My primitive simple approach to intra day trading the FTSE

Richard-ftse

Junior member
11 0
I just wanted to post my approach to trading the FTSE 100 index and hopefully it can provoke and guide your thought process.

it's a mix of approach and rules. Take from it what you will.

The biggest highlight I will make is risk/money management.
Always be disciplined and have enough to trade another day.

I only ever risk 6% on a trade. i.e.
£4000 account my stop loss will be set at a max loss of £240 then you can work out how much to put on a per point after that process.
A clear idea of trend for the day ahead is key.
This can be decided by zooming out to Daily, 4H, 1H and 30min charts.
Your lookinging for a correlation between them to indicate they are all trending in the same direction.
This is not always the case however, if they are your risk is lowered by probability of the trend continuing but this is not guarenteed.
A 200 day SMA(simple moving average) Indicaor will also give you a good indiaction of trend direction sloping up or down and with the candles trading above = Bullish/Below=Bearish
Now you have recognised whether you think the bulls(buyers) or the bears(sellers) are in charge you need to find and entry and exit. (You can research S+R for yourselves on here and google it for an in depth understanding)
Why are S+R important for entry and exit?
Because this is where the majority of buyers and sellers will be looking to get into the market be it retail traders or institutions.
The higher the time frame the more prominenet the S + R seem to be.
Just look at weekly timeframe on FTSE chart and plot some S+R trend lines to see an example of this.
Intra day I would look at 4H and daily to correlate for higher probablity.
Your looking for clusters of S+R. Horizontally and Oblique/diagonal for better confirmation.
This gives less trades but will be less risky as the S+R will not likey break.

Once entered into the trade your exit would of been determind already which would be dependent on your direction and will be the next S+R point relevent to the timeframe you are trading. i.e. 30 min chart for intraday trading some trade on 5/10/15 min but thats if you are staring at your screen all day.
Try to correlate the exit S+R with 4h timeframe or higher.

Never move your stoploss unless you move it to break even or to lock in profits.
Always let your winners run to target. Just manally trail your stop loss once you are in profit 10-15 points or more. You can always close half your trade to lock in profits too.

This is a very basic approach but hopefully it will be insightful to some.:)

Happy to answer any questions that the above doesnt cover.
 
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drtro

Active member
216 21
I don't think risk management should ever be x amount of the principal or capital in your account. It should be what the market is willing to give or take. You're buying a stock at $60. Why put your stop at $54 to risk 10% when you know if it breaks the $58 support, it's no longer going to follow what your initial strategy planned for the stock to do. I see many people setting stops lower than they should realistically be because it's x% of their position. Just wasted money thrown away on your losses and lack of market awareness.
 
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Richard-ftse

Junior member
11 0
I don't think risk management should ever be x amount of the principal or capital in your account. It should be what the market is willing to give or take. You're buying a stock at $60. Why put your stop at $54 to risk 10% when you know if it breaks the $58 support, it's no longer going to follow what your initial strategy planned for the stock to do. I see many people setting stops lower than they should realistically be because it's x% of their position. Just wasted money thrown away on your losses and lack of market awareness.
Good observation however, 6% is the MAXIMUM I risk on any one trade and not the amount you HAVE to risk.
I never mentioned placing the stop at precisely 6% below entry.
You mention risking 10% but that would never happen with my risk managment as I only ever risk 6%
 
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