Megamuel's Money Making Journal

[megamuel]

Thanks Tim and Pitbull. I am playing around with 10 and 20 ema's. I'm now trying to make 2 filters on Sharescope that will find stocks with a close above 10 and 20 ema and close below 10 and 20 ema. If anyone knows how to do that on Sharescope Gold it would be much appreciated. I have also added a 4 week change filter to sort these in order of % rise/fall. Remember this is just how I am going to search for potential trades and nothing to do with my entry criteria

Sam.

 

[timsk]

Sam,
I had an account with ShareScope for many years and always found their support staff to be excellent. If you e-mail them what you want, I wouldn't mind betting that they'll produce the code for you and all you'll have to do is load it into your version of SS. They did this for me on more than one occasion and, as I say, they were always very helpful.
Tim.

 

[megamuel]

Hey Timmy! Its ok I sorted it out in the end. So now I have two filters, one to find stocks above 10,20 and 50 day EMA's and one to find stocks below them, and a 4 week % change filter added to both of them to help me find the stronger trending stocks. Hopefully this will help me find some good trenders, now I just have to figure out how to trade them! I'm thinking of going down to 15 min charts for more precise entries. Would I be correct in thinking that a 340 EMA on a 15 min chart would be the equivalent of a 10 day EMA? Going to have a play around with some ideas anyway, any thought are welcome

Sam.

 

[timsk]

Hey Timmy! Its ok I sorted it out in the end. So now I have two filters, one to find stocks above 10,20 and 50 day EMA's and one to find stocks below them, and a 4 week % change filter added to both of them to help me find the stronger trending stocks. Hopefully this will help me find some good trenders, now I just have to figure out how to trade them! I'm thinking of going down to 15 min charts for more precise entries. Would I be correct in thinking that a 340 EMA on a 15 min chart would be the equivalent of a 10 day EMA? Going to have a play around with some ideas anyway, any thought are welcome

Sam.

Hi Sam,
I'll probably get this wrong but here goes: based on the U.S. trading day of 6.5 hours, there are 26 periods of 15 minutes each. Therefore a 10 day EMA is going to equal a 260 EMA on a 15 minute chart, (26 x 10), I think!
Tim.

 

[megamuel]

But what about UK trading hours? I only just realised the yanks only have 6.5 trading hours.... Slackers! 8.5 trading hours in UK session right? 8.5 x 4= 34 for 1 day x 10 = 340 for 10 days?

Sam.

 

[timsk]

Sorry Sam - yes, for the U.K. you're spot on by my calculations.
The only issue is whether or not you take into account market movement outside normal trading hours - then it gets more complicated. Perhaps Lee will have a view on this.
Tim.

 

[megamuel]

Progress is a bit slow as I have not been too well. Should be able to spend some more time with this on the weekend. Basically what I am trying to do is find trending stocks and trade them while the trend continues... So I've got the 'find trending stocks' bit - I'll search for stocks above or below 10, 20 and 50 day ema's and then use 4 week % change to sort them. This will help me find the trenders, next I have to trade them while the trend continues. Basically I need to define my entry and exit criteria which is the tricky part... I want to go down to smaller charts, maybe 15 mins, for a more specific entry/exit. I was thinking about again using a moving average on this smaller time frame to help me indicate when the trend is ending. For example, use a 340 ema (representing 10 days) on the 15 min charts. Stay in the trade while the price remains higher than the 340 ema for longs or lower than the 340 ema for shorts. Seems to work well although I don't have much data on my 15 min charts to see its past performance. Could also trail my stop by using the ema.

The only thing thats bugging me at the moment is that I am hearing a lot about only 5% of spread betters actually make money... So my ideas have to be smarter than 95% of all the other people trying to do this, and I strongly doubt whether they are... I'm just not that smart! On the other hand lots of people say - "Keep it simple", can you really succeed with a simple system? I guess the skills come with experience though, so as long as I stay in the game and don't give up, I'll get there one day!

Feel free to post some ideas/motivation! Hope everyone is well,

Sam.

