# Strategy for trading the ASX 200 daily



## clayton4115 (12 March 2009)

hi all

can anyone provide some insight into your trading strategy in trading the asx200 index,

i'm currently using CFDs and with the current rally on the market ive basically lost most of my profits i built up over the last couple of months,

im going short the asx200 and would like to know what strategy you employ in trading the asx200,

i use the 30 min chart to reduce noise and misleading indicator signals but i have had very limited success,

what techniques do you use?


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## Ardyne (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

I use trend lines , symetrical triangles and all that jazz but most importantly I do this on the s&P 500 aswell. If the s&P500 is looking really bullish then I'd hold back on going short on the asx200. I dont trade it a lot but that would be a little rule of thumb of mine


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## Trembling Hand (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

Here is a strategy. Learn about Max risk per trade!!

Another place to start would be learn about Support....


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## Trembling Hand (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

This would be a good start after you get the Money Management thingo down.

https://www.aussiestockforums.com/forums/showthread.php?t=6588


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## Glen48 (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

CFD on the DOW I have found out you need to go with the trend not fight it.
Watch it for awhile and see if you can judge the direction....It can suddenly turn and burn you out which is a pain because you need to watch it all the time.
Still to make any serious money.....only thing is it should be a bear in this market GFT send out reports as they happen and you can try and judge the trend...bit hard when some CEO sends out a memo and the World market lights up.


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## James Austin (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



clayton4115 said:


> hi all
> 
> can anyone provide some insight into your trading strategy in trading the asx200 index,
> 
> ...





here's a tool worth considering. 
its little known and little used (which is a good thing!). and theres a little magic in it.

its called "andrews pitch-fork"

when price approaches the outer lines, there is a good place to consider a trade

below is a picture of the SPI yesterday and today


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## buckylegs (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

James, I have look at the Andrew's Pitchfork but I am having trouble applying it to a chart.  Can you help please?

Cheers
Scotty


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## James Austin (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

ask some specific questions and i'll try to help


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## Trembling Hand (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



James Austin said:


> ask some specific questions and i'll try to help




How do I take 80 tics a day? :


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## MS+Tradesim (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



Trembling Hand said:


> How do I take 80 tics a day? :




There's this guy called TH. I think he does stuff like that.


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## buckylegs (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

My software asks for 2 points of reference.  The first is a reference to the center line and the second is for one of the outer channel lines.  Where on a chart would you put these 2 points.  Can I suggest we look at the daily chart of the XJO an try to use some points of reference there.


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## skc (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



buckylegs said:


> My software asks for 2 points of reference.  The first is a reference to the center line and the second is for one of the outer channel lines.  Where on a chart would you put these 2 points.  Can I suggest we look at the daily chart of the XJO an try to use some points of reference there.




What instrument are you actually trading? May be you should look at the chart for the actual instrument, or is there a particular reason that you are looking at the XJO? 



Trembling Hand said:


> How do I take 80 tics a day? :




By far the easiest way is to set up yourself as a Market Marker CFD provider and target your marketing towards small investors, while kick out anyone who show consistent profit...


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## James Austin (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



Trembling Hand said:


> How do I take 80 tics a day? :




we're focusing on APF, not takings tics TH!!


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## James Austin (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



buckylegs said:


> My software asks for 2 points of reference.  The first is a reference to the center line and the second is for one of the outer channel lines.  Where on a chart would you put these 2 points.  Can I suggest we look at the daily chart of the XJO an try to use some points of reference there.





Source 3 “obvious” pivots on a chart in your preferred time frame.

You are always looking for the “best-fit” re price trajectory.

Move the APF as price action develops.

Its not difficult with some practice.


View both of these:

http://www.youtube.com/watch?v=VTtqsmCqMhQ

http://www.scribd.com/doc/7056540/Market-Maps-Timothy-Morge


* i cant draw APFs on the XJO cos i dont have the data feeding into my software


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## buckylegs (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

skc,
I can use any chart. I was just suggesting the XJO so both of us could be looking at the same one. That way I could place the points of reference where James suggested. I can use any chart.


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## clayton4115 (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

hi Trembling hand,

what time frame do you have on that chart of yours?

its good to see the support and resistance levels on your chart

regards


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## buckylegs (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

Thanks James.

Can you please give me the name of a chart and pivot points to use so I can try to apply the APF.


