Hit and Miss

[barbie2002]

Hi y'all

I've been spread-betting for just under a year, with the help of the systems sold by Vince Stanzione and Champion Trader. I'm not a day-trader, having an enormously boring day-job, so I'm looking for more long-term trades, at least a week in length. I've looked at the various TA tools available, but have a couple of questions. Please excuse me if they seem a bit stupid, I'm still learning.
a) Which is best, EMA or TMA, and over what period?
b) Is MACD of any benefit, in your opinion? I plotted 13, 26 MACD for the FTSE 350 yesterday, and this gave me several valid buy and sell points, but hindsight is always wonderful. Obviously this wasn't buying at the bottom and selling at the top, but I'd rather make lots of small profits than one large one and several large losses.

I've gone for the simpler methods first. I haven't made many bets, but have had more winners than losers, I suspect by more luck than judgment.

Any advice will be more than welcome.

Barbs.

 

[techtrader]

Hi barbie

You could try swing trading EOD doing your research in the evening. try looking for trends by looking at the weekly charts and see how they look on the daily charts then check the 1 hour charts for an entry look at say rolls royce RR.L .(I wold put up the chart but I haven't a clue how to) it has just bounced of support at 235.5 and seems to have a resistance at about 254 ( its last high) if it makes a new high judging from its progress so far it could be 265/270. I know you will probably find I have it totally wrong but as it is an example I am not to disturbed ( yes I have just gone int this stock and never ramp) I have a stop loss at230. everybody has there own reasons for entering a position some use indicators, some price and volume and others mechanical trading systems.
You must develop your own system and trade what you feel comfortable with, by the way I gave that particular stock as the time length 2/3 weeks (so it seems from the past) seems to be the time scale you are referring to. Some folk on here that know better than me will probably tell you that that length of time is called "Position " trading
Hope that helps
Regards
Dave

 

[techst]

Hey barbie, I use EMA's on weekly's and dailys and trade normally holding over a week. I also use MACD Divergence in my strategy. As some of your trading tools look similar to mine I would suggest (if you haven't already read) Come into my Trading Room by Dr Elder as a book that should be interesting to read, as he discuss EMA's and MACD and other indicators fiited to the time frame your looking at. I found this book so helpful to me as i didn't want to daytrade and thought position and swing trading fit me more comfortably . It will give you a good solid grounding in the Mind, Method, And Money Management of trading so good luck!

 

[techtrader]

Hey barbie, I use EMA's on weekly's and dailys and trade normally holding over a week. I also use MACD Divergence in my strategy. As some of your trading tools look similar to mine I would suggest (if you haven't already read) Come into my Trading Room by Dr Elder as a book that should be interesting to read, as he discuss EMA's and MACD and other indicators fiited to the time frame your looking at. I found this book so helpful to me as i didn't want to daytrade and thought position and swing trading fit me more comfortably . It will give you a good solid grounding in the Mind, Method, And Money Management of trading so good luck!

Also Master swing trader by Alan farley
IBNS0-07-136309-2
Dave

 

[barbie2002]

Thank you both - have you read the swing trading book by Marc Rivelland (excuse the spelling if it's wrong)? I found 'Charting' by Alistair Blair totally fascinating, but agree with his point that some of the methods oare just different ways of saying the same thing. And how do you tell a flag from a pennant??
Anyway, I'm going to pore over my EOD and a couple of beers. Cheers.

Barbs.

 

[techtrader]

Thank you both - have you read the swing trading book by Marc Rivelland (excuse the spelling if it's wrong)? I found 'Charting' by Alistair Blair totally fascinating, but agree with his point that some of the methods oare just different ways of saying the same thing. And how do you tell a flag from a pennant??
Anyway, I'm going to pore over my EOD and a couple of beers. Cheers.

Barbs.

Beer sounds good
Good luck
\dave

 

[laytonm]

Hi

I've read Marc Rivalland's book (to the extent that it's falling apart). His method works well for me - complete beginner. I've also read a few other. I know it's a bit of a cliche but Reminiscences (and the other books about Livermore) are excellent.

Cheers

Mark

 

[knorrie]

laytonm and others

It's good to hear that you've been able to get the Rivalland swing method working for you. I got this book when it first came out, but was disappointed to say the least when I tested his methods on a selection of UK stocks. Also I find the section on false and failed signals too complicated and imprecise, so never pursued it.

Maybe I should dig this out of the cupboard and have another look. But on what stocks/indices does it work for you, and do you use swing charts alone or together with the P&F stuff?

