FTSE 100 intraday trading - JUNE 2003

kevin546

Established member
699 0
Payneg01

Thanks for your comments.

Fluke/Lambchops

The last thing I will say on this is that I find it best to trade the first few hours of the UK open because the FTSE appears to trend more. The best trades come during this time and when you get an early morning reversal it tends to be the first main trend of the session as in the case on Friday. (Having said that just remember to keep an open mind because what may happen most times may not happen this time).

That trade and the next trend change are going to be the best one's because of simple retracement theory (30%, 50% and 60% of original move - known as pull backs and other names, which can be waves in there own right - but you need to speak to someone like Bonsai about that as my knowledge of EW is very basic). When there has been a good trend in force for a while then I like to get into a new trend early if I can because at that point the sentiment between sellers and buyers is changing and my belief is that if you can get into this new sentiment you have more chance of making a short term profit than spending to much time making a decision. This is especially the case if considering following a trend change that would be against the trend of the day. Once the price has moved against the main trend the longer you hold or the later you enter the chance that the momentum may run out of steam increases.

When I enter against the existing trend I always look to see how much the price moved in the last fall or rise to establish (as a guide only), where the retracement levels may reach. My first target as I have previously stated is 5 points . My reasoning is that there are enough of these deals that another will present itself and I am now holding a new profit. I find especially when placing a deal against the trend not to expect to much from it because the original trend may continue even if the trend line has been breached. Taking 5 points may mean you get out to early but some days there are 15 - 20 so that's a nice return and 10 on a poor day which still produces 50 points. I try to get around this problem by trading 2 methods another way round this would be to place a larger deal and when 5 points or your given first target is reached to close half, whichever suits your own style and financial circumstances.

((On that point here is a little risk assessment of such a style. If you place your deal with the view of taking out half when an early small target is reached, in this example 5 points then at that point you now have a profit banked. Not as in many cases a paper profit that disappears as quickly as it arrived. At this point for your remaining deal to return a loss it has to work twice as hard to become a loss. In other words for your complete deal to lose it must give back the 5 points you currently hold and then another 6 to become an overall loss of 1 point. Should the price continue in your favour your remaining deal is still working and if it becomes a strong trend you can also consider increasing your deal size back to its original size for another small gain, and so on until the trend changes.

Compare this to your original position of holding a paper profit of 5 points, you hope it will go further but it retraces, it only has to go negative and straight away you move into loss unlike the first method. Setting a very small target it becomes very easy to obtain, just imagine how many deals you could make if you decided to set that first target of 2 points. I would expect you would get a very high return of winning deals against your losses, even though your overall gain would not be high in terms of points. However your winning deals would I suspect be better than normal intraday trading because of those deals that do not currently work in your favour. That is why I set as a guide 5 points as a first target because it is easy to get, what happens afterward's is nice if it keeps going and as a result my overall deals produce less failures than I use to when I relied on all my stake to take the profit in one process. I offer this just as an alternative and food for thought as it works well for me and spreads the risk. Obviously, if you had kept your original deal size and the price continued in your favour then you would have made more than you will with my approach but I find as in any cases of safety or risk management there is an element of payback but I feel the risk reward element is worth it.))

I also consider the previous price moves in a trend to establish a sequence as we may have a flag appearing and so we should get the same sort of price move from the new momentum. While these judgment's can be made do not fall into the trap that the price will make these targets or for that matter stop rising when the level is reached. Just keep monitoring the trading plan.

Sometimes if I am in a good paper profit and get to over 20 in a move I know that often the FTSE will not continuously rise or fall without some pull back and will on occasion set up a 1 min chart with the 2 SMA to watch if this indicator appears to turn against my position. This is also helpful when you maybe faced with several price bars on the 1 or 2 or in some cases 5 min chart where the price and bars give no indication where it maybe going. This tends to be a very short term period of indecision yet if the SMA keeps facing your way then stay in until this changes.

You can see from the charts I have attached that the strategy can work on any time frame but for intraday purposes I would advise that it is best during trending periods rather than choppy times and this is where the pivots can help you especially during the US open. This can be traded but does require some strict rules to be followed as often the trend will not appear until there has been quite a choppy period. Profits can be made during this time but trend following can be difficult or unclear as in the case of Friday afternoon, just when you think you have a nice downtrend forming (as I explained in a previous post) it will turn so stick to the system and if you are to trade during this period, within the trend changes or against the main trend of the day THEN BE PREPARED TO REACT and that will ensure your trading remains both clinical and disciplined. One last thing be prepared to accept losses if you go for these trades as they will not work out all of the time but most of the time. If you are trading Futures through IB I strongly recommend the use of TSim as it is easy to use and places a stop for you I am currently trying out 4 points at the moment.

