# Advice on short term trading approach



## chesl73 (12 October 2009)

Hi,

I'm new to trading and have recently been devouring as much information as I can. I've been reading various books from pure TA charting books to the classics like Elders - Trading for a Living. I've been very interested in all of them. I have Metastock and EOD data and have just been investigating and looking at various charts and indicators and the like. 
When I eventually get around to actually putting my money on the line I imagine I'll be trading EOD data for trades from 2days to weeks+. 
After reading all these books I'm finding that I'm a bit lost as to the next step to take. 
So, I'm hoping some of you more experienced individuals out there can give me some advice as to how you think I can move forward? 
Yes, I understand from the books about lagging indicators and leading indicators and breakouts and so on - and I've read the importance of risk and money management and discipline. 
What I'm struggling with is where to go from here? I've no real idea about what type of system/indicators I should use, what setups I should use and what type of setups I should trade. 
As a beginner, is just trying to swing/trend trade the best place to start with some MAs and RSIs? 
Or try and begin looking at breakouts through support and resistance levels?
Or pullbacks using RSI with a trend? 
I suppose what I'm asking is, 'if you were me, with the benefit of hindsight, what would you do over the next 1 - 6 months in order to get to point were you have some idea as to your aims and strategies for trading?'. As I say, I need some kind of direction for the coming months.

I don't know anyone who actually trades so I've no one to talk to about this, I hope some of you can give me a few minutes of your time to help me progress a little further.


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## So_Cynical (12 October 2009)

U need to find out what trading style works for u, what u feel comfortable with.

So open a dummy account somewhere and paper trade for a while and see how u go.


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## Timmy (12 October 2009)

chesl73 said:


> I suppose what I'm asking is, 'if you were me, with the benefit of hindsight, what would you do over the next 1 - 6 months in order to get to point were you have some idea as to your aims and strategies for trading?'.




You are going to get lots of differing opinions, here's mine. 

You need to understand what moves the price.  A good start is Volume Spread Analysis.
There is a firm that sells 'education' and software about VSA, you don't need this.
Find a book called "Master the Markets".  It is available free out there in P2P land, and I have even seen some legal downloading links to get it for free.
Start with this book.

Read the posts on ASF from tech/a and motorway.  Find tech/a's posts on VSA and motorway's posts on Wyckoff analysis.  (VSA is a small part of Wyckoff analysis, this is the next step after VSA).

Then start to try to look at the price action yourself and understand it, VSA/Wyckoff will get you started on this.

Throw away your books by Elder.  Give me a list of other books you have so I can advise you on which ones to throw away.

Finally, ignore what anyone else says.


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## CanOz (12 October 2009)

Timmy said:


> You are going to get lots of differing opinions, here's mine.
> 
> 
> 
> Throw away your books by Elder.




Your off to a good start sparking interest Timmy.

Cheers,


CanOz


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## JungleMan (12 October 2009)

chesl73 said:


> Hi,
> 
> I'm new to trading and have recently been devouring as much information as I can. I've been reading various books from pure TA charting books to the classics like Elders - Trading for a Living. I've been very interested in all of them. I have Metastock and EOD data and have just been investigating and looking at various charts and indicators and the like.
> When I eventually get around to actually putting my money on the line I imagine I'll be trading EOD data for trades from 2days to weeks+.
> ...




Hi Chesl73,

my overriding sense of what I would do in your shoes now, is probably to start very small (ie either virtual trading so none of your own money), or simply buy an index (ASX or Dow), put in a reasonable stop loss, and get a feel for what is going on.

I think an index to start with would be a lot easier than picking a stock.

Bear in mind (no pun intended), that both the ASX and Dow look set to test the resistance levels of 5000 and 10 000 respectively, and from there it would appear that they may either break through (remarkable) or turn down if they cannot break the resistance.

Therefore stop losses or monitoring risk is important

Hope that helps

Tim


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## chesl73 (13 October 2009)

Timmy said:


> You are going to get lots of differing opinions, here's mine.
> 
> You need to understand what moves the price.  A good start is Volume Spread Analysis.
> There is a firm that sells 'education' and software about VSA, you don't need this.
> ...





