newbie question - medium term trading strategy

[androoo]

I realise this is not the newbie forum; however this question is specifically related to spreads and cfds.
I've read through articles and searched the forums but unfortunately i still can't figure this one out.

If i believe that a stock or market is going to go down in the medium term (like in 30 days time); but in the short term will fluctuate on daily basis, what is the best type of trading strategy should i use?

My understanding is that a simple spread bet won't work for me because the stock could go up by a number of points in the short term and this could then trigger my stop losses, closing out the trade, even though on my target date i still expect the stock to be lower.

I'm sorry if this is a really silly question but - is there a way to manage risk via some sort of guaranteed stop loss but have it only trigger at a certain date.

E.g. If i think stock X will be 100 points lower in exactly 30 days; but, i believe might fluctuate widely higher and lower in the short term by like 10 points - i want to put a gslo if the stock 10 points off of my target in 30 days time, but i dont care what it does in the mean time and don't want stop losses to trigger before the 30 days is up?

Is anything like this possible or am i missing something here?

Thanks

 

[timsk]

. . . I'm sorry if this is a really silly question but - is there a way to manage risk via some sort of guaranteed stop loss but have it only trigger at a certain date.

Hi androoo,
Welcome to T2W.

I think this is a case of wanting to have your cake and eat it!


If you have a guaranteed stop loss in place, it's triggered when it's triggered - or not - as the case maybe. You broker - charming, helpful and friendly though they undoubtedly are - won't send you a nice e-mail saying "Hi androoo, your gsl was hit today but, hey, because we're nice, we won't execute it yet. Let's wait and see if your trade goes into profit in the next few weeks or so and, if it doesn't and the trade is offside by 100 points, we'll only debit your account by the 10 points the gsl is set at." If you find a broker that offers that service - please let us know!

In a nutshell, if you're not prepared to take the loss (because you're convinced the trade will become profitable eventually), you have three options available to you:
1. Have no stop loss at all of any kind.
2. Have a very wide 'emergency stop', which you don't ever expect to get hit but, if it is, will prevent you from blowing your account.
3. Some sort of hedging strategy, so that you're not spooked by the short term gyrations of the market before it eventually moves in the direction you expect it to go.

There may be other options, but those are the main ones that spring to mind. Thinking about it, a 4th option is to wait until there's clear evidence that price has finished chopping about and is making its move - and only then enter the trade.

Your basic conundrum is one faced by almost all traders, regardless of the market or timeframe they trade. I'm afraid there are no easy solutions that I know of.
Tim.

 

[androoo]

Thanks for the comprehensive answer Timsk; i guess i am trying to have my cake and eat it here

The options you've outlined all make sense.

Cheers

 

[gle101]

I realise this is not the newbie forum; however this question is specifically related to spreads and cfds.
I've read through articles and searched the forums but unfortunately i still can't figure this one out.

If i believe that a stock or market is going to go down in the medium term (like in 30 days time); but in the short term will fluctuate on daily basis, what is the best type of trading strategy should i use?

My understanding is that a simple spread bet won't work for me because the stock could go up by a number of points in the short term and this could then trigger my stop losses, closing out the trade, even though on my target date i still expect the stock to be lower.

I'm sorry if this is a really silly question but - is there a way to manage risk via some sort of guaranteed stop loss but have it only trigger at a certain date.

E.g. If i think stock X will be 100 points lower in exactly 30 days; but, i believe might fluctuate widely higher and lower in the short term by like 10 points - i want to put a gslo if the stock 10 points off of my target in 30 days time, but i dont care what it does in the mean time and don't want stop losses to trigger before the 30 days is up?

Is anything like this possible or am i missing something here?

Thanks

Yes it is possible to have a position being closed if certain conditions are triggered. Though the MT5 and MT5 platform you can use scripts and EA's that will automaticly carry out this task. However, not many brokers offer stocks on this platform. Also have a look at Cityindex AT Pro platform that offers automatic algos trading possibilities.

 

[Hate2Lose]

I realise this is not the newbie forum; however this question is specifically related to spreads and cfds.
I've read through articles and searched the forums but unfortunately i still can't figure this one out.

If i believe that a stock or market is going to go down in the medium term (like in 30 days time); but in the short term will fluctuate on daily basis, what is the best type of trading strategy should i use?

My understanding is that a simple spread bet won't work for me because the stock could go up by a number of points in the short term and this could then trigger my stop losses, closing out the trade, even though on my target date i still expect the stock to be lower.

I'm sorry if this is a really silly question but - is there a way to manage risk via some sort of guaranteed stop loss but have it only trigger at a certain date.

E.g. If i think stock X will be 100 points lower in exactly 30 days; but, i believe might fluctuate widely higher and lower in the short term by like 10 points - i want to put a gslo if the stock 10 points off of my target in 30 days time, but i dont care what it does in the mean time and don't want stop losses to trigger before the 30 days is up?

Is anything like this possible or am i missing something here?

Thanks

Trade without a stop loss seems to be your best option. Do a smaller stake than you normally until you get to grips with it all