Advice on short term trading approach

[nunthewiser]

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

 

[Julia]

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

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

 

[Mr J]

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 :.

 

[bunyip]

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.

 

[wayneL]

We got there in the end.

Thanks Bunyip.