Warning! Complete Numpty's maiden post

[SimonD101]

OK - here's the foolproof plan...

I've been following Diageo... they employ me....the RSI describes a very pretty sine wave that matches highs/lows in the SP.

Plan is -
1. wait for upswing in RSI and take out a long spread bet
2. close position with a trailing stop and open a short bet for the return leg.
3. repeat ad nauseum
4. Collect loads of cash

What can possibly go wrong?

(I have now put on my tin hat in anticipation)

Many thanks in advance

 

[ewilcox]

if it were only that easy. lol.

good luck to you.

 

[Racer]

What RSI is that? Exp or simple, 21 or shorter, above 50?

 

[FTSE Beater]

Hi SimonD101

Welcome to T2W

You'll soon learn in trading, that if you want to make a strategy more complicated...ask those who have been trading for awhile :cheesy:

Racer is however correct. These are the sorts of questions that you need to ask yourself. Having a solid trading plan will make life a lot easier.

Adding onto Racer's questions, I would like to add a couple more

2. close position with a trailing stop and open a short bet for the return leg.

• What size trailing stop are you going to use?
• Are you happy to close out trades mid-day, and are you able to. i.e. if you have a 5% trailing stop and it fell below 5% in that day, are you happy to exit as soon as it falls through, or are you going to leave it till the end of the day to see if it recovers.
• When you go short, are you going to wait for it to start a downswing or just reverse your long position when it gets closed out?
• Have you Back-test it? Have a look over the last 6 months to see how it would have faired, BUT BE HONEST!!!!!!

These are all valid questions that need answering before you start trading. Don't be put off though, you have the basis for a solid plan there

 

[Racer]

You'll soon learn in trading, that if you want to make a strategy more complicated...ask those who have been trading for awhile

LOL
That is very true!

 

[ewilcox]

very good post ftsebeater. that was what i was (badly) implying in my post. - that there is a bit more to it than just....a) b) c) then take the profits.

 

[SimonD101]

First thing's first...thanks all for taking the time to help out a newbie. It's good to know there are some generous souls out there.
All comments - even (especially?) the raised eyebrows - are useful but I particularly appreciate yours, FTSE Beater. Your 'basics of trading' thread is also great for such as me.

Conclusion - I'm going to jump in with small positions, you learn by doing.

Final thought - the 'strategy', ha ha, outlined above implies a cycle timed in weeks rather than hours/minutes. Are there any views on the relatives merits of long/short timescales.

Final, final thought - in days where we hear a lot about terrorist threats etc. it seemms to me that picking opportunities go short is a safer approach than long?

thanks all again

 

[rossored]

Final, final thought - in days where we hear a lot about terrorist threats etc. it seemms to me that picking opportunities go short is a safer approach than long?

Not ness. so. Take a look at a historic chart for 9/11 : it wasnt all downhill. Sure, it went down, then back up, then back down, then up...and then down bigtime. But would you have held your short position through all the upswings??? During the start of the last gulf war, I know plenty of people who were majorly bearish for the indices... and that turned out to be exactly the right time to be bullish instead.

Don't get caught up trying to anticipate what the best position is, because sure as eggs are eggs, you'll end up learning otherwise.

 

[Racer]

Like yesterday, Dow futures started falling on Sun night on US terror alert.. FTSE and EU and far east shares fall..

US shares end up!

 

[trendie]

Price Action !!

Risky business trading news - as someone else will always know more than you !!
Dont try to pre-empt moves, tops or bottoms, ( I confess I am studying Fibs though ).
Trade the price. Thats where your profit is.

Suppose you trade news, eg, terrorist threat. You think SHORT.
Pat on the back for being right on the news.
Poke in the eye for getting the market wrong.

What is your profit for getting the news right ?
Your profit is being on the right side of the market.