Thanks Timmy. Looking on Amazon for 'Master the Markets'. There's a book that's no longer available by Tom Williams and there's a book my Mark Douglas which has is called 'Trading in the Zone: Master the Market...'. 
Which one is it?

Other books I've got (ebooks), I've read some and haven't read others would be:
John Murphy - TA of the Financial Markets
Elder - Trading for a living/Come into my tradin oom
Farley - The master swing trader
Appel - Technical Analysis
and a book on Candlesticks. 
Some other authors:
Guppy, Thomas Carr, Mark Douglas, Kaufman.

I'll check out what I can on VMA.


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## Timmy (13 October 2009)

Here is a link for a free download of Master The Markets:

http://www.tradeguider.com/mtm_251058.pdf


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## Mr J (13 October 2009)

chesl73 said:
			
		

> I suppose what I'm asking is, 'if you were me, with the benefit of hindsight, what would you do over the next 1 - 6 months in order to get to point were you have some idea as to your aims and strategies for trading?




Develop a trading philosophy that suits me. Read _everything_ I can. Go to various forums and read the different strategies that people post up, and see what clicks with me. I wouldn't use those strategies, but adopt ideas that I like. Read as much good trading discussion as I can, and maybe check out 'live' threads to see what people are saying. Their opinions themselves may not be valuable, but knowledge of their opinions can be. This is what I have done, and I wouldn't change anything if I was to start over, apart from doing it in less time .

As for specifics, I would just continue to question myself on price movement (for better or worse, I don't currently think beyond price movement). Why is price moving like it is? What is the shape of the movement? What impression does it give me? What does it seem the market thinks? What might other traders think? How is price likely to act when it reaches support or resistance? What will happen if it breaks? What will happen if it fails? What does all of this look like? How much can I gain from this move? Is the potentional move large enough? etc etc. I ask myself a lot of questions anyway, so this is a natural process and what I feel works best for me.


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## chesl73 (13 October 2009)

Thanks Timmy.


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## chesl73 (13 October 2009)

Mr J said:


> Develop a trading philosophy that suits me. Read _everything_ I can. Go to various forums and read the different strategies that people post up, and see what clicks with me. I wouldn't use those strategies, but adopt ideas that I like. Read as much good trading discussion as I can, and maybe check out 'live' threads to see what people are saying. Their opinions themselves may not be valuable, but knowledge of their opinions can be. This is what I have done, and I wouldn't change anything if I was to start over, apart from doing it in less time .
> 
> As for specifics, I would just continue to question myself on price movement (for better or worse, I don't currently think beyond price movement). Why is price moving like it is? What is the shape of the movement? What impression does it give me? What does it seem the market thinks? What might other traders think? How is price likely to act when it reaches support or resistance? What will happen if it breaks? What will happen if it fails? What does all of this look like? How much can I gain from this move? Is the potentional move large enough? etc etc. I ask myself a lot of questions anyway, so this is a natural process and what I feel works best for me.




Thanks for the reply. I have been trawling through this forum recently and reading discussions. I don't find that many posts with people really discussing their strategies or setups. I think I'd find it helpful to see how others trade, is it looking for reversals and jumping on a trend, is it breakouts, is it pull-backs or whatever and maybe how they approach each trade. I suppose people keep their theories/strategies to themselves.


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## skc (13 October 2009)

chesl73 said:


> Thanks for the reply. I have been trawling through this forum recently and reading discussions. I don't find that many posts with people really discussing their strategies or setups. I think I'd find it helpful to see how others trade, is it looking for reversals and jumping on a trend, is it breakouts, is it pull-backs or whatever and maybe how they approach each trade. I suppose people keep their theories/strategies to themselves.




There are plenty of threads here where people discuss semi-real time setups.

Flags and pennants
Fib retrace and pull back trades
Elliot wave debate
Potential breakout alert

Just to name a few. 