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## James Austin (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



buckylegs said:


> Thanks James.
> 
> Can you please give me the name of a chart and pivot points to use so I can try to apply the APF.




BHP daily


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## Trembling Hand (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



clayton4115 said:


> hi Trembling hand,
> 
> what time frame do you have on that chart of yours?
> 
> ...




It doesn't matter what time frame your charts are. That support was on all time frames but that was a hourly of the SPI with SYCOM included.

Not only was that support there it was standing up in the face of the US getting "oversold", plenty of forewarning of a coming rally. You want to learn how to trade.... learn about market movements not breakout/breakdowns they don't pay.

BUT I will say it again just in case it was lost in the banter. To lose 2-3 months of profit on a 1 day rally of some 2% shows that *your problem is FAR greater than "trading strategy*".


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## nunthewiser (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



James Austin said:


> BHP daily




dunno about your pitchforks but ive entered a BHP short as of today


happy to drop it like a hot spud if wrong also


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## James Austin (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



nunthewiser said:


> dunno about your pitchforks but ive entered a BHP short as of today
> 
> 
> happy to drop it like a hot spud if wrong also





dont actually trade BHP, so dont know what its doing.

but APF rules say:
consider short at pink circle (which i think is around todays prices), 
at which time price may find resistance and retreat to lower orange line

good luck!


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## clayton4115 (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

yes TH, now i have stop losses in place!


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## Trembling Hand (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



clayton4115 said:


> yes TH, now i have stop losses in place!




I would start with position sizing. That was obviously completely out the window.

Just no way in hell you could be trading daily and lose 2 months of gains on a 2% move.

Just no way that should happen.


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## clayton4115 (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

dont crucify me im a trading newbie


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## beamstas (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



Trembling Hand said:


> I would start with position sizing. That was obviously completely out the window.
> 
> Just no way in hell you could be trading daily and lose 2 months of gains on a 2% move.
> 
> Just no way that should happen.




Unless his 2 months profit was $12


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## skc (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



Trembling Hand said:


> I would start with position sizing. That was obviously completely out the window.
> 
> Just no way in hell you could be trading daily and lose 2 months of gains on a 2% move.
> 
> Just no way that should happen.




This is an exert from the highly authoritative finance publication called CMC Markets Trade Review (Feb 2009).



> TR: How much or what was your biggest win?
> RM: My biggest win was in February 2008 the market fell about 3% overnight and I was short in the Aussie200 and the US30, I woke up to around 600% increase on my account.




To gain 600% in the account with a 3% move means you will need to use the full leverage of 200 times!! It also means that a 0.5% move against him would have wiped him out.

Key lesson: Go hard or go home.

Note: RM is some CFD trader interviewed by CMC.


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## Trembling Hand (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



clayton4115 said:


> dont crucify me im a trading newbie



 I'm not. just pointing out the VERY basics that make you a trader, MM. without that you are a gambler with a short career 



beamstas said:


> Unless his 2 months profit was $12




LOL, yeah I guess thats right.


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## korrupt_1 (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

Rreading this thread brings back memories of when i thought i knew it all... i guess i still dont know it all... and probably have heaps more to learn....

keep at it... read, ask, try, over and over again until u hone your skills...

if u're asking about strategies... that's 2nd on my list of things...

Like the others above have mentioned... capital management is far more important than anything else... learn position sizing, Risk/Rewards, etc... ASF is full of information on those topics... but more importantly... learn to take a loss when things are too hot in the kitchen... that way u will live with enough capital to trade your way back... don't blow it all!

If you must ask strategies... I like MA's... that doesn't mean that it will suit you! My style of trading has changed much over the years... when i was a beginner.... i was using all sorts of things...

Fib's, PSARS, RSI, MACD, STOCHS... you name it... i tried it... what u use, doesn't matter... as long as you've back tested whatever strategy (and also forward tested it)... and the results looks positive, then as long as you have good capital management.. you're going to be profitable... (with good discipline too!)

About the ASX200 strategy... the most favourite of mine is the fade
if DOW goes up,... ASX200 will go down
if DOW goes down... ASX200 will go up...

i still do not understand why that happens...

Timing the entry is the fun part... and more importantly... when to exit - whether it's a loss or a profit  Hopefully the later...


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## clayton4115 (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

can anyone tell me, why there are different chart times? like 1 min 5 min 10 min etc?

why is this so and what time frame do you prefer.


