help needed for starting off with identifying trends

[newby01]

Hi,
still very new, haven't started trading, but preparing to do so. Haven't bought any software yet. Any suggestions?
I am looking to start off spreadbetting with indices and use ADX to identify some trending ftse stocks as a shortlist. Have heard alot about sharescope, but not really sure which direction to go . I've heard of some programs that can do an automatic search through all the stocks and produce results matching the requirements you set...can sharescope do this? would really appreciate some guidance here, as I am starting off with very little money... (£300)

thx

 

[timsk]

Hi newby01
Welcome to T2W.
I'd suggest not paying for anything just yet - especially if you're going to focus on indices and plan to trade end of day (EoD). These two sites are quite good with lots of free stuff, although I confess to having a few problems lately with ProRealTime.
Free stock prices, quotes, stock charts, market news and streaming real-time stock quotes.
ProRealTime : Real Time Technical Analysis Software
Sharescope is excellent but you do have to pay a monthly subscription. That said, their customer service is first class in my experience and they are always very helpful when it comes to creating a data mining filter according to your specifications etc. Anyway, given your tight budget, start with the free stuff first. In terms of trend, a moving average is probably the simplest way if you're a lazy so 'n' so like me and can't be arrrrsed to draw trendlines. It's difficult to be more specific with help until you decide what you want to trade (UK stocks?) and what timeframe (Eod?). Given your budget, I'd suggest very low volatility UK stocks and restrict yourself to the tightest spreads your SB firm offer, along with the tightest stop losses. Try if you can to restrict losses to 5% of your equity.
Good luck.
Tim.

 

[samnakthong]

I started paper trading for two weeks and made good profits. As soon as I started using money I only made 20 quid in 10 days. I read somewhere that if you look at what the US and Asian markets do overnight then thats a good indicator of what the ftse will do, seems to work mostly. My tactic is to keep it simple, stick to it and don't get greedy. 5 percent max risk is a good plan.
Another fellow suggested only bet on no brainers ie everything down big overnight.
Any thoughts from any old hands.

 

[newby01]

Hi newby01
Welcome to T2W.
I'd suggest not paying for anything just yet - especially if you're going to focus on indices and plan to trade end of day (EoD). These two sites are quite good with lots of free stuff, although I confess to having a few problems lately with ProRealTime.
Free stock prices, quotes, stock charts, market news and streaming real-time stock quotes.
ProRealTime : Real Time Technical Analysis Software
Sharescope is excellent but you do have to pay a monthly subscription. That said, their customer service is first class in my experience and they are always very helpful when it comes to creating a data mining filter according to your specifications etc. Anyway, given your tight budget, start with the free stuff first. In terms of trend, a moving average is probably the simplest way if you're a lazy so 'n' so like me and can't be arrrrsed to draw trendlines. It's difficult to be more specific with help until you decide what you want to trade (UK stocks?) and what timeframe (Eod?). Given your budget, I'd suggest very low volatility UK stocks and restrict yourself to the tightest spreads your SB firm offer, along with the tightest stop losses. Try if you can to restrict losses to 5% of your equity.
Good luck.
Tim.

thanks for that
I am looking to trade UK stocks within a 2-5 day timeframe. 5% loss restriction is a good idea, will definitely do that. And the moving average you are referring to is to identify trends? or is is to identify entry points?

 

[squall321]

moving average can identify trend by its slope, but it can whipsaw when markets range

just look at the price

higher highs and high lows = uptrend
lower lows and lower highs = downtrend
different highs/lows = range/chart pattern

 

[newby01]

also, how do i measure the volatility of stocks and indices?

 

[timsk]

Hi newb',
The moving average is a dynamic trend line, but it lags price which, as cloud321 points out, won't help much when price whipsaws in a range bound market.
Average True Range (ATR) will measure volatility pretty well - although you shouldn't really need it for trading U.K. stocks EoD. Just look at the daily high/low to see how much a stock typically moves.
E.g. BT.A moves about 5p per day which is nothing compared to say, LMI which can move 100p each day. The point is, that if you set your maximum stop at 5% of equity, i.e. £15.00 (I'm not saying you should - 'tis only a suggestion) then you really want to be trading a stock like BT.A and steer well clear of the likes of LMI. (This assumes you're trading at £1.00 per point. If you can trade smaller size - then this opens up the field for you.) As a rule of thumb, the more volatile the instrument, the wider the stop you will need to deploy. Set it too tight and the chances of it being hit rise dramatically. Set it a long way away from your entry and yes, the likelihood of it being hit reduces but, you'll then be putting an uncomfortably large percentage of total equity at risk.
Tim.