- Joined
- 5 January 2009
- Posts
- 595
- Reactions
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Where to start??? To give some back ground information I started investing in shares about 7 or 8 years ago. Initially due my limited capital, time and knowledge I stuck to a buy and hold strategy (and up until the recent crisis I had done quiet well).
The next stage of my stock market experience, which occurred a few years after my initial investment and after I had gained further knowledge on the works of the market involved short term trading speculative mining stocks and put/call options.
The two lessons I learnt from this were:
1. There is no enough liquidity in options (in my opinion), I made some money but constantly had to drop my sell price just to attract a buyer.
2. With spec stocks it involves a great deal of time understanding the company and the area of mining in which they were involved. This limited my ability to trade these stocks as I was studying full time and could only keep tabs on a few at a time and even then would have to wait considerable time for a buy signal to eventuate.
Eventually my interest level dropped off (I still maintained my long term stocks but was not actively trading) I got busy with HSC, my own business and now University and full time employment.
That all changed towards the end of last year. I missed trading, I missed the effort I put in, the research I did and the feeling I got when I timed my entry/exit and made good trades. I began to investigate how I could get into the market whilst working and studying and help to develop my skills so I can eventually trade full time. I had read about CFD's in the past and although I had been involved with options, I steered due to the leverage and my lack of knowledge in the product. This time round I researched it in depth and instantly liked the potential the product would provide me with. I opened demo accounts with IG markets and CMC markets and instantly swayed towards IG because its user friendly interface. I traded for a couple of weeks to supplement my readings over the last few months.
I opened my trading account just over a week ago and have focused on the FTSE 100. This enables me to work 9-5:30pm, get home at 6pm and be ready to trade by 7pm. At the moment due to my computer set up I look at 4 to 6 stocks at one time and wait for signals to trade.
My trading strategy basically involves support and resistance and trend lines. I identify intra day support, wait for it to be broken and trade. The indicators I use MACD, RSI and momentum are there to confirm trades and identify when the run my be coming to an end to allow a clean exit.
Some far I have traded 4 days, unfortunately day 1 was not as successful as I hoped. Because I am only monitoring 4 to 6 stocks at a time, I got frustrated as I wanted to trade. I jumped in too early before the uptrend had really identified itself. A few it reversed and bounced around for a few hours. Eventually i exited at the price I bought and only lost out on commission. Lesson one was learnt: You don't need to trade, being out of the market is a position in itself. I had been too eager and didn't follow my principles.
Day two would be more successful, although another lesson would be learnt. I had been following Barclay's which had shot up nearly 100% over the past week. It had begun to reverse but had not yet broken through a key support level. Once it broke I short sold (I am currently only using positions of $1,000 until I develop my skills). I couldn't believe my eyes +$100,+$200 +$300 every few seconds it was going lower and lower and my position was showing a profit of $600 within half an hour or so. Then it reversed, I justified holding the position because it may just be a small bounce but it turned almost into a full reversal. I jumped ship for a profit of about $100. Lesson Two: Set stop losses as your profit rises and once the selling/buying looks to have ended. I would have been better off making $600, than holding out hoping it would have gone even lower. Simple answer was I GOT GREEDY and paid for it.
Day 3: Barclay's again, Short sold again, this time $200 profit and sold out once the momentum had run out. I was very pleased with this trade as I had learnt my lessons from the day before and was pleased to see a decent return for the nights work and unlike the other nights I had kept my emotions in check and not gotten carried away with my paper profit.
Day 4: This time I bought Xtrata, I noticed a strong up movement followed by a smaller drop due to profit taking and the stock being over bought initially, it was taking a breather and there was a pattern that had developed showing an uptrend since open. I purchased as the stock headed back towards its high. It eventually reached and surpassed that high and subsequent support/resistance levels from previous days trading. Over the past days trading I had become accustom to the indicators and what they were telling me (it was one thing to read about them in a book, but watching them is a whole other level). My RSI was showing 75, then 80 then 85 before making out at about 86 or 87, it was well over bought and the momentum was flattening out. A medium bar emerged and I sold out to take profits, it soon retreated in a similar pattern to its previous retreat. I left it at that and headed to bed. Another successful day trading and more lessons learnt in understanding indicators and the support and resistance levels.
