Trading the FTSE 101

[a0-0b]

Welcome to "Trading the FTSE 101" a beginners guide to trading shares in the FTSE 100. There is of course one problem ... i know nothing about trading. So i'm hoping others with more knowledge will chip in and provide the actual educational part of the thread .

The idea is to have a thread for complete beginners where we can post charts, comments and questions about trading shares in the FTSE 100 and hopefully get some guidance. It's great reading all the other threads and picking up some knowledge but often the charts presented are formatted to highlight the intended information - which doesn't help me when i'm staring at a blank chart. So i figured if i post charts here you can say "that support is rubbish" or "what makes you think that is happening".

For a quick backround - and because this is for comlete beginners - we'll assume trades are SB and we're looking at positions held from a couple of days days to a couple of months.

OK - i'll begin ... i've attached BUNZL 1 year daily chart, which shows a nice bounce off resistance (i think) and i'm looking for a short term target of 450 (2 weeks) and a longer term target of 410. So i'll probably lock in profits at 450 and leave it to run for a while (assuming there are any profits to lock). I entered on the 29th, the day after it bounced off resistance.

Any thoughts or comments? Is my resistance/support ok? what about the targets? Am i looking at too big a time frame for this type of trading?

a0-0b

 

[iainpw]

Hi ao-ob,
Looked at this last night for a potential short.
The thing that put me off was the trendline drawn from the lows at the beginning of the year. I figure the price is only 10 pts away from this so i didn't bother with it. Maybe wait for a break of this line or retest of it ?
Like you i'm learning so somebody else may have a better idea.

Iain

 

[a0-0b]

I've added your trend lines (i think) and some indicators (which in no way implies i know how to use them properly).

I see what you mean - wondering now if i should move my target to 460 or above?
Is BUNZL in a down trend?

 

[iainpw]

I Take it your in a trade now on the short side ?
Hopefully a break of the trendline (about 450) will give you some decent profit.
I took a small short on British Land this morning that is doing ok so for.

Iain

 

[bracke]

aO-oB and iainpw

Why set up this thread? Why not use the thread started by ftse beater in first steps?

The danger is that this thread will be the blind leading the blind and not moving forward in a useful way.

I don't want to pour cold water on your idea but the more assistance you can get from experienced traders the better rather than relative novices.

Regards

bracke

 

[a0-0b]

Are you looking fro 620 as a target? The last drop took 3 days for 40 points.

 

[iainpw]

aO-oB and iainpw

Why set up this thread? Why not use the thread started by ftse beater in first steps?

The danger is that this thread will be the blind leading the blind and not moving forward in a useful way.

I don't want to pour cold water on your idea but the more assistance you can get from experienced traders the better rather than relative novices.

Bracke,
Yes your probably right - i was just trying to get the thread going.
No doubt somebody with experience will point a0-ob in the right direction.

Iain

 

[a0-0b]

aO-oB and iainpw
Why set up this thread? Why not use the thread started by ftse beater in first steps?

The danger is that this thread will be the blind leading the blind and not moving forward in a useful way.

I don't want to pour cold water on your idea but the more assistance you can get from experienced traders the better rather than relative novices.

There are a couple of reasons i wanted to start this as a seperate thread. First, off i haven't managed to finish reading FTSEBeaters "The Basics of Trading" yet. There's a lot to take in and dragging up things possibly already covered would not be polite. Secondly, the thread has cooled off a bit this year, it's probably at the stage now where it should be printed on glossy paper and made available in Easons, not too many other books would have that much knowledge in one place. Thirdly i'm hoping this will be a place for people learning to make mistakes and get proded and poked by the professionals as we're working on our own trades (good and bad) and not given things to look at which show a certain story of interest. And last but not least, i'd like to try and encourage more of a focus on practial trades with SB and not just technical analysis. I know FB covered a lot on moeny management and risk reward etc. It would be good to see how spreads affect that and what volatility on spreads can do to otherwise technically excellent trades.

That was the intention anyway. But as you said, this thread is useless unless the experts are willing to chip in every once in a while.

