Day trading

[est84]

Hi,

I am very new to trading and was wondering if anybody had any tips about day trading. I am kind of getting to grips with the idea and have read A LOT(!!!).

What I really want to know is can anyone recommend any analysis tools/indicators for day trading? I have read so much about it, but all i can get is that certain tools are good enough due to there two minute time delay, or others are more suited to long term trading....So nothing really seems to be helping me!

Thanks for your time, if you could answer my query, that would be great!

 

[JTrader]

Hello est84 and welcome to www.trade2win.com!

If you are new to trading and want to learn more, you are in the right place!


The Indicator that I have found works consistently well is RSI (14). RSI is my favourite indicator.


The term 'daytrading' covers a very large expanse of possibilities?

What market/instruments do you intend to trade?

On what timescale (3, 5, 15, 30, 60 minute) do you intend to trade?

Thanks

jtrader.

 

[kevin546]

Hello est84

Have you read any books on producing your own trading plan something like 'Come into my trading room' by Dr Alexander Elder. It does not sound like it because you need to have everything sorted before you day trade. One of the problems with day trading is that you have less time to make your decisions so you need to know in advance if you are going to buy,sell,close,re-enter or stand aside. You need a strategy and a plan to back it up which gives you an edge IMHO. You need to research what style of trading suits you best not what you have read. Reading points you in the right direction but only after you have traded real time and gained the experience of what you are trying to do and how you are doing it will you learn what aspects of trading best suit you.

Kevin

 

[Dave1971]

est84

IMHO to daytrade you must have a simple strategy. If you have to wait for a number of indicators to confirm a potential trade, then it is likely that you will have missed a substantial part of the move you are after. Personally after palying around with a couple of mechanical strategies I am now concentrating on price action and basic chart patterns to give entries.

It is a very subjective way of trading, but it is going OK so far, and once I start get my stops and exits right more often I should be able to get some consistent profitability.

 

[est84]

Hello est84 and welcome to www.trade2win.com!

If you are new to trading and want to learn more, you are in the right place!


The Indicator that I have found works consistently well is RSI (14). RSI is my favourite indicator.


The term 'daytrading' covers a very large expanse of possibilities?

What market/instruments do you intend to trade?

On what timescale (3, 5, 15, 30, 60 minute) do you intend to trade?

Thanks

jtrader.

Hi

Thanks for replying. I was actually looking into spread betting, but reading the forums here ahs kind of put me off a bit!!! However, i was considering trading the American markets nad perhaps as a starting point, concentrating on the FTSE 100? Its only because i have read about them a lot. And, how is trading on a one minute tmescale??? I'm not sure, but i read yesterday that with spread betting, the markets can change as quickly as it takes to make a cup of tea! I am a little bit nervous, but i do want to get stuck in and learn as i go, but i think i still have a lot of reading to do

Thanks again, our reply is much appreciated!

 

[est84]

Hello est84

Have you read any books on producing your own trading plan something like 'Come into my trading room' by Dr Alexander Elder. It does not sound like it because you need to have everything sorted before you day trade. One of the problems with day trading is that you have less time to make your decisions so you need to know in advance if you are going to buy,sell,close,re-enter or stand aside. You need a strategy and a plan to back it up which gives you an edge IMHO. You need to research what style of trading suits you best not what you have read. Reading points you in the right direction but only after you have traded real time and gained the experience of what you are trying to do and how you are doing it will you learn what aspects of trading best suit you.

Kevin

Thanks for your reply (and everyone else too!) I will certainly be reading a lot more literature in the form of books, rather than stuff on the internet. I have found that lots of ideas conflict and contradict with othres, but i can see now that a lot of stuff on the net can be deemed as 'bogus'. I think I'll stick to these forums for help and ideas now!!!

 

[kevin546]

Hi

Thanks for replying. I was actually looking into spread betting, but reading the forums here ahs kind of put me off a bit!!! However, i was considering trading the American markets nad perhaps as a starting point, concentrating on the FTSE 100? Its only because i have read about them a lot. And, how is trading on a one minute timescale??? I'm not sure, but i read yesterday that with spread betting, the markets can change as quickly as it takes to make a cup of tea! I am a little bit nervous, but i do want to get stuck in and learn as i go, but i think i still have a lot of reading to do

Thanks again, our reply is much appreciated!

EST

Day trading is not easy, you have to react quickly unless you position day trade. You need to read up on the different trading styles and then consider which one you like the look of. Then you need to spend time watching the market real time not trading to see how things appear in that time frame. You will need to learn the different charting techniques from simple price movements and how you wish the price to be displayed in the charts. If you are to consider using indicators then you need to learn these and then study them in real time.

