Please help a newbie develop a plan!

[Paul Wilson]

Hello.

Ok I am very new to the whole trading thing and am looking for a bit of advice. I would be very grateful for some feedback.

I need some advice on developing a "simple" trading plan. I have a dabble in spreadbetting a while ago. I made a bit of money, then stopped as soon as I realised I knew absolutely nothing about the markets.

Since then I have being doing my homework and learning as much as I can. I have been frequenting these boards for some months now too.

Anyway, question time...

1. Could anybody recommend a market(s) to "learn" on? I'm kinda after something that is easier to spot the trends and isn't going to murder me if I get anything wrong.

2. What is the best time scale to trade for a beginner? I have internet access early mornings and evenings mostly after 6pm. So I cannot devote all day every day for monitoring individual trades.

3. Erm can't think of anymore specific questions at the mo...


Basically I am a beginner, with little or no experience of the "live" markets. I have read plenty of books, checked loads of websites(I like it here tho), and am having an information overload.

I am not going to risk a single penny on the markets until I develop(or someone helps me develop?) a simple system that I can paper trade for at least 3 months and makes a profit.


I'm not after anybodys secret trading strategies here. Just advice on where exactly to start properly. There is a lot going on in this game and it is very overwhelming.


If anyone can point me in the right direction I would be eternally grateful. Also if anyone has any questions or would like to elaborate on the anything in this post please ask.


Thanks - Paul.

 

[timsk]

1. Could anybody recommend a market(s) to "learn" on? I'm kinda after something that is easier to spot the trends and isn't going to murder me if I get anything wrong.
2. What is the best time scale to trade for a beginner? I have internet access early mornings and evenings mostly after 6pm. So I cannot devote all day every day for monitoring individual trades.

Hi Paul - welcome to T2W.
1. There's no such thing as an easy market as such; if there was, everyone would trade it and then it wouldn't be easy any more. However, many traders have markets that suit them better than others and maintain that their style of trading is easier in one type of market as opposed to another. For example, if you day trade futures with one or two set ups, then you may - potentially - have many hours or days even without taking a trade. This would drive some people nuts. To get around the problem, they may trade equities which have a far larger universe of instruments to choose from. Does this mean that equities are easier to learn on? Afraid not, although I've often read advice from experienced traders who recommend that newbies don't try and cut their teeth in the futures markets.
2. Timescale is also down to personal choice and, as with your first question, there isn't a timescale that is easier to trade than any other. Again, you will often read advice to the effect that it is very hard for new and inexperienced traders to remain calm and dispassionate in the often fast and furious world of day trading. Trading end of day (E.o.D.) allows one more time to assess the situation and trade in a more relaxed fashion. On the other hand, all trading involves risk and the longer you are in the market the greater amount of risk you are exposed to. Horses for courses.

Now you're completely confused, no doubt! Click on the icon beneath my name which will link you to the 'First Steps' section of the Knowledge Lab. There you will find a 'Trading Plan Template' which may provide a few useful pointers.
Good luck.
Tim.

 

[Paul Wilson]

Thanks for your speedy reply timsk.

I thought i'd read through a lot of the posts, seems I missed the whole first steps section!

I'm going to steal a plan from off here once i've had another good look about, then hopefully get some feedback on when and where to use it.

There is just so much to learn. The problem with the internet is working out what info is actually useful and what is crap.

It seems every other day I get an email from a "market insider" or an "experienced city trader" that want to charge 4 grand for there magic trading system. I'd rather take the time and put the effort in to figure something out myself.

Thanks for your reply anyway!

 

[dbphoenix]

The first link below my name should be of help. If so, give the second link a shot.

Db

 

[Paul Wilson]

Anyone got any experiences with Darvas's method? It looks like it might be interesting?

 

[counter_violent]

Anyone got any experiences with Darvas's method? It looks like it might be interesting?

http://www.gerryco.com/tech/darvas.html

http://www.protradermedia.com/movies/darvasboxes.html

 

[pssonice]

regarding the last 12 month u could enter the major market for 6 times

+ take a look at the daily volume to verify this.
+ the right instrument for u is the one which is paying a high divividend to their shareholders
+ is it a marketleader like schlumberger adidas caterpillar EON ?

that s all u ve to do.

right now is the worst time to buy shares

P.S. : take a look at www.marketvolume.com. they offer a trial period and daily entries a absolutely fair prices. they r offering their services at a monthly fee. right now they r buying puts in QQQQ.

