Just started swing trading

[Byllie]

After losing the obligatory 20% of equity in a bear market for penny stocks, I am turning to swing trading (currently reading swing trading for dummies)

I understand the indicators fairly well, however, I have a few questions for you expierienced chaps?

The weighted/exponent 9/4 day moving average seems to give less 'lagg' than a simple moving average, however apparantly the simple gives less whipsaws. Which ones do you use?

MACD is fairly easy to understand.


Stochasis + RSI for trading ranges blah blah blah


One question though, do these indicators hold true for the forex markets aswell? Also is it wise to only swing trade a specific type of share, like FTSE100 companies + forex + indicies, otherwise the spreads get too big?

For instance BKIR the spread is 1.41-1.43 for example, would that be too big?

Thanks all

 

[shadowninja]

While the pros will have dozens of charts open, for the moment you're best off focusing on one or two charts and trade the opportunities when they (sometimes) arise. I used to try to trade more frequently and that always resulted in a big dent in my account.

 

[tomorton]

Generally, indicators are equally reliable on any sufficiently liquid market, so FTSE100 index, FTSE100 companies, Forex, all equally reliable one to another. BUT, they are none of them are terribly reliable at all. Certainly beware of using them as entry / exit point indicators, though they can help confirm direction and VERY approximate timing. MA crossover is widely ignored by serious traders as an entry point indicator - all MAs lag the price action, shorter MAs less so but that means you will get more entry signals per month (possibly leading to overtrading) and more entry signals per month also means a higher ratio of false signals.

Generally, the more liquid the market, the narrower the spreaqds and the lower the margin requirement from the SB firm. The spread on BKIR does not sound excessive for swing trading - you would only need a 2% move to put you in profit. For scalping, such a spread is a non-starter, assuming a tick of 0.01.

 

[ccclarette658]

After losing the obligatory 20% of equity in a bear market for penny stocks,

Why is it obligatory to lose money just because everybody else is? If you are losing money you are getting it Wrong. If you are getting it wrong you are not getting it Right. Getting it right is the purpose of any serious trader. This applies in bull markets and bear markets.

I understand the indicators fairly well

How well do you understand the Price? It is the change in Price which will determine your profit or loss on the deal. Additionally, when you say you understand indicators fairly well, what you really mean is that you understand how the indicator is calculated mathematically, and the claims made about the indicator by others. This will not help you to make profits in the market.

One question though, do these indicators hold true for the forex markets aswell? Also is it wise to only swing trade a specific type of share, like FTSE100 companies + forex + indicies, otherwise the spreads get too big?

For instance BKIR the spread is 1.41-1.43 for example, would that be too big?

Thanks all

The indicators do not "hold true" in any market. I will explain. People use indicators because they choose to believe that indicators are predictive of price. This is not the case. Indicators cannot predict with any accuracy what price the instrument will be today, tomorrow, or next year. They have nothing to do with any of the reasons why market participants would choose to trade, except of course the market participants who rely on indicators. (the importance of these small traders is left for your consideration)

I see you mention Foreign Exchange. I can assure you that the progression of exchange rates is not determined by the MACD on a 5 minute chart. Looking at the MACD information is therefore irrelevant. This goes for all other mainstream price based indicators on all other timeframes.

You are wise to consider the dealing costs, which include considerations of liquidity and spread. However that is putting the cart before the horse in that costs are a consideration in relation to the likely revenue that you know you will generate. If you do not have the knowledge and skill to extract profits from the markets then you will lose - the dealing costs will simply have an effect on how much you lose and how quickly.

BKIR - if you consider it will go to 1.50 is a 0.02 spread too wide? What if you consider it will go to 5.00? Higher?

When you are ready to trade you should only trade markets which are liquid and have a continuity of liquidity, and additionally enhance the application of your particular trading strategy.