I mention this because when you look at charts after the event it always appears so clear and easy but when you are trading for real and the chart is being produced before your very eyes it can be a very different thing. You can become fixated with your deal and hold on far to long and then gradually accept you are not going to win from this one and by the time you decide this you are holding a much larger loss than you needed to. In addition you have missed the opportunity to react to the change and so you have most likely missed the next deal that came along. I know because that is what I used to do. I found myself getting several profitable deals one after the other and then when one would not work out I would stick with it not wishing to believe it would not work causing unnecessary suffering. Since I have applied a stop loss such deals have not caused the problems they once did. Unlike many traders I need to keep things simple so that I do react to a change so if the price does cross the line I know I must close if I have not already done so. I use a very tight stop because I am letting the stop make the decision for me rather than sit here and say well I am 4 down now lets see what happens when its at 8 and so on. I still work on trying to close a lost cause earlier than my stop if I can and sometimes run a rolling stop loss but the main thing is to react to the chart and this ensures I do not have many problems. At the end of the day for my main intraday deals I know my loss will not be greater than 4 points from any one deal and that is easy to recover.

Sorry for going on but this has been one of my main problems in the past so I hope by mentioning it here others who maybe suffering this problem will see it for what it is and try to get out of such a habit as I have. This really applies to the fast deals and less so to the trend change deals apart from one against the main trend as you maybe holding when the original trend has just continued. I am sure someone else could put this down better than I. I wish that this sort of information had been available to me at the start describing specific situations you may face in simple terms dealing with your own feelings is possibly the hardest part of trading. They appear out of the blue when yoou are about to make a trade, when your in a trade and when yu close and then there is the second guessing have I done the right thing. By applying a specific trading system you can iron out these feelings of doubt uncertanity and greed, and take greater control of your trading. To help me with intraday matters I took a look at a number of US sites and picked up a few tips along the way.

Best of luck - I have been rambling again so sorry for those who trade differently and would find this of no use whatsoever. I promise I am finished now, LOL. But please remember this is all in my humble opinion please do your own research and testing of this or any system before trading.

Kevin
 

Fluke

Well-known member
456 1
Kevin.
Have copied and filed all your papers and charts to improve my trading.Can you give me the RSI periods you are using on each of the charts from 1 min chart to and including the the daily chart.
Due to my past mistakes and losses,day trading.I am going back to position trading over several days,to get my confidence back then I will consider day trading again.I do not intend to give it up.
Please don't stop posting your thoughts,lot of members are reading this post even though they do not submit any thing.
i am also a fan of Bosai and read all his threads.
Take it easy and keep posting. L&LOL>
 

kevin546

Established member
699 0
Fluke

The settings on all the charts I submitted are the same. The RSI on a setting of 7 with the levels 30,50and 70 highlighted. When I position traded I used 14 and 21 (not RSI averages I have no experience with them and do not think I need them). It really depends what software you are using, 14 appears a very good setting and it is interesting that the CCI which is very similar in appearance is used by many intraday dealers with a setting of 14.

John Murphy's Book indicated that daytraders tended to move down from 14 to 5 or 7 and 7 appears quite good on Sierra charts and 14 was not very sharp visually unlike another site I used. I suggest you try out a few setting until you are comfortable. I do not use another lower indicator for my daytrading because it would take up to much of my screen and I am happier viewing all the data from 1 chart rather than a selection. But for positional trading I suspect I would revert back to using the Slow Stochastic to run with the RSI for 3D charting formation with bands and the other upper indicators I have mentioned. I had them set at 14 the same as the RSI and used these 2 together because in Murphy's book when discussing Stochastic he made reference to how good they were together.

By using both you are creating another filter by selecting what signals you are going to react to and by applying a system where you need both tools to be presenting you with a buy or sell signal it helps prevent entering and getting caught by a whipsaw. I think if you back test you will find that if you follow extreme positions when both provided the same signal regardless of the setting you would produce more winners than losers.

I think it is not difficult in picking winning trades, deciding which way the market is going to go is not a problem. What is the problem is when you should close and take your profit. When I enter a deal I am as certain as I can be that I have got the immediate direction right but if it is going to give me 2point then return or go in my favour ny 5 points or 75 is another thing entirely. If you have had problems look back at those deals you got right and those that you got wrong. Identify common factors that applied in each when entering and closing for both a win or loss. When you have done this study the chart patterns for both and learn from them because as eggs is eggs these patterns or situations WILL appear again.

In addition to this once you have selected the tools that best suit your style of trading, the one's that you have most confidence and success with (not necessarily the so called best one's) you will start to identify specific movements or peculiarities from specific tool that you do not get to see in the TA books. What you get in the books is the particular study and how that study is used. It does not always cover every infinite aspect of how the tool reacts to price movements because they are only concerned with the published data provided by the original author.

All the data I have found on moving averages just talks about crossovers of 1 or more SMA's or of the price crossover, none have used them to illustrate there own individual patterns. With Bollinger Bands it is the same, they explain how the range is formed with a top middle and bottom line and all they tell you is how it is traded from either a top reversal, bottom reversal and that many use the middle line crossover as the buy or sell entry. At no time have the books discussed the individual patterns made to certain price movements other than when the price is narrow so that the lines converge. If you study such things closely as I have or you monitor how frequently a particular indicator performs correctly with a specific set-up then you become far more confident with this signal.

