calculation) account for the spread? For example these stocks have a spread of 9 pts.

Any help greatly appreciated from an increasingly despondant trader!

Karl
 

skateboy

Newbie
1 0
Thanks for the explanation, but I would also like to raise the issue of:

1. the buy & sell spread.
2. spread betting firms not executing trade & stop orders very efficiently.

are there ways of egtting around these?
 
 
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