Hang around the forum and these are the more active threads so you bound to see them. Use the search function.


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## tech/a (13 October 2009)

Invest a few 100$s and join "The Chartist"
Here you'll be able to follow and even shadow trade Nick Radge.
Who is a professional trader who has traded on the SFE and the Chicago floor.
He is trading 4 portfolio's satisfying short to longer term traders.
Easy to follow and the cheapest most intense education you'll get in Australia.
Oh and he's licienced and all 4 portfolio's are in profit.


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## Mr J (13 October 2009)

chesl73 said:
			
		

> I suppose people keep their theories/strategies to themselves.




I suppose some do and some don't. My strategy is pretty simple in theory, I aim to trade waves and support/resistance. By 'wave', I mean a move on a longer timeframe (usually on the 1hr to weekly charts), and use support and resistance to time entries (which usually appear as pullbacks). I also use S&R to make faster trades independent of the big picture. 

I think sharing general strategy and theory is fine, as it is how we trade it that truly matters. I believe in the discussion of ideas, not spelling everything out with specific examples. I think that encourages us to think for ourselves, and it's more deserving and satisfying when we get there, at least that's the case for me.


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## kam75 (13 October 2009)

chesl73 said:


> Hi,
> 
> I'm new to trading and have recently been devouring as much information as I can. I've been reading various books from pure TA charting books to the classics like Elders - Trading for a Living. I've been very interested in all of them. I have Metastock and EOD data and have just been investigating and looking at various charts and indicators and the like.
> When I eventually get around to actually putting my money on the line I imagine I'll be trading EOD data for trades from 2days to weeks+.
> ...





The next step is to test some strategies that you think may suit you.  You have to develop your own.  No use to use someone elses because its unlikely to suit your personality, risk profile etc.  But..., you may use bits and pieces.  For example, my strategy that I started in '02 was:

1. Use only price, volume and OBV.  Ignore all other indicators.
2. Ignore all tips, advice, fundamentals, news items and other rumours.
3. $50,000 starting equity, Use 2% rule, diversify into at most 6 stocks at any one time.
4. Trade only stocks between 0.50-5.00.
5. Minimum reward/risk 3:1
6. Stops to breakeven ASAP after breakout.

...and a few other things I'm sure you can work out.  The most important thing to have is a Trading Plan for every trade you place an order for.


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## Chorlton (13 October 2009)

Hi chesl73,

One of the obvious next steps is to develop a trading plan which will include (amongst other things) finding a method / trading set-up which should take into account your personality, risk profile, etc. This has already been suggested by others...

The problem I can envisage with this though is how do you actually choose which particular method to use? After reading some TA books you may decide to trade a particular chart pattern set-up or focus on break-out type set-ups, etc ,etc.

However, with no previous knowledge of trading how can you be confident that your chosen approach will stand a reasonable chance of being profitable ??? 

To overcome this, IMO you have two options.

1. You can either dedicate sufficient time to looking at charts so that you can understand for yourself how price moves. Remember that different charts will exhibit different "chart characteristics". For example, a chart for Gold will have different characteristics than a chart for BHP which will have different characteristics than a chart for the XAO Index, etc etc.

2. The other approach is to go down the path of Mechanical trading. There are pro's and con's for both approaches but one of the pro's with this approach is that you can code and test a particular idea on a range of instruments over many time periods and get a result straight away. By repeating this process you can gain a very good feel for what works (and more importantly what doesn't) in a shorter time than with approach #1.

Whatever approach you use though, it is vital that you really understand your chosen method and have confidence in it otherwise as soon as you start having some losses (which you will !!!) you will be very tempted to simply drop it in search for another method and by doing so become the next new member to the "Beginners Circle" club......

PS. You do have another option, which is to find a suitable Mentor/Educator whom you can "shadow" and learn from. This approach should help accelerate the learning process and get you to a stage where you are then confident enough to branch off and explore other ideas/approaches for your self. 