When things go wrong always go back and look at why it went wrong and what the chart displays each time you remember this you ca avoid it in the future. It maybe that you should have closed earlier or that you should have not taken the deal in the first place or that you got out to early. Learn from this and your confidence will grow. My set-up will help to some extent because I have already done a lot of the testing it now remains for you to get your head round the trading strategy that best suits you and to practice applying it.

Once you have established what combination of tools you are going to use including my system start from scratch and write down a list of charting signals that you would consider a buy and a sell not only from the system but also from your own previous trading. (You need to include what you have done before because although you may follow my system or an adapted one of your own you may still be tempted to apply some of your old theories when you actually trade - bad habits etc). When you have finished if you can not easily list your signals in your head without reference to your list you have to many. Reduce the signals down to a few and they will become as close to certainties in the future, even those that can work how good are they consider which one's are more reliable than the sometimes. In other words have clearly defined signals THAT YOU are both CONFIDENT in and can APPLY and from your past experience KNOW THEY WORK. Keep it simple.

When you have finally devised your trading charting strategy, I mean the signals you intend to use to buy/sell close and open at this stage you are not finished. You need to devise how you are going to manage an open position what level of risk are you going to take, what percentage of your funds are you going to risk. This is important because it can effect how well you are able to apply your strategy when things become unclear and those feelings present themselves. By establishing not only a charting strategy but a management strategy as well can you really become focused and comfortable with what you are trying to achieve.

Most of what I have said will apply regardless of what style of trading you apply but with positional trading it will be less frantic and you will have more time to make your decisions and basing them on more data. I expect to expand on my trading to incorporate bth positional trading from a 5 or 10 day perspective and possibly from a daily chart as well but that will not be until I can take this up full time. For now I believe I have the best set-up for my own circumstances and get 2 bite's of the cherry from the intraday moves.

I hope this helps it's the process I applied when things did not work out as I had originally hoped for.

Kevin
 

ChowClown

Senior member
2,732 56
Bonsai,

When you get a second could you let me know how I can access the Pinnacor chart at the top of the thread - I'd like to manipulate it to include RSI (and CCI if available), rather than MACD. I've tried to access the link to the chart to alter the parameters but no joy.....

Thanks
Chow
 

Fluke

Well-known member
456 1
Bonsai.
I have had the same trouble as ChowClown,can get the html into notepad but cannot get the chart to show.I get the notepad icon and the text ok.Once I did get the chart icon, but could not get into the html text from the chart picture or icon.Can you tell me what am I doing wrong.?
 

Fluke

Well-known member
456 1
Hi ChowClown.
I e mailed you on the 19/6,just checking to see if you got it.
No problem,I was just replying to yours.
LOL
Jon
 

ChowClown

Senior member
2,732 56
...Fluke, I can probably help on displaying the chart, I'll send a PM in a minute - I can see the chart OK, just wanting to remove MACD and insert RSI &/or CCI as lower indicators....
 

kevin546

Established member
699 0
For Info Re FTSE with D4F

I use both IB and D4F for my dealing and I am sorry if you may already be aware of this but it would appear that D4F have recently reduced the margin requirement for all the FTSE deals such as the cash, monthly and futures to £50 a point, at any time.

It would appear that they do listen to there customers (or react to the competition)LOL as this was something I asked for in addition to charting improvements. Obviously others must have made similar requests in the past because over the last year they have improved the trading platform and charting, certainly by Spreadbetting company standards.

I wonder if we could get the spread down to 2 points or even 1, from the current 3. LOL Still not as good as IB but reasonable value for positional trading and appears to be keeping ahead of the competition in value for money.

Kevin
 

bonsai

Veteren member
4,106 11
Don't know why you are having problems with the charts.
My notepad version works O.K.
So you will have to check your detailed code in notepad.

But here is the link to the page to set up your own indicators.

<a href="http://investor.stockpoint.com/quote.asp?Exchange=&Mode=CHART&Symbol=LS:UKX">Pinnacor chart</a>
 

ChowClown

Senior member
2,732 56
Thanks for the link Bonsai. I've pm'd Fluke, I think he may have saved the file without the .html extension.
 

bonsai

Veteren member
4,106 11
Have put the link at the top of the thread with other links
in case you need it again.

BTW, I shall start a new thread for JULY.
If there are any changes you would like or any additional links
let me know.
 

bonsai

Veteren member
4,106 11
here is an rsi with standard settings but cci is not on the menu.

<img src="http://chart.neural.com/servlet/GIFChart?sym1=ls:ukx&cbcku=FFFFFF&cbckl=EBF5FF&cbckd=cccc99&ctxtu=000000&ctxtd=000000&ctxtl=000000&csym1=000099&csym3=000000&cbckg=FFFFFF&cind7a=FF0033&cind7=009900&cind8=blu&cind9=6666CC&avg1=0&avg2=0&ind7=rels&periodRSI=14&height=350&width=450&source=SP&multipane=1&watermark=splogoblue.gif&dres=min&plottype=line&ignore=1220032746&coname=1&image=PNG">
 
 
AdBlock Detected

We get it, advertisements are annoying!

But it's thanks to our sponsors that access to Trade2Win remains free for all. By viewing our ads you help us pay our bills, so please support the site and disable your AdBlocker.

I've Disabled AdBlock