Newbie dilemma

[dimsdaletraders]

I'd love some opinions on this.

I trade the FTSE end-of-day, daily cash rolling, and as of close of play on Friday I have two trades that are both now into the 20-30 pips profit zone. My question is this...

I've seen it said over and over, cut your losses, but let your profits run.

I had already moved up my stops to lock in a few pips profit the previous day, so there's no danger of them turning back into losses, but obviously if they fall to those stops on Monday, then I'm back down to 3 or 4 pips profit instead of 20/30. But if I move the stops up to lock in the 20 pips (on one) and the 30 (on the other), then I'll probably get stopped out just on daily variation.

My stakes are too small to be able to take half and let half run. I appreciate that I have to decide this for myself, and that's what I'll do, but as a newbie of just six weeks' experience, I'd love to at least hear what other people think, before I make that decision!

cheers
Tess

 

[Shanghai]

Yes a very common dilema. I don't wish to be too harsh but at present the signs are that you are going to fail as a trader. Before you enter any trade you should know what your criteria are for getting into a trade, when to scratch that trade if it is not working and importantly what is your profit target and why. Trying to decide these things once you are in a trade is not good because then your emotions come into play. Experienced traders may revise their trade plans to reflect the changing market conditions but you're not at that stage yet. I think you need to define your strategy in a little more detail.

For your trade what were the reasons you entered it and what were your profit expectations? Have things changed since then?

Incidently the market is very choppy at the moment so I am tending to take profits a litle quicker than I usually would.

 

[dimsdaletraders]

thankyou, Shanghai, and no worries about the "being harsh" part, I'm just glad of the advice!

My reasons for entering both trades were that they were in a smooth phase1/phase 2 movement, higher highs, higher lows, etc, convergence with the MADC and stochastic, plus some FA of the two companies etc, to make sure there were no immediate reasons to stay clear, and then I entered them at the turning points at the end of phase 2, when they hit the 50 EMA that they had previously gotten support from. Sure enough, they both turned around and now have made new "higher highs", which obviously I'm very pleased about.

As far as my stop-losses go, and quickly getting out of trades that don't work, I think I'm getting that part pretty much right, but my profit expectations are still obviously FAR too woolly, based on your reply!

I guess it was some half-baked idea that I wanted to stay in the trade until they reached the top of the new bounce...and it's only now occurred to me that I have no way of knowing where that is apart from depending on a trendline! And now I'm looking at them, and at the pips I could take, and thinking "take the money and run!"...

*g* guess this is why I'm only trading with a little pot, and being strict about never risking more than 1% on any single trade...so if I stuff it up I can learn from it and still stay in the game.

Okay, I'm going to go back to the journal entries I made when I set the trades, and see if I can recall what my profit expectations were at the time, then make my decisions based on that. From the charts, my immediate analysis seems to suggest that one of them is about done, and the other still has some legs left in it, and that's supported by the buy/sell figs for Friday, so maybe that's the answer I've been looking for.

Thanks very much for your time, and esp. the reminder about the choppy market.
Tess

 

[Shanghai]

Good reply. You seem to be on the right track. Profit taking is one of the most neglected areas by some traders but one of the most important. There must be ten times the amount of literature giving advice as to when to enter trades as opposed to exiting them.

One thing that may be of benefit is to set yourself a reminder a few days after you close each trade and to go back and review your exit. Did you exit at a sensible point or would your profits have increased by letting them run? After you have reviewed a few trades you should be able to see whether you need to be revising your exit strategy or whether you have got it right.

I like to scale out of trades, so I sell a core position at a pre defined target and let a smaller position run. In that way I give myself a chance to run with a longer move without the emotional pressure of having all my position still open

 

[Shanghai]

I guess it was some half-baked idea that I wanted to stay in the trade until they reached the top of the new bounce...and it's only now occurred to me that I have no way of knowing where that is apart from depending on a trendline!

If you are looking at trading swings like that then have a look at adding Keltner Channels to your charts. I find that they can give more objective profit targets.

 

[Black Swan]

I'd love some opinions on this.

I trade the FTSE end-of-day, daily cash rolling, and as of close of play on Friday I have two trades that are both now into the 20-30 pips profit zone. My question is this...

I've seen it said over and over, cut your losses, but let your profits run.

I had already moved up my stops to lock in a few pips profit the previous day, so there's no danger of them turning back into losses, but obviously if they fall to those stops on Monday, then I'm back down to 3 or 4 pips profit instead of 20/30. But if I move the stops up to lock in the 20 pips (on one) and the 30 (on the other), then I'll probably get stopped out just on daily variation.

My stakes are too small to be able to take half and let half run. I appreciate that I have to decide this for myself, and that's what I'll do, but as a newbie of just six weeks' experience, I'd love to at least hear what other people think, before I make that decision!

cheers
Tess

I'm not going to offer you advice, however, you may learn a lesson when the SB 'market' opens...

 

[Claudia123]

I would have taken the 20/30 pips rather than worry about what's gonna happen Monday morning. As Black Swan implies the opening of the SB 'market' could be a lesson for you.