As Tech/A has already stated, Nick Radge offers such a service, which for the record, I too,  would recommend.

Chorlton


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## chesl73 (13 October 2009)

That's exactly right, finding your own strategy that works for you personality and risk profile is easier said than done and this is the crux of the problem for me.
For now I'm happy reading and making notes and just trying to take snippets of information/ideas that might be of interest to me.
I looked at the chartist website and this does look very appealing as I can use it as a 'mentor' which I can use to learn from and understand how an experienced trader approaches things.


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## bunyip (13 October 2009)

Timmy said:


> You are going to get lots of differing opinions, here's mine.
> 
> You need to understand what moves the price.  A good start is Volume Spread Analysis.
> There is a firm that sells 'education' and software about VSA, you don't need this.
> ...




Timmy

Check out the chart below.
Can you tell me what's wrong with a system that gave buy signals at the blue arrows?


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## tech/a (13 October 2009)

bunyip said:


> Timmy
> 
> Check out the chart below.
> Can you tell me what's wrong with a system that gave buy signals at the blue arrows?




Yeh.
Seeing them today.
Let me see some charts realtime.
Any trigger a buy signal today?

To the Question.
Kams on the money.
I'll add,skew your R/R to high win ratio 80% with < 5R/R.


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## bunyip (13 October 2009)

tech/a said:


> Yeh.
> Seeing them today.
> Let me see some charts realtime.
> Any trigger a buy signal today?
> ...




I didn't see 'em today, Sunshine....I bought into this trend on 21/8/09 and I've added to my position twice since then. 
As for your request to _'let me see some charts realtime'_......that wouldn't be a problem. But I see no reason why I should alert you to trading signals in the markets I trade, nor do I in any way feel obliged to prove my trading ability to you. 
You want trade setups, find your own.


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## nunthewiser (13 October 2009)

well im of the same opinion that your chart means squat also . bit like the EW hindsight wave count fittings that used to get posted on a regular hinddsighted basis ..........

your chart merely just another example of fitting whatever that suits best after the fact 

if you wish to post them live after entry , thats lovely ...........

if not and want to post them way down the track with points that say "i told you so " thats fine too but i,ll still think they aint worth squat to me

no offenses intended


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## johnnyg (13 October 2009)

Wow, Nun agreeing with Tech on something? Whats the world coming to. :


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## bunyip (13 October 2009)

nunthewiser said:


> well im of the same opinion that your chart means squat also . bit like the EW hindsight wave count fittings that used to get posted on a regular hinddsighted basis ..........
> 
> your chart merely just another example of fitting whatever that suits best after the fact
> 
> ...




My chart means squat because I haven't explained - yet -  the trading system that gave those buy signals.
And I didn't fit whatever suited best after the fact. I ran a scan to find those setups - the same scan I run every morning. The scan picked those setups as they occurred, not after the event.


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## nunthewiser (13 October 2009)

bunyip said:


> My chart means squat because I haven't explained - yet -  the trading system that gave those buy signals.




the thing is .......... one can fit ANY trading system to any chart way after the fact .

thats my only point 

if your system works and all those entrys were presented to you in real time , well done and it would be a great system 

live and hindsight indicators are two different things 

happy to listen to your explanations of your system , just im not a great listener to things that fit later . i like things that fit when im looking to actually trade it

cheers


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## beerwm (13 October 2009)

bunyip said:


> My chart means squat because I haven't explained - yet -  the trading system that gave those buy signals.
> And I didn't fit whatever suited best after the fact. I ran a scan to find those setups - the same scan I run every morning. The scan picked those setups as they occurred, not after the event.




were you ever going to explain it?

or are we just all gonna upload 'trades that went our way' and confuse this newcomer.

ego boost or are you intentionally trying to waste our time.


