Potential trades - Where to start?

[kolonel]

Gday all,

New to the trading scene, and currently reading Trading Secrets by Louise Bedford.

Was wondering what criterias you use to even start looking at a stock. Surely there must be a formula, or signal used to find a share to apply your trade to.

I am not asking for share codes "as a tip", but wonder what critetia is used to even start looking at a trade potential.

Regards
kolonel

 

[MS+Tradesim]

Kolonel,

Welcome. First, you need to know what kind of trader/investor you are. You cannot know when to buy and sell until you know that. Are you hoping to buy quality blue chip companies at discounted prices and hold for years? Are you intending to swing trade? ie. buy at X and sell 10-30% higher? Do you not care about share price and just want to buy strong dividend yield? Will you use a stop loss to preserve your capital or will you just hold through the large downswings? When will you get out? When it reaches a certain price? When a profit goal is met? When the fundementals change?

These are very simplistic questions and I'm not after answers as I'm not allowed, by law, to offer advice but if you don't know your goals and objectives upfront you cannot possibly know when to buy and sell and what criteria to use.

Define your objectives first. Whether you do it on your own or whether you use a licensed advisor.

 

[kolonel]

Thanks for the quick response.

I will be looking at short term trading, with the outlook of around 20% gain, and in other cases, very low losses Understanding stop loss, so as to get out without emotion is another goal. I must admit, this site is a great read.

Have got a little tied up with COE and WOW for the long at the moment, but looking into comfortable (as possible) trading with an online broker, and to use the money from these stocks ~$15k.

Constantly reading and (trying) understanding trends/signals etc from the book, but unsure how they find that share to start with. I currently have a program from Bullcharts which seems quite good, and would utilise the tools available.

Again, this site has been very educational, and look forward to the long term gains (and minimal losses).

Regards
kolonel

 

[Timmy]

Your time is probably better spent reading threads on this forum than that book, there is far more educational material here. Start by going through the Beginners Lounge looking for threads along the lines of this one you have started, there will be a multitude of responses and an enormous quantity of material referred to/linked - then branch out from there.

 

[awg]

Gday all,

New to the trading scene, and currently reading Trading Secrets by Louise Bedford.

Was wondering what criterias you use to even start looking at a stock. Surely there must be a formula, or signal used to find a share to apply your trade to.

I am not asking for share codes "as a tip", but wonder what critetia is used to even start looking at a trade potential.

Regards
kolonel

If you want to trade on a purely technical basis, and have not yet devised a Trading plan, you may need to either:

a) buy some expensive trading software which generates buy/sell signals, and/or;

b) read a lot of material that gives you examples of trading plans, and select something that suits your situation.

In either case, you do need to have a reasonable knowledge of what you are doing. If you dont it becomes more likely that you may lose money.

There are some good threads on this forum about this topic under the sub-forum of Trading. It is searchable. Some of the older threads on these subject will be helpful, and even give some examples of trading plans, books are available that do as well.

Otherwise you need to have fundamental or other methods of selecting which stocks you will look at, then conduct technical analysis on selected stocks.

I am in the process of devising a more refined trading plan than my pre-existing one, using ASF posts to point me in the right direction and other research, and it is a complex task.

There is much disagreement on what constitutes a reliable signal, especially with regard to the time scale of your intended trading.

My opinion only, not advice.

good luck, Tony

 

[MS+Tradesim]

Kolonel,

You may be better off searching the forum for threads on Bullcharts. It sounds like you roughly know what you want and now need to find out how to find the shares that meet your criteria. That is where understanding how to use its exploration functions would come into it.

I can't help with that as I use Metastock.

 

[kolonel]

Was also wondering, has anyone devised a program/spreadsheet that can track all trades (through paper trading) ? I know you can set up a watchlist, but was wondering if anyone has done one for EOD information. Somehow have it set that if it reaches stop/exit criteria, it could calculate all profit/loss, maybe factor in fees as well.

I cant seem to find it, but there was also a spreadsheet for risk assessment (i think tech/a). Having trouble finding it.

Thanks in advance.
kolonel

 

[kolonel]

Have picked up valuable information from just reading through these posts alone.

Considering taking the plunge and buying "Amibroker" and utilise it as best i can. It seems to have what i want to start with (Portfolio manager/backtesting and plenty of support), so it is next on my list. Will continue to run with Bullcharts until i get the gist of it.

Let me know if i need to learn to crawl before learning to walk

Will spend some time putting a plan/system together, which you guys cannot express enough.

Playing around with some charting, so hopefully you guys dont mind me posting them, and picking through them.

Again, glad i have stumbled onto this site, as i have found it to be most rewarding in relation to knowledge acquired.

Regards
kolonel

 

[MS+Tradesim]

Kolonel,

I can't recommend this book enough: Trade Your Way to Financial Freedom, Van Tharp

It doesn't tell you how to trade. It discusses the important aspects of the necessary concepts about trading. Things like risk management, money management, psychology, expectancy and more.

I read it every couple of months just to keep it all fresh. I've since been doing one of his courses. It has also been invaluable in helping me to consistently act with my plan, avoid mistakes (a mistake is when you don't follow your rules), and most importantly throughout this unfolding stock market decline I have been able to remain emotionally neutral and think clearly.

IMO, these things are way more important than entry and exit signals.

EDIT: Ps. If you decide you want the book buy it through the ASF bookshop link and support Joe!

 

[kolonel]

Thanks for the thorough reply Tradesim, and i will definately look into the book you have recommended.

Just started reading some info about trading plans, so this might go hand in hand.

