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Hey guys,

 

 

I have been interested in trading for a while. Gave it a shot a year and a bit back, but didn't do so well.

 

 

I've since spent the time in between studying technical analysis and the market in general.

 

 

A bit of back-ground- I generally trade in PM stocks as it is an industry I work in, follow, and understand (more than others). With that in mind, there is often a fundamental aspect to my trading which uses fed reports, gold/silver prices, and a number of other global factors that influence market sentiment towards PM. As anyone who has followed, its been a tough year and a bit.

 

I'm still figuring it out, but my strategy has been fairly simple up until now. If there are clear S/R zones, I will trade it as I see it, with careful stops, especially at the resistance support.

 

Beyond that, I've been trying to trade the pull-back in a trend supported by a clear line or channel, using a combination of MACD and force index to determine periods when a stock is over/undersold. Don't want to open a margin account just yet, so all of my plays have been long, anywhere from 2-10 days.

 

I pay attention to a number of factors like moving averages and volume, but more as confirmation. All sounds fairly text-book, and that because it is. Once again, since most of my trading is done within the PM/mining sector, price of gold/silver and other macro incentives cannot be avoided...or so I feel.

 

So..what have I been trading? Well, I have a handful of stocks I like to trade. I can go a week without a position as, with the stocks I trade, I don't always see a opportunity that I like. The stocks I watch are listed below:

 

-SBB.T , Sabina Gold and Silver

-BTO.T , B2Gold

-BSX , Boston Scientific

-CS.T , Capstone Mining

-K.T , Kinross Gold

 

 

Anyone have any suggestions on how I could hone my strategy. Not exact step-by-step info, but some indicators or oscillators that may work well with what I described above. Thanks.

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  Geogaddi said:
Hey guys,

 

 

I have been interested in trading for a while. Gave it a shot a year and a bit back, but didn't do so well.

 

 

I've since spent the time in between studying technical analysis and the market in general.

 

 

A bit of back-ground- I generally trade in PM stocks as it is an industry I work in, follow, and understand (more than others). With that in mind, there is often a fundamental aspect to my trading which uses fed reports, gold/silver prices, and a number of other global factors that influence market sentiment towards PM. As anyone who has followed, its been a tough year and a bit.

 

I'm still figuring it out, but my strategy has been fairly simple up until now. If there are clear S/R zones, I will trade it as I see it, with careful stops, especially at the resistance support.

 

Beyond that, I've been trying to trade the pull-back in a trend supported by a clear line or channel, using a combination of MACD and force index to determine periods when a stock is over/undersold. Don't want to open a margin account just yet, so all of my plays have been long, anywhere from 2-10 days.

 

I pay attention to a number of factors like moving averages and volume, but more as confirmation. All sounds fairly text-book, and that because it is. Once again, since most of my trading is done within the PM/mining sector, price of gold/silver and other macro incentives cannot be avoided...or so I feel.

 

So..what have I been trading? Well, I have a handful of stocks I like to trade. I can go a week without a position as, with the stocks I trade, I don't always see a opportunity that I like. The stocks I watch are listed below:

 

-SBB.T , Sabina Gold and Silver

-BTO.T , B2Gold

-BSX , Boston Scientific

-CS.T , Capstone Mining

-K.T , Kinross Gold

 

 

Anyone have any suggestions on how I could hone my strategy. Not exact step-by-step info, but some indicators or oscillators that may work well with what I described above. Thanks.

 

hi there,

 

I am sure you will get a lot of good advices here.

 

From what you are describing you are a scalper, even if you are trading for 7-10 days. You didn't mention what makes you to close a profitable trade?

 

That should be interesting in order to have the overall picture.

 

TW

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Thanks for the reply,

 

 

Well, If I'm trading just straight up S/R zones, I'll sell off at the R zone. If I think the attack is going to break the R zone I'll wait for a 3.5% rise in price above the zone to hold the position. If I don't see the confirmation, or I don't feel it is particularly strong, I'll sell off.

 

 

Otherwise, if trying to trade the pull back, as of now, my exit strategies are not that great. I find that the force index and MACD together are quite good at giving reliable over-sold indicators, which I confirm with visual pull-back in the price action. Unfortunately, I haven't had the same success with using it as an exit strategy....which I don't understand why.