 

[Paul Wilson]

dbphoenix, counter_violent and pssonice - thanks for the replys.

I checked all the links mentioned, so thanks for the info.

I've got the Darvas book on order as well as William O'neils. I think these are going to form my starting blocks.

I have a question on software...

I know sharescope comes highly recommended by many people. Would this program alone be sufficient for my first steps? I'm thinking the pro edition as at the moment I really don't see the need to have real time data.

Also would this be good enough to back test any strats I want to try?


Thanks for your help.



And remember i'm a noob.

 

[Paul Wilson]

BTW

pssonice.

In your reply header you say that over the last 12 months you can enter the market 6 times?

Could you elaborate on this for me please?

 

[Paul Wilson]

Oh and below my name there is a French flag.

Not to offend anyone(French) but I need to change to the good ol Union Jack. Any pointers?

 

[timsk]

I have a question on software...
I know sharescope comes highly recommended by many people. Would this program alone be sufficient for my first steps? I'm thinking the pro edition as at the moment I really don't see the need to have real time data.

Paul,
The answer to your question depends entirely upon the direction in which you are taking your 'first steps'. Sharescope comes in 3 sizes: Gold, Plus and Pro. You appear to be opting for the top of the range in electing for the 'Pro' edition, although I'm confused by your comment that you don't have a need for real time data. This is, I believe, is what distinguishes 'Pro' from its siblings. Nothing wrong with Pro', although it may have more than you need or, possibly, not quite enough. If you're wanting to swing trade U.K. equities E.o.D., then the basic 'Gold' version will more than suffice. If you want access to the U.K. equity markets AND the U.S. ones E.o.D., then 'Plus' will suffice. The tag 'Pro' to the Pro version is, IMO, a bit of a marketing con. Don't get me wrong, I'm a fan of Sharescope (I subscribe to the 'Plus' version), but I've never been clear as to who the 'Pro' version is really aimed at. It's certainly not for someone wanting to trade U.S. futures or equities intra day. Doubtless, Sharescope will disagree, but I've yet to come across anyone using SS to trade these markets in this way. So, to conclude, if you want to day trade (especially a non U.K. market), then I suspect you're barking up the wrong tree. If you want to swing or position trade, then the the 'Gold' or 'Plus' versions will almost certainly meet your needs and then some, as well as saving you a bob or two in the process.
Tim.

 

[Paul Wilson]

Hey timsk.

My typing error. I meant I don't need pro. I don't want the entry level version either.

I meant the plus version. Mainly due to having access to US shares.

I definately don't need the streaming prices though. I really don't want to try to run before i've learnt how
to crawl.

Cheers for the reply.

 

[Charlton]

Oh and below my name there is a French flag.

Not to offend anyone(French) but I need to change to the good ol Union Jack. Any pointers?

Paul

click on user CP about one third the way down the page, then edit profile and choose the relevant country from the list

Charlton

 

[Paul Wilson]

That's better.

Nice one Charton.

 

[Dinos]

Hi Paul, beware of "traders" offering you a fool proof system and wanting to charge you the earth, it doesn't exist.

I've been trading many years now, and seldom contribute to BB's as I am settled with my trading, you can make it as simple or complex as you wish it to be.

Study this or back test this, it has served me extremely well for many years, try different time settings to suit yourself and test it out, it may suit you style.

Using the DJIA, 1,5, 10, 15 minute charts for the short term, 30, & 60 for the medium term and daily, weekly for the longer terms view.

Use ema (8&21)
MACD (12, 39, 9)
Trix (15&9)

Check all charts starting longest timescale first to identify trend, moving down to 5 min chart, they all should tell you the same, the shorter the timescale, the more movement can be seen on the chart, the indicators should be telling you the same., when the 8 day ema crosses the 21 day ema, lenter a position in the direction of the 8 day ema and keep the position open whilst it remains above this line.

Using the MACD Histogram to identify pending changes, exit position on MACD Crossover, re-enter a position when the 8 day ema crosses over the 21, this allows time for the correction to occur and you are not liable to enter the trade to early, at this point the gap between the MACD and its trigger line may be widening, indicating a gathering momentum and you can enter a trade more confidently.

Its simple, I'm not one for looking at Eliiott wave, Fibs and all, keep it simple and don't become bogged down with to much data, take what ever any body says at face value, (including me) check it out, DYOR and try it on paper, if it works, take small positions and build your style.

