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     eric
Member
Username: eric
Post Number: 133
Registered: 09-2006Rating: N/A
Votes: 0
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| | Tuesday, September 11, 2007 - 01:37 pm: |  
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Well, I am sort of back from my holiday and started to look at the market again. Looking for some new trading methods, using CFDs, I have come up with the following trial.
I am investigating a trading plan to day trade CFDs, concentrating on the ASX20.
This gives me 20 stocks to scrutinise; any more would be too difficult. The ASX20 stocks have big daily volumes, ensuring a trade when needed.
Selection criteria:
Set intraday chart to 2 minutes, you may have to wait until about 10:30 am before both EMA show up. If you trade after about 11:30, set interval to 5 minutes.
Using the intraday chart, set one EMA to 7, second EMA to 15
If EMA7 crosses above EMA 15 and price is above both, buy.
After you bought, set chart to 5 minutes interval.
Set stop loss just below the EMA 15, trailing up as the EMA moves up.
I will always sell at the stop loss, however should the EMA7 move up steeply, I will consider taking profit if the price drops below the EMA7. This is a subjective judgement.
At this stage I am only trialling with a quite small number of shares, just above the minimum brokerage.
Any opinions or suggestion are very welcome.
Attached are my (so far) 2 trades, I will put all trades on the forum as we go along.
10 Sep 07
FGL 1900 shares bought at 6.38. Sold at 6.40, profit 13.76
11 Sep 07
ANZ 502 shares bought at 28.33, sold at 28.48, profit 46.84
Running profit $60.59
Time frame: as long as it takes
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eric
Member
Username: eric
Post Number: 134
Registered: 09-2006Rating: N/A
Votes: 0
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| | Tuesday, September 11, 2007 - 04:03 pm: |
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11 Sep 07
Shortened BXB sold 953 shares at 13.85, bought back at 13.79. profit 30.91.
Running Profit $91.50
Time frame: as long as it takes
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davkell
Member
Username: davkell
Post Number: 534
Registered: 07-2004
Rating: N/A
Votes: 0
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| | Tuesday, September 11, 2007 - 10:23 pm: |
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Hey Eric; Good profits trades so far, but realistically best to wait till you've done 20 trades to have an idea on the profitability of it.
Curious though, can you advise what your stop losses are for each trade and/or what the profit is in a R format. Ie. If you total risk is $100 and your profit is $200, then you've made a 2R profit.
Also, may I ask what your total trading capital (at least for your CFD account) is? Curious as your buy positions are in excess of $10K.
Cheers.
"Trade Your Way To Financial Freedom" - Van K Tharp
"Manage the downside; the upside will take care of itself" - Donald Trump
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eric
Member
Username: eric
Post Number: 135
Registered: 09-2006Rating: N/A
Votes: 0
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| | Wednesday, September 12, 2007 - 09:55 am: |
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Hi Dave, I realise that one needs many more trades before one can establish any idea of profitability. At this stage, I am just developing this trading plan and will of course tweak it as experience will tell me. I will certainly be grateful of any feedback from the group.
As far as the stop loss is concerned, as I said earlier, I set it just one tick below the EMA15 and trail it up as the EMA trails up. There is no certain percentage.
At this stage, my total CFD account stands at $5000. I treat CFD totally separate from my normal trading account.
If for example you take my ANZ trade, total trade $14214, margin 3%, eg $$426. But of course the full margin is never at risk. I can't tell you in hindsight now what the biggest downside would have been, as it depends on what the intraday chart is doing. The main percentage of any loss would be brokerage, which is 0.1%. I will have a look at the next trade and see what the worst scenario would have been.
Hope this helps
Eric
Time frame: as long as it takes
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davkell
Member
Username: davkell
Post Number: 535
Registered: 07-2004
Rating: N/A
Votes: 0
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| | Wednesday, September 12, 2007 - 10:26 am: |
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Sounds reasonably OK. Not sure what you meant by "of course the whole margin is not at risk". I would say that your margin is all at risk and then some.
Example: You buy your FGL shares, but before you sell them the stock goes into a trading halt awaiting a report. The report is negative and upon trading again, immediately gaps down 5% (very possible scenario). In this case you are immediately $606 down, which is two times your margin and 12% of your total capital! Just be aware that this can happen, and in a leveraged environment, can hurt real quick!
Look forward to your progress!
"Trade Your Way To Financial Freedom" - Van K Tharp
"Manage the downside; the upside will take care of itself" - Donald Trump
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chart_rider
Member
Username: chart_rider
Post Number: 221
Registered: 01-2005Rating: N/A
Votes: 0
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| | Wednesday, September 12, 2007 - 04:56 pm: |
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eric
I also was about to comment on the leverage.
There are times when the 1 minute EMA7 is above the EMA15, while at the same time the 5 minute price is below the EMA15 - presumably in this case a buy is not triggered.
There will also be times when the 5 minute price is considerable above the EMA15 when a buy is triggered. Do you have a limit on this, even without a trading halt followed by gap down, the stop could be a few % down, which at the leverage indicated could result in a wipe out after a losing streak. Unless you choose situations where the set up is more perfect and the % to the stop loss is small. This in turn will limit the number of trades, which may be OK, but could result in limited business returns.
