I need some one to mentor pls
Because i want to be full time trader
Pro n expert trader I plead your help please
Trading a stock index is similar enough to trading a stock or forex pair or commodity that you can use the exact same rules of technical analysis. If you can learn TA for trading, you will have learned how to trade indices.
There are some unique features -
Indices are less volatile than individual stocks so that means less risk but also a slower capital growth.
Index prices for traders may be traded 24 hours/day Monday-Friday (unlike individual stocks), so index prices and brokers’ index charts may not show an overnight gap, when other types of chart do show overnight index price gaps.
Hmmmnnn…
Dunno so much about there being similarities between trading stock indices and commodities vs. FOREX. Maybe in theory and insofar as the same tools being available to be applied. But in practice I’ve found differently I’m afraid. In my first few years I actually did this exercise and asked the same question and to date nobody has given me a reasonable explanation i.e. I lost copious amounts of money (as noted recently: in the upper six digits and in USD to boot) for various reasons. What confounded me was this though: just about all of my trades on indices and commodities were profitable over a pretty long period of time (at least two to three years) whereas just about all of my FOREX trades over the same period were losers (and unfortunately for me those were the bulk of my trades by a huge margin at the time given that I thought FOREX was the business and figured that indices were out of my league and only for the professionals at the exchanges) (not to mention leverage or lack thereof which, even back then, was a fraction of the leverage being offered on FOREX pairs and which, we all know, is bait for new the new trader which included me at the time of course). My argument back then (same as it will be today) is how come the same trader with the same personality traits and personal shortcomings, with the same trading systems, taking the same (ridiculous at the time) risks, and even with the very same broker could be profitable in one market (well: indices and commodities) and yet lose the farm on FOREX. I have (back then as well as over time) formed my own personal opinions as to why but not worth upsetting the budding FOREX millionaires over here. Anyway and long story short: the moment I dumped FOREX and got seriously into indices, stocks, and commodities only then did things start turning around (although unfortunately by that time it was too late to make up all the losses due to an eventual lack of capital and had to step away from trading for a good while i.e. could not sustain myself on a monthly basis in spite of being profitable but with a lack of capital). Anyways. Just saying based on my personal experience. Not sure that it’s a discussion I want to rehash. It made me pretty unpopular back then and it’s bound to achieve the same result today.
Moving on…
I see the OP has tried to get help on more than one occasion re: this very topic. I’m happy to help. But I sure ain’t calling you on the phone. But before we even bother with this: you need to realize that you need decent capital before even attempting to go this route. Margin requirements have been greatly increased (leverage decreased) at all properly regulated brokers. This is a wonderful thing (believe it or not). But it means that you need some serious money to be able to make anything that’s worthwhile on a monthly basis. At a regulated broker the best you’re going to get is 5% or 20:1 (unless you’re able to be classified as a Professional Trader and I’m guessing that in your case this is not going to be possible for a while). In real terms this means that in order to trade just 1 contract (CFD) on the Dow Jones Industrial Average, yielding $0.01 per tick, you need $1 297.20 in margin alone per contract (CFD). Of course you can trade mini contracts (mini CFDs) which some brokers offer i.e. the margin requirement is 1/10th of that but then so is the tick value. Alright. The Dow is a worst case scenario i.e. a lot less margin is required to trade the S&P500 and the NASDAQ (purely because of the prices of course i.e. margin percentage required is still the same). But then of course: the daily ranges of these two are a lot less than the Dow. And, of course, you could go find a broker that offers you ridiculous leverage (saw one just this last week offering 500:1 on the indices) but this means they are not regulated (at least not with a regulatory body that I would entrust to oversee my broker and their antics).
So there you have it dude. The low down (at least from my perspective and based on, sometimes bitter, personal experience).
If you want help: glad to oblige (assuming you fit the bill as detailed above). This being said: nothing done privately or on a one-on-one basis i.e. everything done openly and publicly on these forums on my thread that’s currently running. Oh and don’t go expecting ridiculous gains either. 1% - 5% per month on average over a year: consider yourself very lucky. You want 20% per week (or more): cannot help you. And if you need to withdraw profits monthly: obviously you can forget about compounding. So you need to work out it you have enough money to be able to sustain yourself on 1% - 5% per month (as I say: on average over a year).
Not so easy huh!!! LOL!!!
Regards,
Dale.
3 Likes
Agreed Dale, forex prices have no tendency to move in one direction or another for long sustained periods of time. Indices of course are inherently buoyant and the smashing performance of the Dow or the FTSE getting to where they are today since they were founded has more to do with periodic re-jigging of membership than with stunning financial management.
But its horses for courses. If a trader is good at long-term trend-following they should avoid forex and look to be long on indices (as soon as and for as long as possible). If they’re good at short-term swing trading or range trading or choppy market trades, they should prefer forex.
3 Likes
Aaarrrggghhh…
You’re reeling me into a discussion here!!! LOL!!! (Not complaining though I assure you).
For what it’s worth here’s what I believe:
Stocks (and therefore the Indices of course) have people and therefore human emotion and human judgment behind and affecting price moves. And even although most trading floors have disappeared: I’m convinced this is still applicable (maybe not to the extent that it may have been but I’m actually not sure). FOREX prices are just a function of the FOREX markets doing what they do day in and day out (be it as a result of trade between countries or geopolitics or whatever).
My other mantra has always been the daily closing price of a stock or index. If the Dow closes at a certain price above or below a certain moving average: that is key and just about every stock trader is going to be watching that level. It therefore becomes a self fulfilling prophecy (the next price move). FOREX: who cares whether EUR/USD closed above or below its 200-day SMA???
And of course there’s this thing about there being a finite amount of shares available in any given company. It’s not like they’re going to go out and start printing additional share certificates because they’ve got too many buyers. And this of course affects price once again.