This is not trading advice, DYOR, happy to comment further if required, good luck

 

[ceydababy]

Hi Paul, beware of "traders" offering you a fool proof system and wanting to charge you the earth, it doesn't exist.

I've been trading many years now, and seldom contribute to BB's as I am settled with my trading, you can make it as simple or complex as you wish it to be.

Study this or back test this, it has served me extremely well for many years, try different time settings to suit yourself and test it out, it may suit you style.

Using the DJIA, 1,5, 10, 15 minute charts for the short term, 30, & 60 for the medium term and daily, weekly for the longer terms view.

Use ema (8&21)
MACD (12, 39, 9)
Trix (15&9)

Check all charts starting longest timescale first to identify trend, moving down to 5 min chart, they all should tell you the same, the shorter the timescale, the more movement can be seen on the chart, the indicators should be telling you the same., when the 8 day ema crosses the 21 day ema, lenter a position in the direction of the 8 day ema and keep the position open whilst it remains above this line.

Using the MACD Histogram to identify pending changes, exit position on MACD Crossover, re-enter a position when the 8 day ema crosses over the 21, this allows time for the correction to occur and you are not liable to enter the trade to early, at this point the gap between the MACD and its trigger line may be widening, indicating a gathering momentum and you can enter a trade more confidently.

Its simple, I'm not one for looking at Eliiott wave, Fibs and all, keep it simple and don't become bogged down with to much data, take what ever any body says at face value, (including me) check it out, DYOR and try it on paper, if it works, take small positions and build your style.

This is not trading advice, DYOR, happy to comment further if required, good luck

Very good system and it's simple. I agree, wouldn't pay money away to a trading guru. I use a similar system with tweaked EMA's and RSI instead of MACD. I use bollinger bands to show extreme price moves (tweaked for shorter term prices) this will often trigger an exit point for me (if the candle opens outside the band or if there is a spike in price way outside the band) Sometimes this does mean that you come out of a move a little early, but 90 % of the time you will see a correction from these peaks back toward the EMA line where you can enter a further position if you are really feeling greedy. I also have some support and resistance lines plotted and volatility at these points will often trigger an exit for me too.

The Bollinger bands can often help me find a bottom or top of a short term trend too.

Elliot Wave and Fibonacci are the next level for me. I have looked at Fibonacci but I find my interpretation of this is very loose therefore not so good for me to use. I agree with Dinos keep it simple.

 

[babrevian]

Trading is difficult, but extremely rewarding

Hi, I have been trading for 3 years, but I cannot say that I have been extremely successful. I have made some huge profits, but sometimes lost most of it soon. I took me quite some time experimenting with different methods, but in the end I experienced that the best is to learn more about yourself and adapt a system for yourself.

I learned a lot about myself personally while trading, most of it is not very nice , but still it was the best lessons of my life.

Keep at it. It is worth it

 

[Paul Wilson]

Dinos, Ceyda, bab thanks for your replies.

I have been away. Reading lots and lots. I was humbled when I posted. Although I knew more than I did when I first dabbled in trading, I realised I needed to do a bit more homework.

I have kinda established a few methods which I am plying on the FTSE 100 shares.

I also feel a lot more confident in my own knowledge now too. Its only been a few months since I posted this topic, but my whole mentality and perspective of trading has changed.

I have read some really great books, and have been charting technicals everyday.

Things feel good. I'm only 27 and am glad I found out about trading. I have still got bags and bags of time to settle in properly.

 

[Ted69]

Hi Paul,

I tried ameritrade for shares but without big deposit they don't allow to do 'sell' orders.
That's why I'm sorta looking to forex and the best I can see that most brokers give you a demo account. This is your(my) entry to the market. With this account you can test your strategy on the historical data. I try. Great tool is MT4 - you can find available (free) indicators and experts and try them - improve them. then you know what to expect.
I still test this and can try any strategy that I can here here or other place.

Best luck,
Ted.

 

[Nut]

Hi Paul

I hope all is going well for you, it's not often I visit this site let alone post. Having skimmed most of the posts in this thread I must echo Dino's sentiments about those who come offering foolproof systems, they don't work.

No doubt you have or will read a number of books on oscillators etc, few of these will help you to develope a system with which you can being to learn about your own personal style.

I have traded for many years and only recently came across a book which I thought would be excellent for those starting out. It does not focus on oscillators but attempts to put into place a trading method which is easy and simple to follow and implement.

The book is called Channel Surfing. No doubt others using this site will have read the book so seek their opinion but in my view it is worth a read.

Regards and good luck

Nut