CR
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eric
Member
Username: eric
Post Number: 136
Registered: 09-2006Rating: N/A
Votes: 0
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| | Wednesday, September 12, 2007 - 08:38 pm: |
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today I could not find any suitable (low risk) trades, simply because of the situation chart rider mentioned. The price of course does not change, whether I look at the 2 min chart or the 5 min chart. However early in the morning, the 5 min chart will not show up an EMA 15, until then I use the 2 min chart, but with great care. I must have the price above both EMAs before I act, and the faster EMA has to be above the slower EMA.
If the price is already too high above the EMAs, I will not act on the signal, as I consider that I noticed it too late.
Of course we all know that trading is part science, part art, thus many decisions wil have to be subjective to a certain degree.
Of course as you realise, This is only the very beginning of this particular trading systems, a lot of fine tuning is yet required. Thus I only allocated a very small percentage of my trading capital ($5000) to CFD trading, if I lose some of it, well, we all have to pay for our apprenticeship.
My trading over the last few years was quite succesful, so if I have to give a little back, too bad. But at this stage, it should not be a big problem. Only time will tell.
Dave and chart rider, Thanks for your input.
Eric
Time frame: as long as it takes
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eric
Member
Username: eric
Post Number: 137
Registered: 09-2006Rating: N/A
Votes: 0
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| | Thursday, September 13, 2007 - 06:42 pm: |
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13 Sep 07
WPL 254 shares bought at 46.74, sold at 46.70, loss 30.93
Running profit $ 60.57
I still have to answer a couple of questions.
Dave said:
Not sure what you meant by "of course the whole margin is not at risk". I would say that your margin is all at risk and then some
Of course in the situation you mentioned, you can risk more than your margin. As a matter of fact, the stock can go belly up and you risk the whole value. But the latter probability is pretty low with ASX20. However the same happens if you hold the actual stock. CFDs are nothing more than buying shares with borrowed money. So I can't see much difference there, unless you go overboard because you don't have to outlay the lot at the time of purchase.There is always a risk. But we trade with probabilities, not certainties.
Chart rider said
There will also be times when the 5 minute price is considerable above the EMA15 when a buy is triggered
Yes, this happens. I realise that and have refined my entry criteria sightly.
I shall post that tomorrow.
Eric
Time frame: as long as it takes
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easymoney
Member
Username: easymoney
Post Number: 63
Registered: 03-2005Rating: N/A
Votes: 0
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| | Thursday, September 13, 2007 - 07:54 pm: |
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WPL 254 shares bought at 46.74, sold at 46.70, loss 30.93
Does that mean that the commission is about $20 round trip?
I always reckon that commission is the killer with day trading.
Two of them say they're Jesus.
One of them must be wrong.
Industrial Disease
Dire Straits
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eric
Member
Username: eric
Post Number: 138
Registered: 09-2006Rating: N/A
Votes: 0
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| | Friday, September 14, 2007 - 11:44 am: |
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Easy money, you are right. The commission is the killer. Thats why you have to trade in big volumes. At this stage, I only trade small CFD volume for testing. But if you want to make a reasonable profit, you have to increase volume. At the moment I keep it just above the minimum, which is $10000
Eric
Time frame: as long as it takes
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eric
Member
Username: eric
Post Number: 141
Registered: 09-2006Rating: N/A
Votes: 0
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| | Saturday, September 15, 2007 - 12:40 pm: |
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14 Sep 07
SGB 339 shares bought at 33.85, sold at 34.01, profit 31.27.
Running profit $ 91.84
I have refined the selection criteria after input from various sources. Thank you for the input.
New criteria:
Set intraday chart to 2 minutes, you may have to wait until about 10:30 am before both EMA show up. If you trade after about 11:30, set interval to 5 minutes.
Using the intraday chart, set one EMA to 7, second EMA to 15
Buy if:
EMA7 crosses above EMA 15 and price is above both, AND
the share price has NOT increased by more than ˝% since previous trading day
After you bought, set chart to 5 minutes interval.
Set stop loss just below the EMA 15, trailing up as the EMA moves up.
If after 1 pm, I use 10 min chart for stop loss
Sell if:
Trailing stop loss is hit. Or
If today’s price range rises to or above 85% of ATR (16 days ATR)
Note:
I like Davekell’s post in Trading Psychology – Small Trader Good Lessons (15 Sep 0-7). A very important principle in share trading.
Time frame: as long as it takes
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eric
Member
Username: eric
Post Number: 144
Registered: 09-2006Rating: N/A
Votes: 0
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| | Wednesday, September 19, 2007 - 10:04 am: |
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18 Sep 07
bought BHP 307 shares at $38.5
Eric
Time frame: as long as it takes
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eric
Member
Username: eric
Post Number: 145
Registered: 09-2006Rating: N/A
Votes: 0
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| | Wednesday, September 19, 2007 - 10:49 am: |
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19 sep 07
sold BHP307 shares at $40, profit $430.4
Running profit $522.24
Eric
Time frame: as long as it takes
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eric
Member
Username: eric
Post Number: 150
Registered: 09-2006Rating:& | |
