Help with the FTSE 100

[asawyer899]

Hi

I have been trading using the CMC Trading platform for about 4 weeks and have only really used the FTSE 100, US30 and the German30. Mainly my focus has been the FTSE 100 but i have noticed all 3 of these markets follow similar patterns is there any main reason for this? Also so far i am down about £300 on the ftse 100 because in all honestly im lacking in even the fundemental knowledge, can anyone give me some basic pointers it would be much appreciated?

Many thanks

 

[Dentalfloss]

they are all following the dollar index

 

[tomorton]

Trend-following is a financially viable philosophy and requires you to identify when a strong trend is in place, which direction it is in and a beneficial entry point: the last also points semi-automatically towards likely exit points in either profit or loss. All 3 of these indices will move in close step with each other, the dollar index, the S&P500 and the Dow.

It would usually be wrong to be long on e.g. the DAX when these other correlating indices say downtrend. It would usually be wrong to enter in either direction when these indices are in congestion.

Identifying that a trend is sufficiently strong will depend on your risk tolerance and time-frame. An uptrend of 90 days making net +5% on the FTSE might be a strong uptend for one trader, another, with a time-frame of 10 days might look for a 5-day trend but only be prepared to risk a 2% loss on the position.

The entry point is also debatable - e.g. for longs, you can either enter on the high, as this signifies probable continuation uwards and risk over-paying and being a long wat above your exit stop-loss point, or enter on a pull-back after the high and risk missing the move or buying something whose value is already falling and may not stop.

You must absorb the movement of the markets (sorry if that sounds a bit jedi) and paper trade before you put real money in. When you consistently win on paper trades, put money in in tiny amounts - the game changes when you put real money in and the strategic objective now becomes staying alive long enough to be consistent, the tactical objective becomes concentrating on avoiding risk.

Stay alive, stay in touch.