Spreadbetting has its disadvantages, they can mess with the price and you have to play by there rules and not the price that is displayed on the exchange. However they are good for learning how to trade because you can place low bets. In your case I would paper trade first to learn how things move real time and then consider trading at £1 a point until your system produces profits. The one thing you will have to confront are your emotions and these do not surface until you start to trade. This is why you need a plan because without it you will most likely fail and lose your pot. Do not rush into this. I have been at this just over 4 years, I like to think I am good at charting and I day trade. But it has taken me 3 years to produce a complete trading plan and over the last 6 months I have been asking myself why I did not take more time to learn all I needed to.

I would also agree with a previous poster, I have gone round in circles trying to find the ideal charting set up. Now I have what I want and I have no lower indicators although I can see some use of them if you position trade. I now work closely with price together with moving averages and Bollinger Bands. You need to find what suits you best but I strongly suggest you learn all you can from price itself. In the end you have to realise there is no holy grail of signals, what you must do is find the one that you are most comfortable with. It has to be tested so that on the balance of probabilities it will produce profits more than it fails. That last statement is this market in a nutshell. Your success or failure depends on the balance of probabilities, no one signal is a certainty. All that can be is that you control how you lose and how much you lose. Keep your losses tight and let your winners run.

Some books for consideration

Technical analysis of the financial markets by John Murphy,
Come into my trading room by Dr Alexander Elder
Tools and tactics for the master day trader by Oliver Velez and Greg Capra (see also www.pristine.com you can register fro free e-mails of lessons, chart of the week etc)
Trade your way to financial freedom by Van Tharp (he expands on risk and expectancy in his day trading book)

The only SB that has real time charts that I am aware of is CMC otherwise known as www.deal4free.co.uk you need to deposit £1k to start up. These charts are very basic but you can at least watch how price reacts.

Good luck

Kevin

 

[JTrader]

Thanks for replying. I was actually looking into spread betting, but reading the forums here ahs kind of put me off a bit!!! However, i was considering trading the American markets nad perhaps as a starting point, concentrating on the FTSE 100? Its only because i have read about them a lot. And, how is trading on a one minute tmescale??? I'm not sure, but i read yesterday that with spread betting, the markets can change as quickly as it takes to make a cup of tea! I am a little bit nervous, but i do want to get stuck in and learn as i go, but i think i still have a lot of reading to do

I started daytrading by trading FTSE100 banks through spreadbetting. Banks were good to trade because most of the time they followed the FTSE100 index. BARC, LLOY, HBOS, ANL. I did this through spreadbetting - which proved profitable. However, I would not have contemplated daytrading UK stocks through actually buying and selling shares - as the commissions, CGT, and stamp duty would have made this a non-starter.
As for US stocks - I do not know much.

Trading on a 1 minute timescale should produce lots of entry and exit signals - many of which will prove insignificant. If you look at the polls section of the discussion boards, i believe there is a poll on preferred intraday trading timescales, and 5 minute is/was the most popular. I find 5 minute charts to be effective and reliable in giving the desired number of trade signals pr day for me - under 10.

I have since moved on to day trading forex - for the increased volatility and earning potential associatedd with it.

After 9 months of daytrading on a discretionary basis (making my own decisions with regard to entries and exits) - I decided that using mechanical trading strategies are more suitable for me. This involves programming a set of rules into a charting package like tradestatio or esignal - which will then produce simple trade entry and exit signals. When devising a strategy, you backtest it to see if it is profitable and can also optimise it (in tradestation) to find the most profitable input values. Optimisation can be done periodically (once a month or so) to ensure that you are still using the most profitable parameters - because market dynamics can and do change.

Mechanical trading in something you may wish to consider yourself for the future, it removes mosy (if not all) of the decision making process. While a good discretionary trader may be more profitable than a mechanical trader - it may take a mechanical trader longer to burn out.

Ta very much

jtrader.

 

[est84]

bigcharts

Hi again

You really seem to be a guru at this, and i seem to be able to make sense of what you are telling me!!!! (Thanks!)

I just wanted to ask another thing - anybody please help!!!. I have signed up with finspreads, but will sign up to some others that were recommended as i am not sure. But this aside, I was just looking at their charts today and was a little confused. I have actually been looking at the charts on www.bigcharts.com and find them much easier to understand. I just wanted to know if it is possible/feasible to use bigcharts and then go to finspreads to place my bet? Basically, place bets but not using the spreadbetting company's charting system??? I am not sure, as there is this whole time delay thing, and others factors that are at the moment, way above my head.

Also, i am quite liking the candlestick charts with the EMA overlay. Is this ok for daily spreadbetting. AND when there is anumber next to the EMA ie 9 this is for 9 days, but 9 days of what exactly? And is this the best possible number of days???

