Tech Analysis & Shorting

[g.basnett]

Hi, as a newcomer to this board first let me say I’m very impressed by the layout, content and obvious following in the discussion boards and am wondering why I had not found it sooner. It just shows that it pays sometimes to search a bit further a field, rather than sticking with the same old familiar sources. Anyway to get to the point,
I have been invested in ‘the market’ for some years now, tempted in by the bull market situation of some years back using my own judgement and ‘fundamental’ data as my sole criteria for stock picking, only to find as many others have, that success gets a lot harder to achieve when the market turns negative. I have come to the conclusion that in a ‘bear’ market situation, investment for ‘growth’ in the conventional sense is like trying to be a one armed brick layer!. (My apologies to any one armed bricklayers)!

So my attention has been brought to the consideration of going ‘short’ as well as ‘long’ on some stocks, to open up the options and hopefully the chances of success in the current situation. The theory sounds OK, but in practice it appears that this doubles up the task of finding and monitoring likely stocks. Forgive me if there is an existing discussion thread on this subject but I have so far not been able to find it as there are so many, so may I draw on the experiences out there, to answer a few questions that arise.

1 What is the experience of using T. Analysis methods for selecting suitable stocks, doesn’t this lend itself more to the short term movement probabilities rather than long term?
2 I have read that the most popular TA chart used is candlesticks, how are these best used and what other TA tools have been found to be the most effective / reliable, as indictors for likely stock movements?
3 Is the use of TA more effective to ‘day trading’ and therefore more successful when used with real time prices rather than end of day prices?
4 Are the number of dealers that accept ‘short’ trading limited and if so, where do you find them, any suggestions?
5 Is the time scale for closing a deal when selling short, always a standard fixed one or does the trader have the option to vary it?
6 Are dealer costs for ‘short’ trades the same as for ‘long’ and are the number of acceptable stocks for shorting of limited availability?
7 Is the attendance of a TA training course considered advisory and is the purchase of a TA software package worthwhile, if so any suggestions?
8 I currently use and program M.S ‘Excel’ to give ‘trailing stop loss’ indicators as well as financial performance monitoring for all stocks in my folio. Do any bought packages at reasonable cost include / offer such facilities?
9 My current real time prices are obtained by the use of DT Link ‘Personal Stock Monitor’ linked to Excel, from your experience what TA software is recommended that is compatible to Excel?
10 Is it better to stick to stocks / areas of the market you are familiar with, rather than to consider other types of trading for example currencies, indices, metals, futures and options etc?

My thanks for any answers and best regards to all.
GB.

 

[tomorton]

Welcome g.basnett.

This is a really useful board, but don't forget to kee a pinch of salt about the place. We're all still learning.

To kick off -

1) TA is equally valid for long and short timescales, as long as the interpretation is good

2) candlesticks are a big topic and worth developing interpretation skills. No books around me at moment as in office but quick search of this board will help if I forget to get back. Most people learn TA on line carts. Candlesticks less crucial if you're looking at longer term. Beware of gushing advertising of expensive courses.

3) If you're daytrading you must have live prices (Level 2 data). For longer-term, EOD is fine, but stilll useful to know intra-day highs, lows and daily volumes.

4) You could try shorting by spreadbetting - there are numerous SB firms, SB's are an easy way of gearing your capital, going either long or short, and there is no tax. I know nothing re CFD's etc. but plenty of T2W users could help.

5) Short SB's last for the period stated at time of opening - daily, over XX months or "rolling"

6) SB spreads on shorts and longs are the same.

7) Basic training - New Skills. Basic charting - Sharescope.

8) Sharescope has a stop-loss facility but its not great.

9) I don't use Excel for trading.

10) Tricky. many pundits say stick to an industry you understand, but that's more applicable to the fundamental eceonomics of the industry and its membership. If you're acting solely on TA, subjective assessments of a company's management and accounting expertise are not too helpful. This suggests TA can be used for trading a market one had never previously heard of. But its wrth time getting to know the normal patterns of behaviour of the market you're interested in - the membership of each varies from the next, and the Nikkei reacts to some different stimuli to the CAC.

All this is purely personal opinion, but well-meant. Expect some radically different opinions any minute now.

Good luck.