Swingin' the ftse 2010

[Moneymakingmachine]

I got out of a few of my longs today, some in profit, some not. I held on to marks and Spencer which is about 20p up at the moment, and Sage group which is about 6p up. I still think this market is going up though. I bought Land Securities today for a long term trade. I also sold Verizon as a hedge against that, and to hedge against my longs if this market does start to move up.

 

[thehoops16]

I agree that 9 am is normally a helpful point to get in /out - reversals at 8:30 seem pretty common and a while ago I was playing 0930 reversals quite successfully: i'll go back to it at some point for fun I suppose.

Nice to have an asymmetrical risk:reward. I am currently being very cautious re trend, having got it wrong so often when I thought I knew so much about it. So I normally set my exit target and stick with it. Maybe the trend continues in the same direction and I could have got 2 or 3 or 4 times my actual reward but that's life: and meantime I have got the cash out and ready for a repeat entry into the same trend anyway. I am sniping and raiding, not manning a strongpoint.

What you have said above is the exact problem with my method, in becoming greedy can end up back at square one very quickly. The main way in which i try to avoid this is by moving the stop loss as I go into profit, effectively a trailing stop limiting the loss, assuming the trade goes the way I predict.

 

[tomorton]

What you have said above is the exact problem with my method, in becoming greedy can end up back at square one very quickly. The main way in which i try to avoid this is by moving the stop loss as I go into profit, effectively a trailing stop limiting the loss, assuming the trade goes the way I predict.

Its a never-ending problem, possibly with no right answer. My aspiration is to use TA in the most objective way possible, so that I can see both my initial stop and target levels on entry. Now, if TA suggests I can use the current signal whatever that may be to look for a 100pt gain, whereas a 50pt loss would indicate the market is firmly not going in my direction I would be very happy. I have good TA for entry, stop and target, with a 2:1 reward:risk ratio.

However, suppose I take the entry, my position goes into profit but my target is not yet hit: price races up 90pts, and then flatlines. I am looking for another 10pts here, but if I had never entered in the first place, I would never be tempted to enter at this level for even a 10pt gain - there is no TA to support it. So why would anyone else? We all already know that price was most likely to get to +100, but not +110. And if new players don't enter here at +90, why would price continue upwards?

On the other hand, having made 90pts, I might now introduce my trailing stop strategy, and the amount I would set this by is, of course, 50pts. After all, if I could stand to lose 50pts from zero, I can certainly stand to lose 50pts from a +90 position. But here again, the level of the 50pt trailing stop loss has no rational TA: its not support, price could drop straight through it but even if it did, this would not confirm that my original TA was wrong. Price could also just as easily drop 51pts, take me out, then resume and hit my +100pt target.

My strategy these days is to set the target and take it as soon as hit and get all out of the position. Even if price goes to 90% or 80% of target, I take it and get out. If you're in cash, you can re-enter on new TA in the same direction, or take the contrary direction.

I know the books say run your winners and move your stop to break-even and trail your stops as you ride the price and all that, I know, I know, I know. But I'm not writing a book, I'm doing it.

 

[barjon]

tom

when you're long and got your 90 and it flatlines hedge it by entering half your position on a dow short. if ftse is still angling to go up further it won't do worse than keep pace with dow (2 dow points = 1 ftse point) if it stays flat or turns south and you can happily stay in knowing that your 90 points are safe despite the pullback and in anticipation of a continuation when you can close your dow position if it comes.

if, however, ftse starts to trade weak (worse than 1 point for 2) then you can anticipate ftse has had enough and take your near 90 points.

with spreads at 1 point atm the insurance doesn't cost much!!!

good trading

jon

 

[Mr Flibble]

Good strategy Tom and your longevity here on this forum would suggest it is working for you. I'm not trading the FTSE right now as I just don't see any viable patterns/triggers. Perhaps others can see patterns in this but I just see indecision.

Stress levels are good today as I have a longer trade on the EUR/USD...just please don't throw pens at me!!!

 

[tomorton]

Inside day with strong finish both to FTSE and NY, suggesting a higher range tomorrow. However, this is not an ID/NR4 and a long immediately would be counter-trend. There's still the possibility of a 1-2-3 long if we breach 5240, not too far out of reach, and that would signal a potential change of trend. If that move does not follow through, there's an equally interesting possibility of a hikkake short if we print a higher range tomorrow, then fall through 5072 over the subsequent few days. All in all, a fascinating game.

