How do you select your trades and other advice please

Gordon8

Junior member
27 0
Newtron.Bomb

I am still trying to get my head around the reward risk ratio of 3:1 - I think this is a very important factor in trading.

I have figured out how to calculate the risk bit but how do you calculate what the reward might be? Wouldn't it be a guess?

Unfrotunately forecasting is not my strong point - I always lied when I worked for a company!

Thanks again for your help

Alex
 

Finlayson

Well-known member
410 10
simplest way ( daytrading for me anyhow) just place an exit limit 3 x of what your initial risk is, so if your stop is at say -10 set a limit exit for +30 points (index e.g DAX)

this will vary for different people & their methods, but this is it in it's simplest form.........just dont feel remorse if the market steams on past, be happy with your +30 :)

jay
 

stevet

Established member
917 5
Newtron Bomb

i did try to add the definition of my version of what i mean by professional - but i mean someone who earns their income each day by trading markets and has to be/ or is cash positive each day - they could work for themselves, for a proprietary trading company etc, but they are more than likely trading their own money, or are just on a split of profits and dont have a basic - so on the average i dont mean someone who sits in an investment bank etc where there main job in trading might be to do with controling risk or just be one of a team who gets the bank in and out of positions - i mean someone whose livliehood is totally dependent each day on their trading decisions - and these are definetly the type of people u want to replicate if u want to be a trader
 

DaveGos

Active member
100 1
Gordon 8

Re the risk reward the most important part is the risk, this is where you will lose your hard earned money, if the risk is to high, the figure usually quoted is no more than 1% of your capital at risk in any one trade then don't take it.
Also always set a stop loss and stick to it no matter how much it hurts. The number one aim of the trader is to preserve capital and this is what the stop loss does, you do not want to see a small loss become a large one. While this is important at any stage it is vital when you start trading because you will lose a lot of times and almost certainly your capital will decline even with good risk and trade management. Just think of it as the price you have to pay to the market to learn.
 

stevet

Established member
917 5
Gordon8

my expertise ( by expertise, assume i mean that i know more about that than anything else, not that i am an expert!) is in intraday trading US futures indexes, and options ( the options are effectivly used to trade US stocks), but do have their own quirks , and also a little bit of bonds as well

and re trading - if u end up relying on stops to trade - in the end u will get burned regardless of the risk reward ratio - if u r trading with the trend - as you should - the trend will protect your position - you just need to get out if the trend looks like it is changing or getting exhausted - but if you are scalping - you definelty need stops and to use a risk reward ratio - but that sounds fine in print - but as u spotted - no matter how logical your risk reward basis - no matter how sure u r of your support or resistance points - no one can be sure - so a 3 to 1 ratio is fine if u win 50% of the time - but a few losers in a row will soon mean you are just fighting to get back to zero
 
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Newtron Bomb

Experienced member
1,602 87
stevet glad we are talking fromteh same page :)

gordon8
in the edit part of my post i mentioned that the "reward" part is calculated from "targets" these can be found on FTSE Beater's (FB) thread as they can take many forms some and can also be tradable patterns... some example for you are triangles and support and resitance levels again these are all on FB's thread
 

Halfbutt

Member
56 0
This is a really good thread to read. Sorry to show my ignorance in public , but what is the definition of a Swing trader.
I really like that no matter how much you dont know, there are kind people who advise rather make fun of the virgins.

And STEVET, i loved you comment below, and thats why im still morgaged up even though i bought my house at 20, thanks Sun Alliance twits

- and that cut is what pays them nice fat salaries - seeing as they have thrown away most peoples hard earned money on "safe long term strategies"
 

Newtron Bomb

Experienced member
1,602 87
A swing trader takes advantage of short term upswings and downswings in a market or a share price.... this can be done in many time frames most people associate swing trading with overnight positions to a few days to a few weeks, as i believe it was originally intended but there is no specific definition

there are a few good books on the subject.. i however dont trade this way so am very limited. am sure someone else will be able to give you a better description of swing trading
 

Halfbutt

Member
56 0
Thanks Newtron, really appreciate you taking the time to answer begginers questions like these. Now i can catagorise myself, but i only swing both ways on the FTSE.

Gordon8, great to read im not the only new one here,
good luck

HB
 

mma

1
233 0
madasafish ,

I hear what you say , but what size of stop loss would you use on the dax future ?
 

madasafish

Well-known member
470 5
mma
I am scalping so am using the following settings:

with the trend, first move stop 5, target 5
with the trend next move,5,9

Against the trend: 3.5,5

I am using a combination of long term trends in a minute chart coupled with standard deviations to identify when the price has risen/fallen too far. This system warns you to buy within 2-3 points of a short term bottom so I use "Buy at Bid" to get the best price.. - often it tells to buy on a downbar which is immediately follewed by a big upbar so it triggers during the candle.. and instant response is needed.

I always exit on market orders because the settings above usually mean when closing a long/covering short the market is still rising or falling hence I tend to get immediate fills at or better than my target price...
 

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mma

1
233 0
mada,

thanks for that but do you mean points or tics ( 1/2 point on Fdax)when you say :

with the trend, first move stop 5, target 5
with the trend next move,5,9

cheers .
 

Gordon8

Junior member
27 0
Halfbut

Glad you are a beginner too as will appreciate the anguish, exitement and brain numbing amount of information passing though my ears - all of which seems terribly important to know

I want to swing both ways too on the FTSE (!) - it seems so simple when you read about it but actually doing it is another thing! One of the terrifying things (apart from losing all your money) is navigating around the SB web site and ensuring the bet is opened / closed correctly.

I have just opened an account with Deal4free on the advice of this brilliant chat room, as the spreads are good for the FTSE but the ordering platform is horrendous - I still need to get my head around it. It hopefully will be worth it though as TradIndex who I was using charged a fortune in spreads and won't allow you a guaranteed stop.

I think it is safer to plan making trades over a few days or weeks rather than overnight, simply as you have more time to think.

Any advice would be very welcome

Best of luck

Alexandra
 

Finlayson

Well-known member
410 10
Gordon8

Deal4free is a very good platform, personally I think it is the best out of all the major SB's. The order system seems complex at first, but is quite easy to drive once u know your way around.

1 bit of advice , keep an eye on your order book & back office statements. Not that these should ever be wrong, but as with all , there are mistakes made.....they have made a few on my account .

if u ever notice anything that appears wrong( wrong order, open position that shouldn't be there etc.) be sure to take a 'screen shot' of the blotter or statement where the error is. they will always correct it if u can prove it.

not trying to seed doubt's in your mind, hopefully u will never have to query anything, but this will help if u do.

regards

Jay
 
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