I will add a final point. The presence of indicators is dangerous as it stimulates you to make trades you should not be making. If you have no other information on the likely future direction of a market, but you have adopted (for example) a MA cross strategy you will be stimulated to buy because the indicator has given you a signal and not for a valid reason. There can be a "bullish" MA crossover in a very weak market, but since the indicator cannot see the background weakness neither do you. So you buy, and lose.

You cannot complain I do not tell you everything.

I hope and expect that this post is of assistance, to your benefit and my satisfaction.

 

[shadowninja]

I have learnt that every trader has to go through their own journey of discovery...

 

[Byllie]

Of course, I understand that you don't win everytime with indicators, maybe only 30%, but perhaps with using chart patterns aswell, such as hanging man/hammer to show a change in trend, ASWELL as a MA crossover ASWELL as a bullish/bearish MACD then it would be wise to 'take the gamble' so to speak. Due to stop losses, your losses tend to be small, but your profits can be great, if it works out. Thats why I am attracted to swing trading. Can anyone recommend reading malcom pryors books on spread betting + charting?

Thanks

 

[shadowninja]

Best thing would be to **** about on demo until you have something and then see if you can be suitably profitable after 100 trades.

 

[ccclarette658]

Of course, I understand that you don't win everytime with indicators, maybe only 30%, but perhaps with using chart patterns aswell, such as hanging man/hammer to show a change in trend, ASWELL as a MA crossover ASWELL as a bullish/bearish MACD then it would be wise to 'take the gamble' so to speak. Due to stop losses, your losses tend to be small, but your profits can be great, if it works out. Thats why I am attracted to swing trading. Can anyone recommend reading malcom pryors books on spread betting + charting?

Thanks

you are trying to take comfort in wooly thinking, and in the world of excuses etc.,

There is no room for that kind of behaviour in a real arena of Gladiatorial Combat, whether in absolute reality or in virtual reality. The markets are exactly that arena, whether you like it or not.

Therefore, again, Survival of the Fittest.

 

[Sang Froid]

I have learnt that every trader has to go through their own journey of discovery...

How true this rings. I myself have just started to look into swing trading having tried over the last three years dozens of strategies, systems, indicators you name it. I've made money, lost money, blew up two accounts blah blah blah...

Indicators have been clouding my judgement for far too long, I focused on the technical aspect and not on the price. I've now done away with all my indicators and just trade naked looking at s/r. I wish the original poster good luck with swing trading as to me it seems the best 'system' (and I use that phrase loosely) to make consistent profit.

 

[tomorton]

I agree with sangfroidFX - swing trading is much more suited to the majority of players and is also my choice. I have not done as well as the guy who spread-betted £10k into £500k just using candlestick charts and fundamental judgement - but I abide.

 

[sarv]

this great swing trading....i wanna also use it .
This action proof to be a win, win situation. This is a true art
Work, which will be a success story.
===========================

 

[rathcoole_exile]

but perhaps with using chart patterns aswell, such as hanging man/hammer to show a change in trend, ASWELL as a MA crossover ASWELL as a bullish/bearish MACD then it would be wise to 'take the gamble' so to speak.

NO NO NO NO NO NO
NO NO NO NO NO NO NO
NO NO NO NO NO NO NO NO
NO NO NO NO NO NO NO NO NO
NO NO NO NO NO NO NO NO NO NO
NO NO NO NO NO NO NO NO NO NO NO
NO NO NO NO NO NO NO NO NO NO NO NO
NO NO NO NO NO NO NO NO NO NO NO NO NO

i hope I am clear enough ?

 

[iNTRA_FiN]

What markets/commodities do you trade?
What markets/commodities did you start with?

 

[Tradekingfox]

After losing the obligatory 20% of equity in a bear market for penny stocks, I am turning to swing trading (currently reading swing trading for dummies)

I understand the indicators fairly well, however, I have a few questions for you expierienced chaps?