 

[dimsdaletraders]

Thanks a lot for the further advice and the kind words, Shanghai. I went away and found out what Keltner Bands were, and how best to interpret them, and then figured out how to overlay them on my charts, and if I've understood them corectly, then they are signalling to close the trade, so I've set my orders that way, and hopefully won't get crushed in the gap.

Black Swan and Claudia, thanks a lot for responding. LOL, well after those warnings, I'm waiting eagerly now to see what happens Monday morning, if only to try to figure out what it is you're warning me against! I'm guessing (and I appreciate it's only a guess), that you're expecting them to open way below Friday's closing prices, and for my lil profits to just disappear in the gap?

It'll be a shame, but I guess at these prices it will still be a cheap lesson, and a mistake I won't make again (I hope!) I have a very small stake on them both (1%), at least, trying to follow the idea that for the first six months or so the aim is just to stay in the game while you learn the ropes.

I'll post here again once Monday starts, if that's okay, with my best theory as to what you're warning me about once I've actually had the "lesson"! (It would be great if one of you could tell me if I'm right!) I've written all this advice up in my journal, so at least I won't forget it, no matter how it pans out.

regards to all, keep on truckin!
Tess

 

[Black Swan]

the SB gap could go in your favour, it could go against you, I couldn't/wouldn't possibly predict the direction and by how much...
P.S. I don't do indices, but have had many pleasant surprises with forex openings if I stayed with the direction I was in before the market closed

 

[tomorton]

I cancel my SB stops on positions held overnight, re-instate them when things calm down after the first half-hour or so. Have been shaken out by SB chart volatilility (not volatility in the underlying) so many times. Needless to say, these are not carelessly large positions. I also cancel SB limit orders overnight for same reason - SB quote volatility has got me into several positions that make no sense on the underlying's chart.

 

[dimsdaletraders]

thanks for the added info, tomorton. I'm reading and rereading everything I'm hearing here, and very grateful for everyone's time.

I was wondering...does your advice apply regardless of whether I'm using "market" rates or the "our quote" rates from my broker? (I think I should have probably added somewhere in all the previous info that I trade with direct market prices not with MFG's "our quote" system...I was told this was the better option if I'm using direct price action to determine my trades.)

FWIW, I'm really not trying to just pick everyone's brains for free after they've spent all this time finding their own edge, or just too lazy to do my own research, I really am working my n*ts off here too, I promise! It's just that so early in the learning curve, I could fill a library with what I don't know!

thanks again for all the help...
Tess

 

[Claudia123]

Tess - get off FTSE and into Forex its way more fun (IMO)

 

[tomorton]

Tess - I only use SB (or actual share ownership) to participate in the market, no DMA. I would be surprised if even DMA cushioned you from excessive violatility at the open which is otherwise meaningless but I am happy to be corrected by others who are DMA-users.

Beware of charts that only portray the mid-price between bid and offer. This can look like a perfectly flat line, whereas the broker could have opened up the spread betwen bid and offer to whatever he thought would cover hs risk, restoring the spread after action has died down.

 

[dimsdaletraders]

Black Swan: I bet ya could! But seriously, thankyou for the time, and I take the message onboard completely...(well, I hope I do, maybe you were saying something completely different! AARRGGHH!!)

Claudia: I can't wait! *grins* It is DEFINITELY in my mid-term trading plan to move into Forex, as I've heard other folks say the same thing, and that it's more profitable too? At the moment my plan says to open a Forex intraday demo account in March, and see if I can learn that, at the moment I know almost nothing about it, tho I'm reading everything I can find.

Tomorton: thanks for the warning. And yes, absolutely, the volatility early morning is still right there, DMA or otherwise, so I'm going to add your suggestion/advice to my toolbox list too, and test both methods. You're a gem, thankyou!

I use ADVFN for my charts, rather than the service from my broker, as it was the cheapest of the options recommended by TU. (yeah, yeah, I know...there was 2.5K that I coulda had in my trading a/c instead, huh? *g*) The dearer option was eSignal, but for now I'm pretty happy with ADVFN, tho they don't seem to offer Fibonacci on their entry-level deal. But they give me good live feed all day, at least...

*heading off to update my notes and journal with all this feedback!*

 

[Black Swan]

I cancel my SB stops on positions held overnight, re-instate them when things calm down after the first half-hour or so. Have been shaken out by SB chart volatilility (not volatility in the underlying) so many times. Needless to say, these are not carelessly large positions. I also cancel SB limit orders overnight for same reason - SB quote volatility has got me into several positions that make no sense on the underlying's chart.

Tom, that's only on FTSE, or other indice trades, right?

 

[Black Swan]

Black Swan: I bet ya could! But seriously, thankyou for the time, and I take the message onboard completely...(well, I hope I do, maybe you were saying something completely different! AARRGGHH!!)

Claudia: I can't wait! *grins* It is DEFINITELY in my mid-term trading plan to move into Forex, as I've heard other folks say the same thing, and that it's more profitable too? At the moment my plan says to open a Forex intraday demo account in March, and see if I can learn that, at the moment I know almost nothing about it, tho I'm reading everything I can find.