Regards
kolonel

 

[kolonel]

OK, have been working through the "Trading Secrets" by Louise Bedford and found it quite interesting, but also a little daunting.

Also, have been quite intrigued with the capital% risk trading, which makes a lot of sense, and minimise any losses that are inevitable.

Looking at trading ASX stocks, and short-mid term trading.

Was wondering what software/scans/trends some of you use or recommend ? Was going to look at a package with data supply/history and use some indicators best to find a stock worth looking at.

Don't really want to jump in until i feel comfortable with something, and look forward to any feedback.

Regards
kolonel

 

[MrMarcus]

Don't know if this thread is still active, but anyway...

I also use Bullcharts software and my technique when looking for shares to buy is to generally accumulate scans for

* Stage 2, or entering Stage 2 from 1
* MMA crossover, ie golden cross
* the various Breakout scans

I then scroll through and select whichever shares look the most promising.

I am also a reader of Louise Bedford's books. Van Tharp's book is more for experienced traders and I personally find it difficult to read. He fills the book with too many "I remember when i was at a conference someone came to me and asked....." anecdotes.

'How to profit in bull and bear markets' by Stan Weinstein covers similar concepts to Louise's in more detail.

Darvas' "How I made 2 million.." is also an interesting read, and is another example of breakout trading.

 

[alwaysLearning]

I'm in the middle of reading 'Trading Secrets' as well.

It sounds like you are going to 'paper trade' for awhile before you decide to trade for real. (and that is a good idea).

I also would be interested if someone has a pre-made excel spreadsheet. If not it's not a big deal. (Should be pretty easy to make)

 

[strudy]

Kolonel.

The first and most important thing you must have is a “TRADING PLAN”

This is a “Written PLAN” which you can refer to from time to time. The reason for this is that it will keep you on track and on the right path to becoming a “Successful Share Trader. It should comprise of several steps which will become a constant guide to each trade that you make.

1.OBJECTIVE. Of course the main idea is to make a Profit.

This is regardless of whether you are a “Long Term or Short Term Trader.” Surprisingly enough quite a few Traders don’t make a profit.

This usually is brought about by NOT planning in the first instance.
They are actually trading “BLINDFOLDED.” Not a very desirable state to be in. But funny enough Traders are doing it all the time.


2. RISK. There are several types of risk to be alert for.
Firstly there is “Overall Market Risk.” What is the current “MOOD” of the Market “RIGHT NOW?”
Is it a “BEAR or BULL” Market?

Now depending on what type of Market it is, this should/could influence you on whether or not to enter the Market now or later.
If everything is heading downwards, a little delay might mean that you purchase that stock a little cheaper.

A bit of advice here, “NEVER TRY TO PICK THE VERY BOTTOM OR THE VERY TOP OF THE MARKET.” If you happen to it is luck and nothing else.

Even the so called “EXPERTS” cannot predict the top or bottom. As much as they would have us believe they can.

Another “RISK” is speculative Risk. This can be found particularly in the Mining or Oil sector. Sure the stock price can go skywards, BUT it can go the other way just as quick if not quicker. Only put a small proportion of your capital in this area. Unless of course you are willing to accept the Risk involved.

ONLY YOU can decide what level of Risk you are comfortable with.

3. ENTRY. This where you have decided at what price you are going to pay for your share.
As to when we will cover that in “TIMING.”

What ever you do, “DO NOT” leave an order in overnight particularly if the stock is VOLATILE that is to say that the stock is going up and down like a yoyo.
You could pay more than you bargained for.

If you must leave in overnight put a “LIMIT’ to what price you want to pay. Not a “AT MARKET ORDER”. At least you won’t get any nasty surprises that way.

4. TIMING. A very important part of your trading Success will be in your timing.
If the market is going downwards a little patience could mean a better entry price, which will reflect ultimately on your profits.

As I have quoted before don’t try to pick the exact bottom or the top. Waiting to long might mean the difference between a small profit and a larger more desirable one. The best advice is to get the “BEST” price possible at the time you decide to trade.

5. EXIT. Not enough attention is paid to this area. Timing is important, but a good “TIP” is “Have a “PRE SET” exit figure already prepared.
This has the advantage of you knowing already how much Profit you are going to make

Now DON’T BE GREEDY!!! This is a “TRAP” that many traders fall into very regularly. More than I care to mention, Small profits taken on a regular basis can build very quickly into quite large amounts.

6. USE A STOPLOSS. This can mean the difference between “SUCCESS OR FAILURE”
A stop loss is a price that is set either ABOVE or BELOW your share price.
This has the effect of stopping a substantial loss or a “BIG” one. A good guide is to have no more than 2% of you total portfolio at risk. You can decide what% you are comfortable with.
(Another name for a stop loss is a "Conditional Order.)

A “TRAILING STOP LOSS’ is what you place just behind your rising share price, this effectively “LOCKS IN” those Profits so near and dear to you and me.

7. PAPER TRADING. This is a wonderful idea to practice and To “LEARN” and to “FINE TUNE” you’re trading skills without endangering your hard earned cash.
Remember if you fail to plan, you are planning to fail.

I hope this has been of some assistance to you in showing how vital a "Trading Plan" is for your continued. survival in the stockmarket.

 

[Trembling Hand]

Remember if you fail to plan, you are planning to fail.

I hope this has been of some assistance to you in showing how vital a "Trading Plan" is for your continued. survival in the stockmarket.

Strudy I just don't think any of this is worth much because you are missing the MOST important thing. WHY/HOW your plan is profitable. You can stick to your plan religiously and many do but that alone will not make you profitable.