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## nunthewiser (13 October 2009)

beerwm said:


> ego boost or are you intentionally trying to waste our time.





i do not think this is the case at all 

  i think he just showing timmy that some of the methods timmy discarded may work for him


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## tech/a (13 October 2009)

bunyip said:


> I didn't see 'em today, Sunshine....I bought into this trend on 21/8/09 and I've added to my position twice since then.
> As for your request to _'let me see some charts realtime'_......that wouldn't be a problem. But I see no reason why I should alert you to trading signals in the markets I trade, nor do I in any way feel obliged to prove my trading ability to you.
> You want trade setups, find your own.




Hahaha.
You are truely blessed.
Not doing to bad myself on this one.


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## bunyip (13 October 2009)

beerwm said:


> were you ever going to explain it?
> 
> or are we just all gonna upload 'trades that went our way' and confuse this newcomer.
> 
> ego boost or are you intentionally trying to waste our time.




Yes, I fully intended to explain the system and I still do.

You're on the wrong track in thinking I'm looking for an ego boost. I had no intention of even revealing that I'm in this trade. I did so only in response to Tech implying that I found those setups with the benefit of hindsight.
After 15 years or so in the trading game, I assure you I'm long past the stage of needing to boost my ego or prove myself to others by disclosing my trades. 
A 'lone wolf' approach to trading works best for me. I rarely talk about trades I'm in, trades I intend to enter, or trades I've completed - no matter how profitable they were.

If you think I'm intentionally trying to waste your time, that's up to you. You're pretty good at jumping to conclusions, all of which have been wrong so far.
Don't read my posts if that's how you feel.


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## beerwm (13 October 2009)

bunyip said:


> Yes, I fully intended to explain the system and I still do.




the suspense is killing me..

i look foward to hearing it, ... that is your advice on short term trading.


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## wayneL (13 October 2009)

Guys,

Check Bunyip' record of posting on ASF, He's posted plenty of trades real time and ain't no hindsight tosser trader.

I didn't see his post above as anything but leading into a discussion on a method.

Let's cut him some slack eh?

The criticism from at least one poster is a tad ironic.


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## beerwm (13 October 2009)

My contribution to this thread;

-know/pick your timeframe

ie. no point settings a stop at 4-5[ATR] if you're only planning to be in the stock for < 2weeks


-co-ordinate your trades with the 'Bigger Picture'
ie. dont be oblivious to the movements of the underlying index [ ASX 200 ]


+ experiment... best learning tool is going live [doesnt mean blow up your account though]


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## nunthewiser (13 October 2009)

wayneL said:


> Guys,
> 
> Check Bunyip' record of posting on ASF, He's posted plenty of trades real time and ain't no hindsight tosser trader.
> 
> ...




i found my comments fair  in the situation they were posted in

i have read some of bunyips posts hence the use of respect and manners and personally looking forward to hearing his trading methods when he has the time


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## bunyip (13 October 2009)

wayneL said:


> Guys,
> 
> Check Bunyip' record of posting on ASF, He's posted plenty of trades real time and ain't no hindsight tosser trader.
> 
> ...




Thanks Wayne. And you're right....my original post was intended to lead to discussion of a method that's worked well for me for many years. 
That discussion may still eventuate - unless the criticism continues and I get sick of it and just walk away without further comment.
The reason I post very little on this forum is because of the number or ignoramuses who try to tear you down with ill-informed criticism and hasty conclusions when your intention was simply to share something of value.
Empty vessels always make the most sound.

My original post was directed to Timmy. No reply from him yet - maybe he hasn't seen my post - before I disclose the method I really would be interested in hearing his views in regard to the buy signals I've shown on my chart.


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## Timmy (13 October 2009)

bunyip said:


> My original post was directed to Timmy. No reply from him yet - maybe he hasn't seen my post - before I disclose the method I really would be interested in hearing his views in regard to the buy signals I've shown on my chart.




Mornin' all.
Saw your post before I went to bed Bunyip and thought you must have been being rhetorical ... blue arrows do not a 'system' make, and all ... 
I would like to keep this thread on track, so any comments anyone, including yourself, has in response to the opening poster's questions would be good.