The weighted/exponent 9/4 day moving average seems to give less 'lagg' than a simple moving average, however apparantly the simple gives less whipsaws. Which ones do you use?

MACD is fairly easy to understand.


Stochasis + RSI for trading ranges blah blah blah


One question though, do these indicators hold true for the forex markets aswell? Also is it wise to only swing trade a specific type of share, like FTSE100 companies + forex + indicies, otherwise the spreads get too big?

For instance BKIR the spread is 1.41-1.43 for example, would that be too big?

I use 50,200 SMA on weekly chart,and 10 SMA,30 EMA on daily.But i dont base my entry/exits points on them a lot.Iam more of the candlestick pattern guy.With combinations candlesticks+day's volume vs 90 days avg volume and support/resistance levels,thats how i pick my entry/exits points.So far worked for me.I also plot MACD and RSI on my charts but i never enter/exit the trade just base on one of those 2 indicators.I found fibonacci retracement works really good for me ton your Q. about spread between ask/bid,i would say the tider the better in case if you enter the trade and market moved vs you and u wanna get out quick w/o lossing to much money.Sorry for bad gramma,eng.not my native lang.

 

[safvan]

All indicators show you what price of an instrument has done in the past. If it moves up, the indicator shows and upward slope and if it moves down the indicator line shows down. It does not show you what is happening right now.

Quit using indicators. Quit using indicators. Quit using indicators.

With indicators you EXPECT that market to move in a certain way however market moves in its own way. The price you see if front of you is the reality. When you stop expecting from the market and start acting WITH the market then you eliminate most of your chance of having a loss.

In order to make consistent BIG money in the stock market, you need

1. Price
2. Volume for the day and average volume per day.
3. An established upward or downward trend.
4. A very very strong emotional control to ride the fluctuations in the price as long as the trend is intact.

That is it. That is it.

 

[Tradekingfox]

All indicators show you what price of an instrument has done in the past. If it moves up, the indicator shows and upward slope and if it moves down the indicator line shows down. It does not show you what is happening right now.

Quit using indicators. Quit using indicators. Quit using indicators.

With indicators you EXPECT that market to move in a certain way however market moves in its own way. The price you see if front of you is the reality. When you stop expecting from the market and start acting WITH the market then you eliminate most of your chance of having a loss.

In order to make consistent BIG money in the stock market, you need

1. Price
2. Volume for the day and average volume per day.
3. An established upward or downward trend.
4. A very very strong emotional control to ride the fluctuations in the price as long as the trend is intact.

That is it. That is it.

Disagree about 4th one.Emotions got no room for trading if you wanna succeed in the long run.

 

[rathcoole_exile]

that's what he said, "emotional control"

 

[safvan]

Disagree about 4th one.Emotions got no room for trading if you wanna succeed in the long run.

If you read carefully I said *as long as the trend is intact*. You can have a 100 plus variations of what you *define* as a continuation in trend.

Its not the method itself that kills but the ability to consistently follow it.

For example many traders sell early and not follow their exit rule and ruin their chances of getting a lot extra and on the other hand many traders do not sell and not follow their exit rule in the hope to recover from losses.

Follow your rules without emotions. It requires a lot of emotional *control* to trade without emotions.

Live free die well.

 

[safvan]

I highly recommend reading the articles and videos posted on this blog. You have to scroll through OLD entries to get more quality material. This is HOW trading should be done and that is how BIG money is consistently made in the markets.

http://stockbee.blogspot.com

Swing trading or position trading or trend trading or breakout trading are all the same patterns with different words. Once you develop a procedure on how you look at charts, you would not need indicators or other fancy stuff to back up anything.

Live free die well.

 

[orangetrader]

Have been trading full-time for 6 mths now , so not qualified to call myself a pro but i have learnt a few lessons. One of the keys one was to stop relying on indicators such as stoch, macd etc... I still use them as a secondary confirming/questioning tool but I find that price action & volume are by far the most reliable form of direction & timing