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## beamstas (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



clayton4115 said:


> can anyone tell me, why there are different chart times? like 1 min 5 min 10 min etc?
> 
> why is this so and what time frame do you prefer.





https://www.aussiestockforums.com/forums/showthread.php?t=14640

You already have a thread on this.

Like i said.. It depends on your trading style. If you hold for an average of 1 year, a 1 minute chart isn't going to be much use...

But if you trade intraday, a 1 week chart isn't going to be much use!

Thanks
Brad


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## Wysiwyg (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



clayton4115 said:


> hi all
> 
> i'm currently using CFDs and with the current rally on the market ive basically *lost most of my profits i built up over the last couple of months*,
> 
> ...




Hi, my  = At the bottom of the markets we see whipsawing and bottom bouncing so a trailing stop and/or profit target would be a healthy choice.This could be part of your trading plan before opening a trade and if it helps ... write it down and follow it to the letter.


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## clayton4115 (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

yes thanks but im with city index and they dont have trailing stops

anyways do ppl look at the small picture and then look at the big picture when trading?

for example. i like to trade daily and look at the one minute chart to see any trends in which i can jump on ride it out and then exit

but if the trade goes against me, i think to myself, well why close the position at a loss when I see further falls in the market over the next 3 months or so and that the market will fall further to my open price, rather than crystalise a loss why not wait it out till the market does go further down and perhaps take a small profit?

after all we are in a bear market and i feel the market will penetrate below 3000 sooner rather than later

my current daily chart has all bearish signals!

what are your thoughts?


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## prawn_86 (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



clayton4115 said:


> what are your thoughts?




Sounds like you need to figure out what time frame you actually want to trade.

And learn money management. Although you probably wont until you blow up at least one account, seems to be standard for everyone (myself included)


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## Wysiwyg (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



clayton4115 said:


> anyways do ppl look at the small picture and then look at the big picture when trading?
> 
> for example. *i like to trade daily*



Contradiction of trading daily is holding onto a loss which you hope will turn around. 


> after all we are in a bear market and i feel the market will penetrate below 3000 sooner rather than later



So you have a bearish bias day trading yet the ASX200 is not bearish everyday. 



> my current daily chart has all bearish signals!



Can anyone tell you how to trade?You can only trade on what you believe and with the experience you have, in my opinion.


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## beamstas (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



clayton4115 said:


> rather than crystalise a loss why not wait it out till the market does go further down and perhaps take a small profit?




You know, i bet the people in the bullish market that ended in '08 had this exact type of thinking.

Why make a loss when up until now the market has been bullish? I can hear them saying that in my head right now. Sooner or later your going to realise that your losing position is just getting more rotten and you are going to have to cop that loss. 

I'd rather take my loss sooner than later

If i were you i'd read up on some basic risk management.

Nick Radges book titled Adaptive analysis of australian stocks is a great one for risk management, i'd suggest you pick up a copy and read the first 50 pages. Once you have done that read them again 

Thanks
Brad


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## clayton4115 (12 March 2009)

*Re: Strategy for trading the ASX200 daily*

thanks, im sure you all are getting fed up of my ignorance i have decided to put stop losses if my trade hits a $200 loss, im just got it in my excel spreadsheet now this equates to 4% of my capital.

this all comes through experience i suppose.


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## beamstas (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



clayton4115 said:


> thanks, im sure you all are getting fed up of my ignorance i have decided to put stop losses if my trade hits a $200 loss, im just got it in my excel spreadsheet now this equates to 4% of my capital.
> 
> this all comes through experience i suppose.




Firstly, i'd suggest not risking more than 2% of capital as a *maximum*

Secondly i'd suggest that you define your stop losses using a technical point on the graph rather than a point as a percentage of your capital.

That way you-

Define your dollar risk (in your case 4% of capital.. say you have $100000 capital that is a $4000 risk)

Define your entry point (say $10)

Define your stop loss (say $9.50)

THEN decide how many shares to buy, in this case it would be $4000 / 0.50 (50 cents being the risk per share)

Your position size would be 8000 shares

Thanks
Brad


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## Trembling Hand (12 March 2009)

*Re: Strategy for trading the ASX200 daily*



clayton4115 said:


> this all comes through experience i suppose.




Actually you should stop. simple as that.

No MM. in trades without even knowing what time frame you are trading. no idea of expected moves. No edge. No set-ups. No idea of where you are going. 

Get a map before you set out again.


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