Z
Hi,
Currently working on this at the moment. Have been for 4 months now and beginning to make some progress, though I have been stung a number of times after making some stupid errors. But have learned an awful lot from the experience and still determined to hang in.
I have based the foundations of my strategy on a great book I came across when reasearching Spread Betting:
http://www.amazon.com/Financial-Spread-Betting-Handbook-Trading/dp/1897597932/ref=pd_bbs_sr_1?ie=UTF8&s=books&qid=1196792617&sr=8-1
Absolutely invaluable as the biggest problem with Trend following is managing the leverage aspect. If your triggers are too far away then you never get in while if they are too tight you lose your bet before you can blink...... It is a real balancing act. To me it is far more important than the strategy (risk management).
Basically the strategy is just an indicator of potential .....the hard part of jumping on the trend with a minimum of capital exposed and then pulling up your stop loss as you start to make profit. That is why the book is important.
Problem at the moment is that the markets are neither trending up or down so opportunities are very limited (supported by Market Monkey in the Tribune).
I use equis to run explorations against the market and then identify potential opportunity.
I spotted "Charter" in the UK as an opportunity last week. The stock was at 910. I put in an order to Sell at 894 with a stop loss at 916. The order was actioned and then closed out in a few hours so despite the signs decided not to go back in. Since then the stock has dropped an impressive 139 points !!! Lesson here was my spread range is too tight in a volatile market but if I kept my discipline then I would have been okay. This has happened a few times.
My advice .... read, read, read and then use the Simulators (Paddy Power is best as Delta does not allow access to charts (which incidentially are not right anyway)). Ultimately though you have to learn on the job, when to get out and when to stay in....
EddieT
I read Shipmans book too after seeing him on the Late Late ... the book was very commodities focused but still good and worth reading.
I read Richard Farleighs 'Taming the Lion' just before that it really enjoyed reading that alot more. There is a chapter in it on Trends in Prices. He discusses the pyshology of investing alot. Alot of very interesting stuff in it for the likes of me who is a bit of a novice. Highly recomended!
DDG
Interesting stuff Eddie T.
SO - in summary,what is teh trading strategy in that book you mentioned?
E.g. I have come accross one trading strategy which says buy long when the price is above both the 40 day and 20 day simple moving average.
And exit the long position when the price dips below the 20 day S.M.A.
For going short it recommends doing teh opposite.
THis theory however was put forward by a guy called vince stanzione who seems to generally have a dodgy rep o just running realy expensive workshops of no real substance. Maybe that's just the cynics speaking !!
ANother strategy by a different guy called mark shipman also seems interesting.
He looks at far more long term and invests only after 12 week higher-highs.Normally he could hold a position for many many months.
By the way - mark shipman comes accross as a fairly reliable character to me.
There is a link below to an interview of his on the late late show.
I got his book - it's very very good.
[broken link removed]
His interview is half way down the page.
He also has a free webiste where he updates his positions every week.
www.trend-follower.com
Interesting stuff folks.
I think Shipmans tactics are sound but would appear to be more long term and larger accounts are needed I feel.
I recommended a book on a different post today and will do so here again - its called 'The Financial Spread Betting handbook' By Malcolm Pryor, excellent book and I am now just starting to put his theories to the test.
One of his simple theories is based on ADX.
A - Go long when ADX is 30 and above and D1+ is greater than D1- and go short when ADX above 30 and D1- is greater than D+.
Should state however that additional set up criteria has to be satisfied before an actual bet is placed - too detailed for here, all in the book however.
I raised the idea previously on this site of setting up a small group of spread bettors, say 5 or 6 of us could, as a group, keep in touch and share ideas/results/sucess rates with different stratagies etc - a mastermind group if you like - does anyone think this might be worthwile?
As I said before the strategy is not the most important thing, the Risk Management is.
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