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## beerwm (13 October 2009)

bunyip said:


> Thanks Wayne. And you're right....my original post was intended to lead to discussion of a method that's worked well for me for many years.
> That discussion may still eventuate - unless the criticism continues and I get sick of it and just walk away without further comment.
> The reason I post very little on this forum is because of the number or ignoramuses who try to tear you down with ill-informed criticism and hasty conclusions when your intention was simply to share something of value.
> Empty vessels always make the most sound.
> ...




all criticism is intended to be constructive, never harsh. Just trying to get some discussion happening....

hindsight trades... pfft, who cares - just hoping to learn something new...

.. still waiting


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## Julia (13 October 2009)

kam75 said:


> 4. Trade only stocks between 0.50-5.00.




Why just in this range?


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## Mr J (14 October 2009)

I would also ask why Tech suggested just 80% with <5:1 R:R? I'm an equal opportunist: I don't care whether it has a 30% chance or a 80% chance as long as I'm getting good odds on the trade. Can a beginner accurately identify a situation with an 80% probability? How many good 50% opportunities do they pass on waiting for this high probability event?


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## beerwm (14 October 2009)

Julia said:


> Why just in this range?




im guessing kam thinks;

sub 0.50, the spread eats into commission
too much volitility

post 5.00
too little volitility


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## wayneL (14 October 2009)

Mr J said:


> I would also ask why Tech suggested just 80% with <5:1 R:R? I'm an equal opportunist: I don't care whether it has a 30% chance or a 80% chance as long as I'm getting good odds on the trade. Can a beginner accurately identify a situation with an 80% probability? How many good 50% opportunities do they pass on waiting for this high probability event?




Agreed. Bottom line = Expectancy x frequency.

**Skeptical of 80% probability directional trades anyway. Holy crap, if someone has 80% probs with positive risk:reward.... Jesus, mortgage the house and retire rich to the Bahamas in 12 months.


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## aramz (14 October 2009)

Timmy,

You mentioned earlier to read master the markets. I am currently reading through a list of trading books. Just wondering if this book should definitely be part of that list. Is the book fairly advanced or good for a novie with some trading experience to grasp? You rate highly i presume?


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## Timmy (14 October 2009)

aramz said:


> Timmy,
> 
> You mentioned earlier to read master the markets. I am currently reading through a list of trading books. Just wondering if this book should definitely be part of that list. Is the book fairly advanced or good for a novie with some trading experience to grasp? You rate highly i presume?




Aramz - if you have a bit of experience then it should be useful to read.  It is not the be-all, just a good starting point for understanding price and volume movement.  The 'smart money' references can get a bit tedious, bit conspiratorial.

Williams has written an earlier book "Undiscovered Secrets of the Market" (or something like that), that I have seen spoken of even more highly.  It is around too on sites like Rapidshare etc.

Once you have read the book then use it as a base to build experience, it really is a starting point - have a look at how the ideas are put into practice (plenty of VSA users on ASF) and explore Wyckoff further with Motorway's posts.

Hope this helps.


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## nunthewiser (15 October 2009)

no offense intended



well after all that kerfuffle there was still no outcome of method explanation so my posts still stand regardless of ones feelings .




my thoughts on  short term trading are .

1 . start with the simple stuff ........ trade where an entry points out an obvious LOW % loss stoploss point ....... may be simplifying things but if one knows where the probabilitys change is a big stepforward in learning to take smaller losses

2. where stoplosses stand there is no excuse for undiscipline as you already picked the spot that made sense b4 panic/emotions kicked in 

3. WATCH WATCH WATCH . individual depths , live movements , games in depths , patterns that re-occur , patterns that re-ocur , sizes of individual trades  etc etc 

4. i am not one for set targets ... i am one for directly watching the action and reading it to my ability . sometimes this costs me profit , sometimes it dont and i get it right  with the use of trailing stops ( tightness depends on trade time frame i am looking at and various points that present themselves to ME on MY chart while its moving)... if im skimming an intraday trade i use intraday 1 min charts for entrys  BUT happy to do the 1/2/3 tick shuffle IF the action , NOT the chart is dictating it to me

5, stick to your stoploss and use various sized capital according to the  stoploss % range it takes to be proven a bad trade


i could go on but reading back its getting harder to post anything thats gunna make much sense from here at this time of night 


have a niceday


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## Julia (15 October 2009)

Julia said:


> Why just in this range?






beerwm said:


> im guessing kam thinks;
> 
> sub 0.50, the spread eats into commission
> too much volitility
> ...