 

[Mr. G]

Tom - you mention a potential change of trend. Is that at 5240? I see the tend change point at 5436 as opposed to 5240 as we haven't made a lower low since 28 May.

 

[tomorton]

I agree with 5436 Mr. G, though I'm not such a hard-liner about change of trend levels these days, I'm seeing change of trend more as a process than an event. 5240 must be convincingly breached before we get near 5436 obviously, but I think breach of inernmediate levels such as that are signifcant milestones.

 

[tomorton]

Yesterday printed a blue up day on the swing chart, effectively a continuation of upleg from 25/05. I was cautious and waited for confirmation of the break of 5241 for a 1-2-3 long, but this never came. The gap up and low close suggest also a whiplash short opportunity from yesterday's close - I was not around to take it, though the SB price dropped only 35pts from there anyway, and was then dragged up by the rather positive close of the S&P.

Yesterday was of course a putative swing high, and in a downtrend - so if we breach the low, today should be a shorting opportunity. Same entry level for a short on the 3-day unfilled gap reversal. I suspect the next best bet after that would be a hikkake short if we breach the low 02/06 of 5072 today or Monday.

 

[tomorton]

Oops, yesterday also formed a potential evening star at the upper margin of a congestion area, so a confirmation of bearish pressure today could signal short entry at the close tonight if you're not already short / out of longs.

 

[Mr Flibble]

Dow at 9990 and I'm seeing some bullish signs despite the fact we have an equal low. Going long right now on the FTSE as it will only follow the DOW today after trading hours. Target ?? Unsure as yet tight stop losses though this could easily continue to break down however the rr means this is a no brainer for me.

And out for a small loss proved to be a poor trade. I think the fundamentals trump the technicals today.

 

[tomorton]

Not really Mr Flibble - technicals show what is, fundamentals tell what should be.

Its quite possible there'll be a bounce next week but until we see a bounce, there is no bounce. Alright, maybe there are good reasons to think there should be a bounce, but would you buy a car that 'should be' a Mondeo? Surely, if you're looking to buy a Mondeo, it either is or it isn't and once you've got confirmation it is, that's the time to buy. Until then, you could have bought a Fiesta.

Small loss is good though - its much more important to have smallest possible losses than biggest possible gains. I am much more impressed by the people who come here saying the market tanked 150pts but they only lost 30, than the guys who claim they make 10% profit per week. Gooo r:r is always good, but don't forget r:r is a theoretical ratio, as one side will definitely not materialise.

 

[tomorton]

Friday's price action emphatically bearish. The drop confirmed the swing short, the hikkake short, the 3-day unfilled gap reversal short and the evening star short, so there should be no complaints that the signs weren't there. Bearish engulfing pattern also completed and suggested short entry at the close.

Friday's near 80-20 pattern does suggest possibility of a long day trade if price trades below 5102 and recovers upwards.

 

[benji2010]

So what do you think will happen on Monday morning?

Thanks!

 

[tomorton]

benji - More importantly, what are we going to do about it?

I'm already short, there have been plenty of good sell signals. If we keep selling I'll try to stay short until my target is reached or the TA changes, suggesting we won't get there - the latter could comprise an 80-20 long if we trade lower than Friday's low early tomorow but recover up through it. I would only look to ride the 80-20 until the close, as the overall downtrend calls for shorting and we are in a bear flag.

 

[benji2010]

Got this in an email

Pivot: 5170

Our Preference: SHORT positions below 5170 with 4992 & 4900 in sight.

Alternative scenario: The upside breakout of 5170 will open the way to 5265 & 5292.

Comment: the break below 5170 is a negative signal that has opened a path to 4992.

 

[benji2010]

This I got from intertrader!

 

[benji2010]

They send me these e-mail mon to friday!

How is everybody doing? I am up! Only a bit tho!

 

[heavy_a24]

Hi,

Where do you think it would go from here? I have a long position, should i keep my long position? Where do you think the price will go next?

Thanks

 

[Mr. G]

Nice little 80-20 on the go this arvo.....thanks Tom :clap: