My first post.

[limey]

Hello everyone
I want to start by saying thanks to everyone for so many informative posts,I am a spread betting virgin and have found them very helpful, and there is a drink at the virtual bar for you all.(Thats the crawling bit out of the way as I am new here).
But seriously it's going to be a bit easier to start spread betting being here with you all.
I have done a bit of commodity options trading in the past mainly physicals,but because there were only about 20 or so markets a lot of the time I was out of the market.

I have switched my attention to US stocks and Download end of day data into Metastock,that screens about a thousand stocks for me and out of that I will get about 20 or so to look at manually on the charts.

I have been paper trading some of these with promising results,but there is some thing I cannot get my head round at the moment which is stop placement.
I have been using resistance or support levels for my stop placement,but have noticed with spread betting they decide for you a minimum distance for your stop.

Some can be 10% and more away from your entry which means my bet size has to be small if I want to practice tight money management,am I right in this or am I barking up the wrong tree,don't forget I am a newbie.

Thanks for your help

 

[rossored]

Hi Limey, and welcome to the boards.

It depends on the SB company a lot of the time. Sometimes the default stop will be a certain percentage away from your entry point, but it is usually the case that you can move the stop after you have opened a position. A lot of SB companies will not let you have a really tight stop - sometimes they will specifiy a minimum of "xx" points for example.

However, if, at the end of the day, the stop is too far away from your entry point and cannot be moved - find another broker. There's no shortage of them.

PS - where is this "virtual bar"?? Not heard of that one...

 

[RUDEBOY]

Try calling them on the phone( if you already don't) to move the stop, but if the markets bouncing around alot they can't really give you a tight stop.

 

[Roberto]

Welcome, Limey.

I completely agree with Rossored. This varies a lot from one SB firm to another. IMHO it's important to use a SB firm that allows stops as tight as you want them for your trading.

A word about stops, for spread-betting (and with apologies if it's not relevant to your situation): I think that many traders have a "fixed number" in mind for their stop for a specific instrument, without relating it to volatility at all, but I think this is usually a mistake. Close to "round numbers" (like hundreds and fifties) is another common place for stops. Also just beyond recent swing high/lows, trend lines and support/resistance levels. The thing to be aware of is that many traders look at the same charts and place their stops in the same areas.

Call me paranoid, but I think that when a lot of money pools up in one small region, such as just below former support or just above former resistance, it's always possible that someone big will come and take it. I don't mean your SB firm, of course. That won't happen. Your stop can easily be someone else's take-profit limit, and anyway in practical terms they certainly don't have either the incentive or the ability to do that. But it's easy for small players like you and me to imagine that their stops are being deliberately "hunted" by brokers and dealers and banks. I've learned much on this subject from reading books by Joe Ross, and everything I've learned that way has been borne out by my own experiences

I suggest, above all, that your stop should not be some arbitrary number. This thinking of "I want to make 60 pips, so I'll set my stop at 30 pips" is not helpful. R/R ratios are perhaps more important to some traders than others, but I want my stop to be where the price would tell me that my analysis of my trade was wrong, or that my signal was most probably false. So, when I think the price is rising I look for a place on the charts below which a price drop means to me that the price has really fallen instead of risen (rather than being "just noise" or "just a quick correction").

 

[limey]

Thanks Rossored I will have to do some surfing to find out more about minimum stop distances of the various firms,also reading some of the threads here it looks like there are quite a few differences between the firms and each trader will have to identify which aspect is more important to him/her.
As for the virtual bar........do you know what I must have had one too many and can't remember, oh well perhaps it's just as well considering the amount of people here it would have cost a small fortune to get a round in.

Point taken RUDEBOY, what I forgot to mention was it is the initial stop when I go in that I want quite tight,once in the stop will have to be far enough away for trade to breath.

Thanks for that Roberto I don't think you are paranoid about the big boys taking out stops,I saw it happen a lot in the commodity markets,but do not know enough about SB
It is interesting when looking at resistance or support levels and you often see a certain price that keeps cropping up be it an open high low or close.It is nice to see prices retreat from a level that you thought would be resistance and often you can get your stop nice and tight .

Good point about round numbers It is a good idea to place your stop just a little further away from the crowd,at least that way they get hit before you.As you said stops are a good way of telling if you are right a market.
Cheers

 

[Tileman]

Hi Limey,
If you are scanning 1000 US stocks you will probably find that alot of those will not be covered by spread betters.Why spread betting for US stocks the spreads are to big imho why not try interactive brokers to keep your dealing costs down and no trouble placing tight stops.

 

[CityTrader]

PS - where is this "virtual bar"?? Not heard of that one...

Sorry to cost you some serious money Limey- but The Virtual bar is in Illetes, Mallorca - (think they also have a place in Palma ) It's a beach bar, restuarant and club. Drinks aren;t cheap, but you do get the most amazing views over the sea and coast line. Look forward to that drink. ..

 

[CityTrader]

http://www.virtualclub.es/home.html

 

[limey]

Thank's Tileman
I have been trying to write my system into metastock and finally done it,and wanted all the stocks I could find so I could do some extensive searches to see if it worked.
Thanks for the bit about interactive brokers,I do not know anything about them so will do some searches.
Cheers.

 

[limey]

I think it's 1-0 to you Citytrader,
doesn't it look lovely but surely you don't expect me to fly you all there as well?!!