Sorry for sounding so absolutely dumb! But, i am trying to teach myself, and seem to be constantly glued to the computer. But i think i need a break, as im not sure i'm taking anything in at the moment!!!

As always, any help is very much appreciated

Cheers
est84

 

[stevet]

if you dont know what a "candlestick chart wth ema overlay" is? what do you like about it?

dont start trading until it does make sense - and then when you lose on each trade you take - try to figure out why you lost before you do the next trade - the worst thing that can happen to you is that you win - and you wlll then think it was because you knew what you were doing - you didn't - and you will lose a ton more before you wake up and smell the coffee!

 

[est84]

if you dont know what a "candlestick chart wth ema overlay" is? what do you like about it?

dont start trading until it does make sense - and then when you lose on each trade you take - try to figure out why you lost before you do the next trade - the worst thing that can happen to you is that you win - and you wlll then think it was because you knew what you were doing - you didn't - and you will lose a ton more before you wake up and smell the coffee!

Its not that I don't know what it is, i actually do, i was asking if it was a good way to view charts, better than say, a line chart. I seem to find it easier to read and understand, and have found a strategy of using a candlestick to determine where i enter and exit a trade. Obviously, i will paper trade using this method, and also, as i have joined Finspreads Acadamy, i can also trade real time for the next eight weeks at only 1p per point. Don't worry, i may seem a little dumb, as i am only learning, but trust me, i will be forcing myself to understand no matter how long it takes!!!

Thanks

 

[stevet]

dont matter if you are dumb or a nucleur scientist ( are they clever?) - its just that trading is the hardest way in the world to make money - and hence when you can do it - the returns are astronomical - but you are looking at years to really learn and at least a solid year to at least stand half a chance

there is no right way to trade, there are many many ways to trade - there is no magic secret - its just a hard hard slog to find out what works for you and you just need to find something that makes you comfortable and confident to take a trade and that also produces a profit over time -

its a shame -but its just about hard hard work till you finaly see through the fog

 

[TRADERguy]

Line charts leave out information because for each period of time they only plot one point--usually the close. Bar and candlestick charts show the open, high, low, and close for each time period. They both provide the same info but the candlestick charts highlight the open and close. The drawback to candlestick charts is that the eye tends to focus on the bodies and not the wicks. I prefer bar charts, especially for day trading because I don't think the open and close of a 5, 15, or 60 minute bar have much meaning (different story for daily charts).

For day trading you need charts that are in real time. I don't know about bigcharts.com but if the data is delayed it will not do.

Cheers,

TRADERguy

 

[kevin546]

est

You have to test what is right for you. Start with what you think it is but be prepared to test other set ups and yourself. If you are going to day trade it really depends what the time frame of your chart is in respect of the ema/sma you select. On a daily chart a 9 ema would represent a period of 9 days, on a 1 min chart it would be 9 mins. On intraday charts it is 9 periods of the time frame of the chart.

If you intend to day trade you would generally need real time charts to support you. I don't know what Finspreads charts are like but I do prefer to work from the chart of the SB price. If you use real time charts you can find sometimes that when the real price is moving lower the SB is remaining still or going in the opposite direction. This can be off putting. As far as I am aware bigcharts are 15 min delayed so you really need to research this before you make a start. To try and day trade from delayed charts or to even think of it suggests to me you are trying to run before you can walk. Bigcharts are fine for making end of day assessments but not for day trading.

I strongly urge you to read those books I have mentioned and put in the time and effort. If you think you can just start up with something and it works for you straight away then you will be very lucky if it does. Unless you prepare for this in a thorough way you are going to lose money and probably a lot if you are not careful.

Sorry to preach but my comments could so easily to into facts for you if you do not prepare correctly. Read the books they will help you to formulate plans and expand the ideas to your own needs as you see drawbacks in some of the methods and applications. That is what you need your own complete trading plan. You do not sound anywhere near ready to SB let alone day trade at present. Are you aware day trading is probably the hardest style of trading to overcome, it is certainly the most demanding. Maybe you should study position trading to help you then understand day trading requirements. The art of trading is to understand and possibly be able to trade from different time frames.

Kevin

 

[Alphabet]

Have you started trading on paper using real data but just recording your buys and sells? This will allow you to test out some of the strategies you have read about and develop a trading style that you're comfortable with. Good luck.

 

[gregw]

There is no single indicator or setup, it is a matter of learning to read the markets and use the tools. There are lots of ways to day trade and make money and lots of ways to lose as well. Education is the first step

We are having our next seminar on Sat Sept 18, we have one every month. Learning to day trade is a process not an event.
If you are interested visit www.thetradingzone.com