 

 

Typically if I'm up by 15% I'll get out. A few times, the momentum seems to be so strong that I'll only sell of half the position, but I'm pretty disciplined when it comes to 15%.

 

 

As far as stops, I've determined that a 4% loss is my current risk tolerance.

 

 

Not sure if that really answers your question or not.

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Thanks for the response.

 

 

I don't really see the pattern. My last attempt, I was investing long based on fundamentals. In the long term, it isn't to bad, but short term its a crap shoot.

 

My strategy this time around is different.

 

 

I certainly agree with the sentiment of the passage which you quoted. I don't believe in making predictions based on market sentiment. That being said, those into gold know to follow a couple of things as they will be represented in the POG, the HUI, GDX, GLD and any of the majors, from there it is a trickle down effect. I believe that, in these times, you can make the case the TA was "to late". Of course...I'm no expert at all...

 

 

Clearly, bullish behavior is bullish behavior and although we all have different ways of confirming it, its always being taken at face value. In my opinion, the passage is good, but full of a decent amount of rhetoric. I was looking for advice/discussion on quantitative means of analysis. Granted, I'll still save the passage for future reading, when I find myself getting to caught up in things that don't particularly matter.

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Hi,

 

What you describe sounds promising, and as long as you don't have unrealistic expectations of performance it ought to work well enough.

 

I would caution you not to get bogged down in the use of too many indicators/oscillators (they're mostly overly complex manipulations of price data that tell you nothing and exhibit serious lag).

 

In terms of the more technical, mechanical aspect to your approach, you only need to do two things:

 

  1. Identify the long term trend. A simple moving average is perfectly adequate for this purpose - I have yet to find anything that clearly beats it. What setting for the moving average? I would recommend that you optimise this (it's just one parameter), and then keep on re-optimising with each new potential trading opportunity. You'll usually underperform the historical optimum, but outperform what you would have achieved with no optimisation at all.
     
  2. Identify the pullbacks in the trend. To do this, you just need to compare aspects of prices over the last couple of bars. Something as simple as "three consecutive down closes in an uptrend" can work, but I recommend a 2 period RSI. If you look at the calculation of this (you'll find the formula on Wikipedia), you'll see that rather than being some complicated nonsense, in the 2 period form it becomes a very simple price comparison.

 

 

For each of the above, you could then apply a discretionary overlay based on your knowledge of the industry. You'd simply want a fundamental (or insider!?!?!) answer to each of the following questions:

 

  1. Is the long term trend really valid, or just a price excursion that you can't find any real fundamental justification for?
     
  2. Is the pullback just a brief and minor correction before the long term trend resumes, or is it the result of something much more significant that may begin a major trend change for that particular stock?

 

Hope that helps!

 

BlueHorseshoe

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Thanks for the reply.

 

 

I've tried to keep my mind focused on the basics of identifying the trend and trading the pull-backs. Admittedly, its easy to get caught up in indicators/oscillators while trying to figure out what works for you.

 

 

My TA education began with multiple readings of Technical Analysis of Stock Trends by Edwards and Magee. Obviously it is an older work, one of the first, and some of the original writings are out-dated for todays traders but it was a good introduction, especially the chapters on Support/Resistance, Market Psychology, and Dow theory.

 

 

The book doesn't cover any of the fancy oscillators/indicators that have been invented since its initial publication, nor does it deal with Candlestick charting. Does anyone have any recommendations in regards to a good follow up to Edwards and Mcgee? Even if just for a better understanding of the historical development of TA.

 

I would also like to hear peoples opinions on how necessary it is to use Candlestick charts. I admit that it is something I have neglected in my readings, and I only know the basics formations. I normally use the standard line graph, but if I'm missing out on something big, please let know.

 

 

Once again, thank you for the replies. I have enjoyed reading them.

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Hi there,

 

Candlesticks vs bars? Its just personal preference. Forget about the hype of fancy and cool names candlesticks have. I use both bar and candlestick charts and my preference is to use bars when I want structural charts and candles when I want to do bar by bar analysis. Both are showing the same things its just your preference.

 

Magee book is a classic and still a great book today. I'm sure you'll get heaps of book recommendations from others, but a few that I liked were:

- Trade your way to financial freedom by Van Tharp

- Evidence Based Technical Analysis by Dave Aronson

- The Art and Science of Technical Analysis by Adam Grimes

 

With kind regards,

MK

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  Geogaddi said:
Thanks for the reply.

