Education
Share Personality
by Greg Secker on Mar.09, 2007, under Education
Personality:
- Shares are like people, they have certain characteristics and patterns of behaviour
- Understanding a share’s personality can give you an edge when trading it.
Timeframe:
-
•Whenever you look at a chart of a share for the first time, pull out the maximum timeframe
- Get a feel for where the price has been and where it is now with respect to it’s history
- Toggle to the monthly bars for clarity
Long timeframe:
- Features to look for:
- Alltime highs and lows
- General trends over long timeframes
- Channels and trading ranges over long periods
- Support and resistance over long periods
- Relationship of current price to these features
Medium timeframe:
- Now you can home in on the medium-term and look for features specific to that timeframe
- Establish trendlines
- Establish major resistance
- Establish major support
- Look for larger scale chart patterns such as ascending and descending triangles, double tops and bottoms
Characteristics of Price action
- Now look at the price action itself and look for:
- Volatility
- Spiky daily price action
- Price spikes
- Gaps
- Sideways
- In deciding on these price behaviours:
- Look at the frequency of the events
- Avoid stocks with wild or step-wise price action (they will probably have bigger spreads anyway
- For stocks that have wide daily ranges:
- Use wider stops, but watch for adequate risk:reward
- Possibly use limit orders to close your position at your target
- If you trail stops give plenty of space
- Also look for:
- DMA’s and trend lines that have acted as support
- Chart patterns that frequently appear and work favourably
- Powerplays that have been winners off support and DMA
- You can learn a lot about your stock by looking back at the history and doing some analysis
Scaling into Positions
by Greg Secker on Mar.09, 2007, under Education
Scaling IN:
- What is it?
- Scaling in is when you add £££ to a position that is doing well in order to increase your profits
A good system for scaling in should be the following:
-
•A simple method using the knowledge you gained from your training weekend
- It can be worked out quickly as you review your trades
- Uses sound money management
- Locks in profits
- And allows winners to continue to run
Scaling OUT of positions
- Scaling out is when you reduce £££ in a position that could be about to turn, in order to reduce your risk
Summary
- Protect your capital – you worked hard for it!
- Make every trade a breakeven trade ASAP on Day 1 or Day 2
- Minimise your losers
- Maximise your winners
DEVELOPING THE TRADING HABIT – ‘We are what we repeatedly do. Excellence, then, is not an act, but a habit. (Aristotle)
by Greg Secker on Mar.09, 2007, under Education
Building your trading machine:
- Mechanising what we do and what we think reduces the margin for error resulting from the feature of the human condition we call our emotions.
- What you do and think must be constant repeatable and disciplined, with a goal of making your actions and thoughts automatic and unconscious.
- Develop a trading plan – with WHY you are doing it, WHAT do you want to achieve, and by WHEN.
Basic Tools – What you need as a minimum:
-
•Sharescope Gold – FTSE 350 sorted by Market capitalisation
- A funded spreadbetting account
- A spreadsheet to calculate trades and record trading activity.
Trading Routine
- Your daily setup (schedule it to a fixed time)
- Start up :
- Computers + Screens
- Information sources (News eg. Bloomberg TV, Sharescope)
- Trading Tools (spreadbetting platform)
- Management tools (trade records and sizer)
- Interaction with peer group – Skype
- Research
- Looking for trading opportunities
- Scan markets
- Select candidates
- Create watchlists
- Size trades
- Risk managed trade – follow rules
- Place orders
- Keep meticulous trading records
Keeping Trading Records
- Make a very good habit of this and always record:
- The reason you took the trade, eg. was it a:
- Powerplay
- Consolidation
- Breakout
- etc
- Entry and Exit date and Time
- Entry, Exit (eg stop) and Target levels
- Reward to Risk
- What was the outcome?
- The reason you took the trade, eg. was it a:
