schoe said:Interesting theory da but when do you stop adding to your position, when do you know how to get out of a trade.What happens when the next Sept the 11th happens will you be able to meet the margin calls? Sounds like a quick way to get into a lot of debt !
da443n said:I've just been experimenting with ftse swing trading.
I think there are 4 key elements to the tactics I'm employing
1. Long term FTSE movement view
If you have a long (say several months) term view of where you think the index will move it makes sense to always buy (if you think it's up) or sell (if you think it's down). This means that over that period, assuming 'random walk' short-term movements and an average position held you will not lose out. E.g. 'going to grow'
2. An entry strategy
I am experimenting with the following on a 3-4 day view.
Buy at 0.1% of my overall funds per point eg £10K funds means £10 per point. At entry I go with this bet.
In terms of timing enter after a daily FTSE movement opposite to your view in 1 above
3. An exit strategy.
Set yourself a level at which you'll profit take. eg 20 points
Once you enter into a buy bet (with a buy-sell spread of y points) there are only two states for the sell to go assuming the ftse moves x points
For x = 25 , y=5
a) a sell 20 points above your buy level - sell up and you made x-y stakes i.e. £200
b) 30 points below your buy level i.e. a 'virtual loss' of £300.
4. A covering strategy.
If the sell moves to 3 a) obviously you've won hurrah! But on the random walk principle you will get to 3b) 50% of the time. However when this happens don't sell up and curse your losses, instead go in a bit deeper.
i.e. Now place another buy at 0.2% of your funds eg £20 a point. Why, well a smaller rebound on the index of about say 13 points will put you back even, but a rebound to the starting position will put you in profit (cos your 'virtual loss' is cut by £130 and you make an 8 point @ £20 = £160 profit on bet #2 to cover the rest) And any further rebound is worth £30 a point profit to you. So if the FTSE returns to the starting level you'll make another 12 point @ £30 = £360.
If it falls cover again in the same manner
Well thats the basic idea anyway....
Hi,
I'm about to plunge into swing trading and was wondering which way to go - do I buy the stock (using FTSE 250) or spreadbet
Pervaz
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