 

[timsk]

Hi Sam,
Sorry to hear you've been poorly - hope you're better now.

Basically what I am trying to do is find trending stocks and trade them while the trend continues... So I've got the 'find trending stocks' bit - I'll search for stocks above or below 10, 20 and 50 day ema's and then use 4 week % change to sort them. This will help me find the trenders, next I have to trade them while the trend continues.

If you're struggling with identifying trending stocks, you might want to look at some different chart types. Attached is a 'Renko' chart with a 'normal' candlestick chart for comparison. It's quite good for painting a picture of basic price movement without the detail and clutter of the candlesticks. Point & Figure charts are a half way house and well worth looking at too, IMO. (ShareScope do very good P&F charts.) Don't forget a good ol' fashioned simple line chart as well. Steve Nison recommends looking at Renko, Kagi and Three Line Break charts to get a feel for price movement. Having done that, he suggests switching to candlesticks to time the entry and exit.

The only thing thats bugging me at the moment is that I am hearing a lot about only 5% of spread betters actually make money... So my ideas have to be smarter than 95% of all the other people trying to do this, and I strongly doubt whether they are... I'm just not that smart! On the other hand lots of people say - "Keep it simple", can you really succeed with a simple system?

Ignore all the chatter about 95% lose spread betting, it's mostly bollox. Well over half of the alleged 95% are mere gamblers who've read something online or seen an ad' in the paper about trading and think they'll make a killing in a week. I know, I was one of 'em once! Of the ones that take it seriously and do some sensible research and take their time, I'd wager the failure rate drops to something in line with 'normal' businesses. Still high, but nothing like 95%. As for keeping it simple, you've no worries on that score. I'm convinced that it's trying to be too clever and doing something that one foolishly imagines no one else has thought of that actually gets one into trouble. Simple is good. As for not being smart enough, you've no worries on that score either. After all, look at Lee, and he's a pro' day trader making a fortune!

Tim.

 

[Rossini]

''The only thing thats bugging me at the moment is that I am hearing a lot about only 5% of spread betters actually make money... So my ideas have to be smarter than 95% of all the other people trying to do this, and I strongly doubt whether they are... I'm just not that smart!''



You don't need to be smarter, you just need to have proper money management, a method that YOU are totally confident and comfortable with, and the discipline and resilience to continue, even through inevitable loosing days.

In my view, this puts you ahead of most from the starting line.

 

[boodi]

and a reliable broker too?
jm2c

 

[megamuel]

Thanks for the support guys! Making some progress with my strategy now , will post some details about it on the weekend.

Just want to say a quick thank you to trader_dante for helping me without knowing it - Monday afternoon I read some posts of his saying that he was anticipating a stock market crash. Although he wasn't making a call or giving advice, it made me think about my positions - I have 3 long positions open. I have had them open for a while and they are all profitable, nothing to do with the strategy I am trying to develop in this thread, just something to keep me interested in the meantime... Anyway, I decided to tighten the stops on these and it also made me think, "Why have I got 3 longs open when the markets are like this and no shorts!". So I decided to enter 2 shorts based on some of the principals I am developing for the strategy in this thread - Segro, and Brixton Estate. Now, I don't know if I just got lucky or something, but I entered these Monday afternoon and just look what happened to these 2 stocks yesterday (Tuesday). 2 of the biggest fallers! So thanks to you tarder_dante, I made more money in one day (when I wasn't even at my computer) than I do in a week of running round at the pub like a tool!

I also learnt that its not really good to trade based on your 'opinion' on the markets... For example, I had it in my mind that the market has seen its lows and is in recovery, whilst trader_dante is expecting a crash. I think its best to be prepared for both eventualities.

Anyway, THANK YOU T_D!!!

Sam.

 

[megamuel]

I've not updated this journal for a while as I have temporarily banned myself from trading! I don't mind spending my money on strippers and alcohol but trading it when I haven't got a strategy is just stupid. I'd be better off giving it to charity! So for now I am still searching for a trading style that suits me and that I feel I can apply effectively. Doing more research into price action and applying trendlines and the like. Progress is slow, feel a bit lost, but I'll get there. Hope everyones trading is going well. All the best,

Sam.