KenN

 

[laytonm]

Ken

Don't put too much stall by this advice because I've only been trading about a year, but I've formed few view on this type of swing trading which I'm happy to share. The ''trouble'' I found with MR's book is that it does assume a general level of trading knowledge which I didn't have at the time I first read it. So I've read a lot more around trading plans, money management, psychology and other methods.

But what I've really found is this. I think (like all trend following methods) this works very well in trending markets but less well in sideways price action. I started last year and made a small profit just trading indices - should have been more but I had no idea when it came to money management. This year I really struggled in the 'sideways ' markets and made a loss up to last month, but this must have been good training because the last 2 months have been very good and I am now up overall. The indices that I trade are the Dow, Nasdaq 100, S&P500, Dax & FTSE 250. I generally now avoid the FTSE 100.

The same applies to stocks. I stick to MRs top down method (index, sector,stock) but all stocks are not suited to this method, and the ones that are are not suitable all the time. It seems to me that the best stocks to swing trade change every few months or so. So what I do (and I think that this is the vital bit) is to go through all the potential stocks with a fine tooth comb (this had taken me hours and hours) and I draw the swing chart on top of the bar chart, mark the entry and exit point, work out what the best entry to avoid false starts (might be a few % after the signal), stop loss and profit taget which I set in advance. If you do this you can work out how much you could have potentially made historically. I then assume that this will carry on for a while and trade it. As MR suggests I stick to the ''biggest'' high volatility stocks. My own experience is that US stocks are better than UK. I also think that it's important to limit actual trading to a handfull of stocks that you have got to know really well. I have also lost money when I have 'jumped around' looking for signals - much better to trade every signal consistently with 2 or 3 stocks that you select as mentioned and then stick to.

I havn't really mastered point and figure yet and I use it only as a filter (like RSI) so I don't trade if the P&F contradicts the swing chart.

I do hope this is useful. My general impression from reading is that there are lots of methods that work (moving averages etc etc) but this one seems to work for me because I like the logic around points of equilibrium between buyers and sellers. I also like the tight stop losses on continuation of trend signals.

Regards

Mark

PS the other thing to mention is that I've seen MR lecture (at the recent e-trade trading day). It was a good talk but it made me think that there's only so much someone can put in a book and he clearly has years and years of trading experience.

 

[knorrie]

Many thanks for your reply Mark. Your comments on not trading the FTSE 100 index are interesting as this was one of the first things I looked at, and he mentions trading it in the book, but for me it was just a mess, as were several of the usual UK top suspects like AZN, RBS etc (at the time anyway, certainly does look better in recent months from a quick look at the charts). You are spot on with your comments about trending vs. sideways BTW.

I'd be interested to know how you work out your profit targets, as this is another thing not well covered in the book?

KenN

 

[waverider]

Thanks Laytonm. I like MR's book but have not tried or tested the methods. Its very useful to have someone else's experience of it to draw from.

The particular gem I do use from the book is his 3-day pullback method for getting in on breakouts you've missed.

WR

 

[laytonm]

WR, yes I agree


Ken

I started off using the targets described in the book for indices eg 150 / 300 for the ftse 100 for half and full profits. Earlier in the year I reduced these to 100 / 200 as I thought that in the lower volatility smaller targets were appropriate. Now there's quite a clear down trend I'll move back, although I'm trying to run my profit at the moment (with a moving stop loss) as (for the US) we might be in what MR calls a linear phase.

Re the FTSE 100, I read in investors chronicle that this market is distorted at the moment by dominant effect of very few shares (including oils) and so I've moved to the 250 instead. To be honest I prefer the main US indices. The trouble with the 250 is the trading vehicle - I use SBs and the spreads are painful which is a pity as it swings wonderfully. With stocks I work out my profit targets for normal swings based on studying the last year or so's chart. I keep planning to look at CFDs incase these are better.

Incidentally, I looked at RBS although I don’t trade it. It looks ok to me this year apart from March to early June which looks a bit tricky. A tough time for any trend following method I think. What I’ve not had time to look into is how well this method works compared to more standard TA methods. I keep planning to pick another method and paper trade it to see, but with the day job and the family there are only so many hours in the day.

Regards

Mark

 

[Orion]

laytonm

I agree with you about the 250 but which SB firms do you use? To my knowledge only IG now offer it, albeit with a ludicrous spread. Do you know of any other SB firms offering the 250?

 

[laytonm]

Orion

No, I use IG. I also use City Index and Cantor - neither of these do. Other's I'm not sure, but I've read somewhere that only IG offer it.

Regards

Mark

 

[knorrie]

Mark

Sounds to me you've done a great job in getting MR's method to work for you. Many thanks for your feedback, and continued good luck with your trading.

KenN