Last but not least: it’s a smaller market. While some may see this as being counter intuitive I’m not one of them.
But before I get shot down in flames or with arrows: the above is really just my personal beliefs and insights but, as noted previously, both being based on the fact that I’ve not traded FOREX profitably EVER since around 2005 to date. I am willing to accept that it could very well just be my own personal bias and those are my justifications for such bias. In my case though: my results are the only thing I can go by.
Regards,
Dale.
P.S.
In order to make it interesting though: as you know I’ve been wondering how that system of mine will work on FOREX pairs i.e. never tried it. So to this end: I do indeed have a (very small I might add) pending order to start scaling-in on EUR/USD comes Monday. Let’s see what happens. Just for the fun of it. Who knows. Maybe I end up eating my words above.
Its all good Dale, can’t argue with the logic of anything you’ve said.
1 Like
Actually. There’s another point that I used throw in with the above argument re: stocks and I couldn’t for the life of me remember what it was until now (remembered while I was doing the dishes!!! LOL!!!).
Come to think of it: maybe more of some musings rather than an actual point (or points).
But (and in my mind anyway): there is an expectancy and a propensity for stock prices to go up. I mean just look at the Dow since its humble beginning. Of course there have been pullbacks and corrections (and drama) along the way. But the general idea really is for stocks to increase in value (nobody goes into business with the idea of decreasing the value of their stock let’s face it). So I guess one could argue that only going long a stock or index is trading the path of the least probable resistance. I do know that there are traders and trading firms that will only take long trades (called “long only shops” if memory serves me correctly). Oddly enough and on a side note: it took me a very very long time to feel comfortable shorting a stock or an index (and even now it just feels “wrong” to me but I’ve nevertheless, fortunately, managed to conquer this demon). All of this then though negates my theory re: the 200-day SMA being a filter (or does it???). The other potential pitfall of course is that a stock market can go down and stay down for years on end (I seem to remember somebody lecturing me on Japan and their so-called “zombie banks” after their depression) (but I have to admit I’ve never really studied this myself). Then again: how bad could it be for a trader to know that with a very high probability a stock or index is going to be trading in a certain range for months or years to come and that its only probable breakout direction is up??? Can the same logic be applied to a FOREX pair??? Or are they, for the most part, supposed to retain some type of equilibrium (between developed countries anyway). Must also admit that it scares me when I hear proposals of late for the US to simply decrease the value of the USD to remain competitive and to resolve these issues with China (it comes on the news i.e. no way to avoid it unless living in a vacuum). And China has on occasion just done it at will (which has caused havoc on the indexes at the time) (ask me how I know!!! LOL!!!). I mean to say: I don’t see it happening that the CEO of a company will wake up one morning and simply decide “hey: our stock price is too high so…”. There’s just too many PEOPLE that would be involved and shareholders to whom management has a responsibility to and is accountable to (all things being equal and above board of course).
Anyway. There’s just some musings from me really.
Regards,
Dale.
1 Like
Not on your own, took many to conquer this one - think back to the Bank crisis - not allowed to short the obvious, the shorts were deemed to be part of the problem.
Investors are by nature long, speculators go with the flow I suppose.
(Think maybe the OP has a sell angle but good thing is he has sparked some good posts)
1 Like
Thanks. That looks like a very interesting document. Will read shortly or during the week.
Good point(s) made.
Years ago when this was discussed on these very forums: some bright spark (jokingly of course and in good humor) suggested that I should just physically rotate my screen 180 degrees and problem solved!!! LOL!!!
Regards,
Dale.
1 Like
Interesting informed stuff thanks Dale.
In recent years, I never short the Dow. I only ever long the DAX, FTSE etc. when the Dow is bullish but then I would always be long the Dow already so what’s the point?
Actually I do short stocks but only when I am already long the Dow. If an S&P stock is so cr@p it can be bearish when the Dow is bullish then it must be really bad. And you can just imagine what happens to these dogs when the Dow turns down…
1 Like
Hey Tom.
Wow. Looks like you and I have a lot in common. Nice. And thanks for the compliment (once again). Like I said: just musings really.
For me: nothing wrong being long several indices at the same time (even although I do warn about this on my thread). What I’ve noticed (at least with that TPS system) is that a lot of the time I’ll get signals to close trades (whether at a profit or at a loss) at different times (different days) on the different indices. So while they may be closely correlated they’re not exact (obviously). As an example and as noted on the thread: right now I should have taken profit on the ASX200 at the close on Friday. Even although it’s a small profit on the table is for sure covers the interest I’m paying for holding all of these positions over the weekend. But there are no signals to close trades on any of the other indices (which hopefully will happen by the close tomorrow or, if price retraces, will give me a chance to scale-in to full positions on them).
Individual stocks I rarely look at to be honest. I kind of like the idea that the indices are AVERAGES and therefore not quite as susceptible to radical moves based on nothing other than which side of the bed some trader at Goldman Sachs got out of that morning!!! LOL!!! But I have traded a few with reasonable success with that system. Just not my main thing as it were.
Keep in touch. Really enjoy our interactions.
Regards,
Dale.
1 Like
Interesting research reported recently in The Economist that fund managers spend tiny amounts of time and research effort on when to sell their stocks compared with buying decisions. So your comment on the Goldman Sachs trader’s poor morning humour is maybe not wide of the mark…
1 Like
Oh here you go:
All the usual suspects. AGAIN.
1 Like
The fundamentals of Indices are a little bit different than currencies. Basically these are not short term profit yielding instruments, you need to have a long term approach if you want to earn profits from indices. Basically these are a group of large companies and the overall performance of the index depends on the contribution of each of its constituent. You need to monitor the major components of the index closely and follow a long term strategy.