 

[Rossini]

Try one of these??

Forex Trading Strategy Books, Download Free Forex E-Books

 

[megamuel]

Thanks Ross... Checking them all out now

Sam.

 

[Splitlink]

Sam,
I don't want to depress you, but when Lee says "to look at hundreds of charts" - I think that's very conservative. Thousands would be nearer the mark! Both he and Richard are old hands at this; they'll spot what they're looking for in an instant and can flick through charts like they're flicking through a stack of old photos looking out for the particular one they want. So, be prepared for the long haul and, hey, If you get it sussed in a matter of months, then it's icing on the cake!

Tim.

Tim,

If we have to look at thousands of charts, we are admitting that we are looking for a needle in a haystack.

What is more, it means becoming obsessed with the whole business. I scan the FT100 EOD charts most days (but not every day) but I'm blowed if I am going to spend my time going through too many intraday index charts. Neither, once one has learned what he is looking for, do I advise it for others.

Split

 

[timsk]

Hi Split,

Neither, once one has learned what he is looking for, do I advise it for others.

. . . and there in lies the rub.
You might be one of those very rare individuals who learnt to 'read' charts very quickly and found a consistently profitable set up early on in your trading career which you've stuck with ever since. However, I doubt that this is the norm. Most people take a long time to reach this point and, by the time they get there (if they ever do), they've eyeballed many thousands of charts. I am not for one minute suggesting that it is either essential or desirable to spend all day glued to one's screen gazing endlessly at charts. Quite the opposite. That said, sadly this is often what is required if mere mortals like me are to reach the point at which we can easily and quickly spot the set ups we want to trade.
Tim.

 

[Splitlink]

There are so many ideas about what constitutes a successful method of trading that that is, perhaps, the problem with many traders. They are spoiled for choice. However, there is nothing new about what I say. It has been said and repeated so many times by far better traders than me.

Most traders do not give their system a chance to work.

It is a numbers game, based on statistical repetition, cutting losses, running gains.

This has been repeated time and time again on these boards and many would say that that is easier said than done.

However, that is what it is, ie. not about being unable to find a certain pattern, EMA, or what have you, at all. but about the psychological ability to handle those situations when they arise.

Split

 

[Lorenzo di Zenzo]

Hi Sam

I've spent many fruitless months chasing the perfect strategy. Eventually I realised there isn't one. I tried to follow other peoples generously shared strategies, that didn't work either.

What I've ended up with, rather than filtering hundreds of charts, is a number of instruments -- about 20 -- that do well on the set-ups I like to trade. I watch them, put in my orders & stops before market opens and walk away until next day.

It simplifies life, but it took me a long time to figure out what was right for me.

That's another key issue, if you follow someone else's system you are trying to emulate them; and that system almost certainly match your appetite/tolerance for reward/risk, comfort/discomfort.

You are paying for your education, in cash and scrambled emotions. If you have the tenacity to stick with it you will start to find successful trades, and eventually develop the discipline to take them.

The key insight for me was:- stop chasing the perfect set-up, start trading small and well within my tolerance limits. Don't tinker with the system, because that becomes a futile search for the impossible. Any system that gives you a better than 50-50 chance will return a profit if you are disciplined and have good money/risk management as described in excellent detail elsewhere.

Good luck --

L

 

[jonboy123]

yeah about 20 instruments is a decent size figure.
Countless books say, pick a small amount of instruments/markets/stocks and focus on them.

Lorenzo: are you buying shares with market or limit orders? So you are putting in your orders when the market is closed?

Good points made lorenzo.

Man, i have not much of a system at the moment. Im winging it. Trade by trade.

 

[Lorenzo di Zenzo]

jonboy
Limit orders to enter and exit, stop orders to cover. I trade US, and place orders outside market hours.
For me, it's the only way I can remove emotion from each trade. I know my entry and exit points -- I can focus on placing the trades correctly (ever bought when you meant to sell?) without the pressure of changing market data.