P.S I hope to eventually post some charts up showing my entry and exits because all the above could just be "talk" and it doesn't show much detail without a chart. At the moment through I'm at work without access to yesterdays intra day chart.
The next stage of my stock market experience, which occurred a few years after my initial investment and after I had gained further knowledge on the works of the market involved short term trading speculative mining stocks and put/call options.
The two lessons I learnt from this were:
1. There is no enough liquidity in options (in my opinion), I made some money but constantly had to drop my sell price just to attract a buyer.
2. With spec stocks it involves a great deal of time understanding the company and the area of mining in which they were involved. This limited my ability to trade these stocks as I was studying full time and could only keep tabs on a few at a time and even then would have to wait considerable time for a buy signal to eventuate.
Eventually my interest level dropped off (I still maintained my long term stocks but was not actively trading) I got busy with HSC, my own business and now University and full time employment.
That all changed towards the end of last year. I missed trading, I missed the effort I put in, the research I did and the feeling I got when I timed my entry/exit and made good trades. I began to investigate how I could get into the market whilst working and studying and help to develop my skills so I can eventually trade full time. I had read about CFD's in the past and although I had been involved with options, I steered due to the leverage and my lack of knowledge in the product. This time round I researched it in depth and instantly liked the potential the product would provide me with. I opened demo accounts with IG markets and CMC markets and instantly swayed towards IG because its user friendly interface. I traded for a couple of weeks to supplement my readings over the last few months.
I opened my trading account just over a week ago and have focused on the FTSE 100. This enables me to work 9-5:30pm, get home at 6pm and be ready to trade by 7pm. At the moment due to my computer set up I look at 4 to 6 stocks at one time and wait for signals to trade.
My trading strategy basically involves support and resistance and trend lines. I identify intra day support, wait for it to be broken and trade. The indicators I use MACD, RSI and momentum are there to confirm trades and identify when the run my be coming to an end to allow a clean exit.
Some far I have traded 4 days, unfortunately day 1 was not as successful as I hoped. Because I am only monitoring 4 to 6 stocks at a time, I got frustrated as I wanted to trade. I jumped in too early before the uptrend had really identified itself. A few it reversed and bounced around for a few hours. Eventually i exited at the price I bought and only lost out on commission. Lesson one was learnt: You don't need to trade, being out of the market is a position in itself. I had been too eager and didn't follow my principles.
Day two would be more successful, although another lesson would be learnt. I had been following Barclay's which had shot up nearly 100% over the past week. It had begun to reverse but had not yet broken through a key support level. Once it broke I short sold (I am currently only using positions of $1,000 until I develop my skills). I couldn't believe my eyes +$100,+$200 +$300 every few seconds it was going lower and lower and my position was showing a profit of $600 within half an hour or so. Then it reversed, I justified holding the position because it may just be a small bounce but it turned almost into a full reversal. I jumped ship for a profit of about $100. Lesson Two: Set stop losses as your profit rises and once the selling/buying looks to have ended. I would have been better off making $600, than holding out hoping it would have gone even lower. Simple answer was I GOT GREEDY and paid for it.
Day 3: Barclay's again, Short sold again, this time $200 profit and sold out once the momentum had run out. I was very pleased with this trade as I had learnt my lessons from the day before and was pleased to see a decent return for the nights work and unlike the other nights I had kept my emotions in check and not gotten carried away with my paper profit.
Day 4: This time I bought Xtrata, I noticed a strong up movement followed by a smaller drop due to profit taking and the stock being over bought initially, it was taking a breather and there was a pattern that had developed showing an uptrend since open. I purchased as the stock headed back towards its high. It eventually reached and surpassed that high and subsequent support/resistance levels from previous days trading. Over the past days trading I had become accustom to the indicators and what they were telling me (it was one thing to read about them in a book, but watching them is a whole other level). My RSI was showing 75, then 80 then 85 before making out at about 86 or 87, it was well over bought and the momentum was flattening out. A medium bar emerged and I sold out to take profits, it soon retreated in a similar pattern to its previous retreat. I left it at that and headed to bed. Another successful day trading and more lessons learnt in understanding indicators and the support and resistance levels.
P.S I hope to eventually post some charts up showing my entry and exits because all the above could just be "talk" and it doesn't show much detail without a chart. At the moment through I'm at work without access to yesterdays intra day chart.