Still no reply from the OP

Beerwm, I disagree.  Stocks in higher value range often move in larger amounts, e.g. MQG
You can get the same % variation in SP over course of a day as in smaller value stocks.

Just as an example:
$50,000 worth of a $50 stock has a rise of 5% = profit $2500
$50,000 worth of a $3 stock has a rise of 5%   = profit $2500


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## Mr J (15 October 2009)

nunthewiser said:
			
		

> 2. where stoplosses stand there is no excuse for undiscipline as you already picked the spot that made sense b4 panic/emotions kicked in




Completely agree. In theory, a stop loss is originally placed at the point where the market suggests our plan isn't working, although it doesn't mean we shouldn't exit earlier at our discretion.



> 4. i am not one for set targets ... i am one for directly watching the action and reading it to my ability . sometimes this costs me profit




Also agree here. I'll take what the market gives me. I understand why many people will exit at a significant point of interest (high chance of reaction, reasonable chance of decent reversal), but for me it is often worthwhile to spend a little to see if price can break through.

Something to consider is the opposite of what everyone suggests. I go against quite a few popular rules, such as against the trend, picking tops and bottoms, too tight a stop, attemtping to hit homeruns, trading inappropriate timeframes etc. Seems to work :.


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## bunyip (20 October 2009)

Well over a decade ago when I was in the process of looking for a profitable method of trading the markets, I read two books that outlined a couple of trading systems that struck a chord with me because of their simplicity and effectiveness.
Over the years I've used these systems, or at least a slight variation of them, to pull consistent profits from a variety of markets.....Futures, Stocks, and for the last five years, Currencies.

The two books were...
_'Trading For A Living'_ by Alexander Elder
_'Curtis Arnold's PPS Trading System'_ by Curtis Arnold.

Below I've outlined a system that's a slight variation of Elders _'Triple Screen System'_ from page 235 of 'Trading For A Living.
This is the same system that gave the buy signals in the chart in Post No. 17 in this thread.
It doesn't win every trade but it wins more than it loses, and the average win is substantially bigger than the average loss.
Best of all it's very simple and it's easy to set up a scan to find the setups.

Elder and Arnold taught me that the way to consistent profits is to find a trend, look for the price action to pause for a few days or retrace temporarily against the trend, then enter the trade as the trend resumes.
And of course to use stop loss orders to control losses. And to stick with the trade while it keeps moving in your favour.

You can apply this system simply by eyeballing the chart, finding a decent trend, and visually identifying the pullbacks. No indicators necessary....a simple bar chart or candlestick chart will suffice.

To set up a scan so the software finds the setups for you, it's necessary to give the software some criteria to recognise.
My scan criteria are as follows.....

* 7 EMA is above 14 EMA by 0.01% or greater
* 14 EMA is above 21 EMA by 0.01% or greater
* closing price is above 40 EMA
* CCI crosses below zero

I can scan for the above criteria even when those indicators are not on the chart. I've put them on the chart below for illustration purposes only. Normally I just use a straight candlestick chart without any indicators or moving averages.
The moving averages are not set in concrete - pretty much any combination of moving averages could be used, as long as they're a mixture of shorter and longer term moving averages to show both the shorter and longer term trends.

There are always trends and there are always retracements during trends. Therefore this system produces a never ending supply of trading signals.
The mirror image of this system works for shorting temporary rallies during downtrends.


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## wayneL (20 October 2009)

We got there in the end. 

Thanks Bunyip.


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