Andrew

 

[bracke]

aO-bO

I understand you motives. I hope you manage to get experieced traders to help.

Perhaps an email to the quality traders might help eg mr charts, naz, tbs, etc or perhaps Mr/Ms Moderator can help?

Regards

bracke

 

[bonsai]

lol

aO-bO
Bunzl looks fine at the moment. No real sign that it wont continue upwards
and could goa great deal higher

best to trade this from the long side , I think

 

[nicos]

bracke, hi!
which particular thread of Ftse beater's in first steps deals with beginners' questions about their ideas of trading specific FTSE shares?

 

[a0-0b]

lol

aO-bO
Bunzl looks fine at the moment. No real sign that it wont continue upwards
and could goa great deal higher

best to trade this from the long side , I think

That's not so good - i read it as a down trend and went short when it hit the resistance i had drawn (go to the back of the class).

Here's another one i'm beginning to think i've messed up on. BOC bounced off support and headed up before taking a nose dive back to to support. I think i'm relatively happy with my resistance line, but i drew the support line on just after the stock switched direction near the end of march, and then traded. Should i be trading off the same "bounce" i use to draw the support? Isn't that the same things as me drawing a support line (thick red in EMAP) because i think it's a low and then trading the next day because it opened higher? How do i know when i have a double top or bottom?

And, since i mentioned SB trading ... SB companies trade futures contracts (or at least that's what you bet on) for the near two quarters, but all the charts they offer are for the security. What's the deal there? Should i be looking for futures charts? If so where can i get them (EOD or delayed is fine for now) without costing me more than i'm making (which ain't too much at the moment).

 

[bracke]

nicos

The Traders Forum - First Steps - The Basics Of Trading

Regards

bracke

 

[bonsai]

if you trade with D4F, you will get real time charts of their futures prices -
and that is really what you are trading ? - their prices !

If you have a hankering to go short while you are learning - probably best to find a stock that has already turned over ?

You have probably missed the best of it.

BOC seems to be in no-mans-land ? Its FT relative looks weak.

 

[a0-0b]

If you have a hankering to go short while you are learning - probably best to find a stock that has already turned over ?

Does this mean you only recommend long positions for newbies? I didn't think the difference was that important when using SB.

a0-0b

 

[bonsai]

You may find going short a little more testing for all sorts of reasons.
It can sometimes test / break your stops several times before capitulating.
So timimg is more important.

with FTSE, there is a lot of portfolio switching which can make it look as if a stock is about to fall.
But as soon as you go short, they stop switching !

Just somethng for you to think about ?

 

[iainpw]

I would say since the FTSE is on the up (ish!!!!) it is more harder to find shares shares to short at the moment, i've found it's easier to find the weaker shares outside the FTSE100 to short. I understand where you are coming from bonsai when you recommend caution in shorting but i would say it all depends on whether the overall market is either in a bull/bear trend. At the moment you have to have some bias to the long side until your sure the market has turned.

Iain

 

[bonsai]

that's right Iain
the basic rule is to follow the market
especially if a stocks FT relative is also supportive

so for now, most stocks should be traded from the long side

 

[bonsai]

aO
my approach is not to scan the stocks for opportunities but to scan all the FTSE100 relatives for opportunities.
Then I check the stock's charts

I only long rising relatives and only short falling relatives.
(well, nearly always- lol)

 

[a0-0b]

with FTSE, there is a lot of portfolio switching which can make it look as if a stock is about to fall.
But as soon as you go short, they stop switching !

...

my approach is not to scan the stocks for opportunities but to scan all the FTSE100 relatives for opportunities.
Then I check the stock's charts

I only long rising relatives and only short falling relatives.
(well, nearly always- lol)

Can you tell me more about "portfolio switching" cause the effect you describe is exactly what has caught me out a few times. I see a bounce off resistance and the next day opens lower and goes down so i assume a drop - but just as i enter it turns back up!

I like the idea of scanning relatives ... i'm have a look through my watch list and post some today for comments.

Andrew.

P.S.

Bonsai, thank-you for contributing - your input is greatly appreciated.