Strategy -Help

[mkhegde]

Hi All,
I started my spread betting more than two years back but lost around £2k and stopped it altogether . Now started again with DOW and FTSE indices trading with better strategy and with very minimal investment. I'm still not able to get the grip of the proper strategy and fear that I might run out of capital again... keeping max loss of £15 and a profit anything from £5. Can someone help me please in setting my strategy right to recover my losses if not profit
Any advice/suggestion are most welcome..

Many thanks in advance
Hegde

 

[damianoakley]

Hi mkhegde,

I would suggest that if you have wiped out an account and you fear doing so again, then you are probably risking too much per trade, are undercapitalised for the type of trading you are doing, lacking in a definite trading plan, or all three.

My advice at this point would be to stop trading. Unless you are trading with a well thought out plan, you will not recover your losses and move into profit.

When you say you would like to "set your strategy right", what is your trading plan at the moment? What are your Entry Rules? What are your Exit Rules? How are you deciding what amount to risk on each trade?


Thanks

Damian

 

[Phil Mibbutz]

Probably better to leave the Dow alone because it's far too easy to lose. Try something less frenetic.

 

[mkhegde]

Hi, I'm much delighted to see reply to my help request. Many thanks Damian and Phil..
I try to enter FTSE and Dow based on chart on intraday and got it completely wrong in couple of trades.
With capital of around £500, trying put stop loss for about 15-20points and profit of anything above £5 (to start with). Phil, I think you are right.. I might look for something better than Dow as it is becoming very riskier.
I'm determined stay in trading but trying get my market right and strategy right.. (as I have to get my loss back). Any advice on this will help me lot..
Many thanks again
mkHegde

 

[damianoakley]

Hi mkhegde,

I will say it again: STOP TRADING !

You cannot just flirt between different markets in the hope that you'll find one that will "get your loss back." It sounds like you've had a dabble, lost some money, and then blamed your loss on the fact that you think the DOW is a bit choppy.

This might be difficult for you to accept, but your losses so far have probably come from poor trading techniques, not the choppiness of the DOW. Also, if your main goal of trading at the moment is to "get your loss back" then you are placing yourself under a great deal of pressure and will probably make bad decisions.

Trust me, stop trading and take some time to develop a definite plan - don't just blame your losses on a choppy DOW and then move blindly onto another market.

I wish you the best of luck.


Thanks

Damian

 

[NotQuiteRandom]

If I were you I would quit. Find a different hobby.

 

[hornblower]

If you must keep trading
just paper trade,
and only start to trade for money when you get 60 % of your paper trades correct
IF YOU ARE IN A HOLE STOP DIGGING

start off paper trading £1 pp, at the end of the 1st week ,if 60 % of yor trades are winners ,and you have made a profit on the week , you can move to week 2

week 2 , £2 pp same again but if do not make 60% of your trades winners and make a profit on the week
you have to go down to week one again and start all over again

you cannot trade for real until
you have had 10 winning weeks

If you cannot make money paper trading , what is the point in trading for real money?

regards
Hornblower

 

[fibonelli]

Hi Mkhegde

As a newbie, this is what I am doing
1. Read the market wizards books.
2. Design your trading plan(s) with clear entry, exit and stop loss limits, position sizing and money management.
3. Throughly back test across a small range of indices, currencies, commodities, bonds/interest rate and equities. Basically you want to see if your trading plan works in a variety of markets, in bull/bear phases and in ranging markets.
4. Open a demo account and trade your plan for at least 2 months. You will discover if your trading plan works with live prices, whether you can follow your trading plan in a disciplined way and how you emotionally cope with loss making trades.
5. If the demo account trading is successful, trade very small @ £1 point on a couple of high priced high capitalisation FTSE100 stocks e.g. BP, HSBC, RBS etc for at least 3 months and see how you go.
6. The EuroStoxx50 index @ £1 point may be a good alternative to the FTSE100 and DJ30 if your stock trading is successful.

Regards
Fibonelli

 

[monit0r]

Hey guys, this is a good thread for me. While i'm reading this, I've just got one Q.

1. Whats backtesting and how do you do it as fibonelli mentions?

i've just started paper trading in the manner that hornblower(thx m8!) suggests and I would follow something like this imho mkhegde, as I was in pretty much the same boat as you.

thanks guys!

 

[mkhegde]

Hi guys,
Many thanks for all of your help.. I know it is difficult trade with small capital but at the same time is pretty good that it makes you think twice before trading !! I started based on the technical analysis and found to quite interesting.. for those like me site like www.chartfilter.com help a lot to understand and read charts (otherwise you have to pay loads of money to trainers) I'm in the process of real turn around and hope to continue to learn and trade with the best strategy. If anyone have got better ideas pls. share the same.

Many thanks guys !

 

[fibonelli]

Hi Monit0r,

Backtesting is when you test out your trading plan using historical chart data. The easiest method is to write a formula in a charting package (eg Tradestation) using the backtesting facility or you can create a spreadsheet to record the transactions you would've made (long winded method!).

Naturally, past performance is no guide to future performance but at least you will see whether your trading plan would have worked historically.
Regards F

 

[mkhegde]

Guys

I have been working on proper entry and exist strategy and formed one below for FTSE 100. Pls. have a look and see whether it can be bettered anyway?

1. Enter the market at the beginning of the up swing or down swing

2. Swing is formed if all of the conditions are true
a At least 3 days of successive up or down should be there (higher high or lower low)
b At least 100 points should be away from the previous swing high
c A complex low swing will be formed with upto 6 days where it satisfies the rule b (this is basically marketing is going up and down every day without any trend)

3. Place buy order 6 points away from the higher low of previous down trend.

4. Place Sell order 6 points away from the lower low of previous up trend.

5. If there is more than 80 points up on the given day then close your open position and go for short with around 40 points stop loss and close the trade at 40 points in your favour. Opposite is not true.

6. Stop loss is no more than 40 points or 1% of the instrument

7. Exit market in one of the following conditions

a. Hitting stop loss
b. RSI 5 is more than 80
c. target profit met (ref 2b (average swing of previous up and down swings)
d. Use exit 50% and wait for other 50% till the reverse trend starts.

This simple rules can be applied to any instruments (various numbers to be re-adjusted accordingly) and good profits can be achieved.

Pls. let me know if any one has got better idea/critism or modifications for the same.

Hegde

 

[blackcab]

I have been working on proper entry and exist strategy and formed one below for FTSE 100. Pls. have a look and see whether it can be bettered anyway?

1. Enter the market at the beginning of the up swing or down swing

I stopped here. Maybe the rest of your system predicts whether what will happen next is an up swing or down swing (in which case I would ask how does it do that and what is its historical accuracy?). If it doesn't, then how do you know you're at the beginning of an up move or down move? Maybe I misread.

 

[mkhegde]

Hi,

See point 2. Like this week.. ftse went higher high and higher low last few days..and all I did was go short order at 6 points below previous low. which triggered yesterday (same with dow) and put me in the market. Hope this makes sense..

 

[fibonelli]

What about a trailing stop loss?

 

[mkhegde]

Hi,

Yes.. use 40 points trailing stop loss.