Tomorton: thanks for the warning. And yes, absolutely, the volatility early morning is still right there, DMA or otherwise, so I'm going to add your suggestion/advice to my toolbox list too, and test both methods. You're a gem, thankyou!

I use ADVFN for my charts, rather than the service from my broker, as it was the cheapest of the options recommended by TU. (yeah, yeah, I know...there was 2.5K that I coulda had in my trading a/c instead, huh? *g*) The dearer option was eSignal, but for now I'm pretty happy with ADVFN, tho they don't seem to offer Fibonacci on their entry-level deal. But they give me good live feed all day, at least...

*heading off to update my notes and journal with all this feedback!*

TBH, it appears that you're learning well (and quickly) for 6 weeks...do you put any of that down to this TU firm you mention?

 

[tomorton]

Tom, that's only on FTSE, or other indice trades, right?

Definitely index trades, but also equities, though I only trade FTSE350 stuff and keep aware of results dates of any holdings to lessen the shocks to the portfolio. I would find it economical to exit a position the day before results are due, merely because results are due. Ever since I saw (not holding) J. Laing a few years ago fall 49% overnight on results.

 

[alan5616]

Tess - get off FTSE and into Forex its way more fun (IMO)

I would partly endorse Claudia's comment. However, if you don't feel that you're ready to migrate to trading forex, I would suggest that you consider one of the other indices.

The FTSE is a difficult and erratic market due to the effect of share price changes in 4-5 large cap companies. You might consider trading the Dax and/or Dow which don't get pulled around so much by a handful of large caps. If you want to trade a market, with good price action and fast profit potential, then the emini Russell 2000 is a good choice.

 

[dimsdaletraders]

okay, here's how it all shook out.

Traders University (TU; Knowledge to Action) emailed me a couple of months ago, and my partner and I went off to a free presentation, in Birmingham, where they tried to sell us all a dream. At that point my partner's previously successful business as an IFA of close to 20 years' standing, was going under thanks to the capital adequacy sh*t and the indemnity cover payments the FSA were laying on him, at 61 years old. (I'm 48).

The FSA were all over him like stink on fish, asking for more and more capital from a tiny firm of 3 honest, hard-working people, while the big boys (Lloyds, RBS, Northern Rock, et al) were doing whatever they wanted.

I'm an editor for The Economist (no, not THE Editor, just a lowly lower-case editor thst puts words on the page!) so we've both been around finance/economics for many years, but never as traders.

So. Off we went to the Birmingham seminar. And yes. We were impressed. We knew they were trying to sell us a dream, but at the same time, the basic info they were giving seemed pretty sound.

So we discussed it, we decided that of the two of us I was the one that was enthused, even though he was the one that was paying the fees, and off I went to London to do their weekend course, at a cost of approx £2,400.

Was it worth it? Yes and no. If it hadn't been for that course, I would never have even heard of trading. Is the same info they gave me out there on the net, for free? Yes, it is, pretty much. But would I have found it, or understood it, without that training? I doubt it...

Anyway, here we are, six weeks later. I've been trading, with mixed sucess, since that weekend. EVERY single person that I swapped details with on that "immersion" weekend course has already dropped out. But I'm hooked. This is the most exciting thing I've done since the boy-scout dance when I was 13. And I'm a grafter. And I WILL make this work. Whatever it takes. Because he deserves it.

keep on truckin...
Tess

 

[Black Swan]

okay, here's how it all shook out.

Traders University (TU; Knowledge to Action) emailed me a couple of months ago, and my partner and I went off to a free presentation, in Birmingham, where they tried to sell us all a dream. At that point my partner's previously successful business as an IFA of close to 20 years' standing, was going under thanks to the capital adequacy sh*t and the indemnity cover payments the FSA were laying on him, at 61 years old. (I'm 48).

The FSA were all over him like stink on fish, asking for more and more capital from a tiny firm of 3 honest, hard-working people, while the big boys (Lloyds, RBS, Northern Rock, et al) were doing whatever they wanted.

I'm an editor for The Economist (no, not THE Editor, just a lowly lower-case editor thst puts words on the page!) so we've both been around finance/economics for many years, but never as traders.

So. Off we went to the Birmingham seminar. And yes. We were impressed. We knew they were trying to sell us a dream, but at the same time, the basic info they were giving seemed pretty sound.

So we discussed it, we decided that of the two of us I was the one that was enthused, even though he was the one that was paying the fees, and off I went to London to do their weekend course, at a cost of approx £2,400.

Was it worth it? Yes and no. If it hadn't been for that course, I would never have even heard of trading. Is the same info they gave me out there on the net, for free? Yes, it is, pretty much. But would I have found it, or understood it, without that training? I doubt it...

Anyway, here we are, six weeks later. I've been trading, with mixed sucess, since that weekend. EVERY single person that I swapped details with on that "immersion" weekend course has already dropped out. But I'm hooked. This is the most exciting thing I've done since the boy-scout dance when I was 13. And I'm a grafter. And I WILL make this work. Whatever it takes. Because he deserves it.

keep on truckin...
Tess

Allright Tess, what decision did you come to re. your positions?