Hello! A few of basic questions

[adamwhu]

Hi all,
I have just started paper trading. I am using Technical Analysis and I am just practicing everything I have learnt as far. I tried posting this on the 'First Steps' forum but it died without any responses so I thought I would try here. I have come up with a few questions. Any help would be great thanks!

1) I am not sure which chart to use when making a decision about a chart. I use long term charts (daily/weekly) to find the long term trend. But I am unsure which chart to use afterwards. I am planning to be in a trade for between 1 and 10 days. The 15mins chart gives different indicators to the 30mins chart. This is the thing I am having most problems with.

2) Another problem is where to place the stop loss. I can not seem to work out the volatility of the stock nor the ATR. I think it is because I do not understand the process of placing stop losses. I have the same problem with trailing stops. Any help on this would be great.

3) I try to use 2:1 Reward:Risk but I am having a few problems. Obviously from my second question I am not very good a placing stop losses so that messes up the ratio but also I am unsure when to exit a trade. I can look for the obvious things like exit at a previous resistance level or a 100% gain with certain patterns but after that I am not sure. I guess working out good trailing stops help with this but I am very unclear with this.

Thanks in advance for any help.

 

[Rhody Trader]

1) I am not sure which chart to use when making a decision about a chart. I use long term charts (daily/weekly) to find the long term trend. But I am unsure which chart to use afterwards. I am planning to be in a trade for between 1 and 10 days. The 15mins chart gives different indicators to the 30mins chart. This is the thing I am having most problems with.

If you're planning on swing trading (trade holding periods measured in days) then you probably don't want to use any charts shorter than 1 hour. Even that might be too short. It partly depends on the market you're trading.

2) Another problem is where to place the stop loss. I can not seem to work out the volatility of the stock nor the ATR. I think it is because I do not understand the process of placing stop losses. I have the same problem with trailing stops. Any help on this would be great.

Your exit strategy (inclusive of your stops) should be defined by your trading system/methodology.

3) I try to use 2:1 Reward:Risk but I am having a few problems. Obviously from my second question I am not very good a placing stop losses so that messes up the ratio but also I am unsure when to exit a trade. I can look for the obvious things like exit at a previous resistance level or a 100% gain with certain patterns but after that I am not sure. I guess working out good trailing stops help with this but I am very unclear with this.

Reward/Risk ratios are only really of use if you combine them with a Win%. As for the rest of it, see my answer to #2.