 

I've tried to keep my mind focused on the basics of identifying the trend and trading the pull-backs. Admittedly, its easy to get caught up in indicators/oscillators while trying to figure out what works for you.

 

 

Attached is a screenshot and 10yr equity curve for pullback trading BSX, hopefully to try and inspire you :)

 

Remember, the MA trend filter is near historic optimal (50 periods), so your actual performance would not have been quite this good. On the other hand, this is long only - if you short rallies in downtrends you can probably double your trading opportunities.

 

Kind regards,

 

BlueHorseshoe

5aa71200b80e9_BSXPullbackTrades.thumb.png.78b04c5f76c6597306232b29924b0db9.png

5aa71200bd8a4_BSXEquityCurve.png.4b4e413ca481b59e959c92590757dac7.png

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  BlueHorseshoe said:
Hi,

 

What you describe sounds promising, and as long as you don't have unrealistic expectations of performance it ought to work well enough.

 

I would caution you not to get bogged down in the use of too many indicators/oscillators (they're mostly overly complex manipulations of price data that tell you nothing and exhibit serious lag).

 

In terms of the more technical, mechanical aspect to your approach, you only need to do two things:

 

  1. Identify the long term trend. A simple moving average is perfectly adequate for this purpose - I have yet to find anything that clearly beats it. What setting for the moving average? I would recommend that you optimise this (it's just one parameter), and then keep on re-optimising with each new potential trading opportunity. You'll usually underperform the historical optimum, but outperform what you would have achieved with no optimisation at all.
     
  2. Identify the pullbacks in the trend. To do this, you just need to compare aspects of prices over the last couple of bars. Something as simple as "three consecutive down closes in an uptrend" can work, but I recommend a 2 period RSI. If you look at the calculation of this (you'll find the formula on Wikipedia), you'll see that rather than being some complicated nonsense, in the 2 period form it becomes a very simple price comparison.

 

 

For each of the above, you could then apply a discretionary overlay based on your knowledge of the industry. You'd simply want a fundamental (or insider!?!?!) answer to each of the following questions:

 

  1. Is the long term trend really valid, or just a price excursion that you can't find any real fundamental justification for?
     
  2. Is the pullback just a brief and minor correction before the long term trend resumes, or is it the result of something much more significant that may begin a major trend change for that particular stock?

 

Hope that helps!

 

BlueHorseshoe

 

 

 

Thanks again.

 

The goal I am trying to reach is to make, on average, $50/day.

 

I'll be trying out a similar strategy (on paper for now) using the MACD and RSI instead of the force index to see which one works better for determining entry points.

 

 

I've been reading a lot of threads/articles here and many people talk about not getting bogged down in using indicators/oscillators to much and trying to pay attention to price action. I find price action to be a fairly general term and includes and number of things, most notably the overall trend. I plan on taking this into consideration.

 

 

Lastly, more or less, how many people actually make $50/day trading. Is this considered a difficult goal to achieve or is it something which many users reached fairly quickly?

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Good response, thanks.

 

 

I think $50 is a good goal to set. As far as under performing, its not so important as I have other means of income and I currently live in Central America where living in fairly inexpensive.

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  Geogaddi said:
Good response, thanks.

 

 

I think $50 is a good goal to set. As far as under performing, its not so important as I have other means of income and I currently live in Central America where living in fairly inexpensive.

where at In CA. I MOVE around quite abit in CA. BELIZE, HONDURAS, GUATEMALA, EL SALVADOR...

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  Geogaddi said:
Good response, thanks.

 

 

I think $50 is a good goal to set. As far as under performing, its not so important as I have other means of income and I currently live in Central America where living in fairly inexpensive.

50 bucks is one point a day in the ES..easily done scalping the ES. just a few minutes each day...but you better learn scalping good first and practice or the ES will easily take your 50 and a few hundred more from you each day.

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  Geogaddi said:
Currently in Nicaragua, although thinking about making a change as I no longer have any business obligations here which require my physical presence.

 

 

Thinking about trying out SA.

sounds interesting. Got any country in mind?

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  Patuca said:
sounds interesting. Got any country in mind?

 

 

Haven't really narrowed it down at all. Right now its basically if I want to start learning Portuguese in Brazil or improve my Spanish to fluency.

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