Intraday trading & market direction

JTrader

Guest
5,741 506
"To be a daytrader is to watch the unknowable future pass into the obvious present every second."

Hello

I found the above quote on these boards, I think it was within one of rossored's posts - but I may be wrong.
I agree with this quote and it nicely puts into words my thoughts. I think that the challenge is to make sure that I have followed and stayed on the right side of a move after it has taken place.

Anyway...I trade UK stocks using level 2 data and technical analysis (SMA 9 & 18, RSI). I like level 2 because I find it reassuring to be able to see the amount of support and resistance, supply & demand etc. in the underlying market, enabling me to make a more informed decision before placing a trade as to whether it is likely to be successful. Without level 2 data I would feel less in control and more exposed, or naked! :eek:

However, I am considering progressing onto trading Forex - EUR/USD inparticular. But with no level 2 data available, my main tools will be charts. When using SMA's as entry criteria there are be times in a sideways market when you enter and then have to exit without gain as the market is sideways. With level 2 at my disposal I am more informed prior to entry as to whether a significant move is likely.

Getting back to the quote, the trouble is we cannot say for sure what will happen until it has happened, especially without an order book. Therefore if I trade with the goal of staying on the right side of the trend, in a sideways market there will be times when my entry criteria are met only for my exit criteria to be followed soon after with no gain. I do not see this as a terminal problem, because it's very possible to be profitable by picking up lots of small losses and the occassional big winners. However, I am looking at finding ways when trading instruments without an order book, to be able to identify, seperate & avoid the sideways trades leading to small losses, and the trending trades leading to substantial profits.

How do others cope with this situation, especially when trading an instrument/product without an order book? Is it possible?


Many thanks

jtrader
 
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stevem12

Active member
135 1
As several people have said before on this site, anyone who has found a reliable method of determining a trend day from a range bound day (other than hindsight) will very quickly become a fiver ahead of Bill. (Gates that is)

Me if it breaks out of previous s/r and the first retracement stays above or below, I class it as a trend. But then I can only cope with simple ideas, anything else makes my head hurt. (and usually costs me money)

Steve
 

JTrader

Guest
5,741 506
Thanks Guys.

Rognvald, the capturing trend days document is useful & certainly worth a read.

Having thought about, another description of my view is -

"To be a day-trader is to watch the unknowable future pass into the obvious past."

I am always very good at predicting moves after the event!
 
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TheBramble

Legendary member
8,394 1,170
JT - Have faced a similar situation myself over the last couple of weeks. Moving from Price & Volume using LevelII to FX (also primarily EUR/USD).

As I've said elsewhere on thee boards - it's been tradeable, but it does feel like having one hand tied behind your back. But that's just because (I think!) it's a new market for me - not just a new exchange or sector or stock - a completely new market.

I guess you're thinking of FX for the 'extra' volatility and trading opportunities that implies. My own take is that it is a completely different ball game. Not better or worse than Stocks and/or Level II and or Volume-based - just different. And well worth pursuing IMO.

Hang around the Forex forum as well - a lot of good stuff in there.
 
 
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