My name is Mick and that is my - ideally - 'common sense' trading diary. I will be trading on newspaper for a while untill I kind out and firm up my egy and begin generating some good profits in demonion mode.
I started it for a couple reasons the most important one being to keep me honest, it's just too easy to change your mind on what your egy is half way through a trade . Another is that I was starting to take up ring width on capilist88's journal . Have a look over there since he has some interesting reading at web site and his diary.
A bit of background -
I am 38 and have been analyzing stocks for a couple years using daily charts, I stumbled upon cfd's and Foreign Exchange, there is a couple reasons for this routine, the first is that I don't have a great deal of cash so finding a workable trading instrument in which fees are not as likely to encroach on profits having a small account proved to be a significant consideration. Another is that in Australia, it has only been lately that cfd's have come to the industry in addition to other derivatives into the masses. I have seen Foreign Exchange before but was a little bit overwhelmed by the quick day trading/high risk picture it depicted but now I know that it's no different to any other market, it's just structured differently using another behaviour - one which I enjoy!
Why do I want to trade?
Obviously there is trading for cash, that is probably the driving force behind many traders, myself included, but there is also the challenge.
For instance, I do a bit of programming. I started using vba and finally got to assembler because I just had to know how it worked! It was one big mystery and the markets to me personally are much the same in that there is always something to research, learn and execute.
I don't program in assembler but I know how it functions and it has helped my programming hugely. Learning about the markets is precisely the same thing, as you may not utilize techniques that bankers do it still helps to know how it ticks.
Although I believe I could play demo forever really, it's great fun, if I begin to turn out routine 'high scores' I will then begin playing for real.
Why Common Sense?
While I don't have any real trades under my belt I have been around long enough to realise a couple of things about trading the markets:
- Cost action is king, while historic patterns and support/resistance are no promise of a move in your favour, the price action before and 'at' these points is essential. After all, how a number of different men and women see the very same patterns and act on these if right or wrong?
I also like to observe things in greater time frames and drill down to lower time frames to 'see' what has/is occurring to provide me a much better look at which way I will play it.
- Money management is paramount, not just risk (capital preservation) but cash maximisation plans as well. IOW, cut losses small and increase profits. I seriously think that is where to earn money and will be my main focus over what else, the market holds no guarantees as to management but when I am ready with a fantastic cash egy I will be set for when it moves within my favour (IOW, when the economy comes to me).
- Indiors ' are 'old information' (i.e. lagging) but are handy to perhaps confirm a move or to use simply as another way of looking at price action and 'help' determine entry and exits. I use mainly the stoch for OB/OS levels as a price management index and CCI stations for entrances and exits. I have only started with CCI's but they look promising as a filter for better trades.
Have a look at bobblongs thread for some more info, it's a great thread.
Anyway, I will write some of my egy down with some other criteria for my trading choices shortly, don't hesitate to jump in if you have any questions or guie along the way, both are extremely welcome.
What I would ask though is this is my diary, not a egy and will be subject to change as I see fit so please don't ask me to carve it in stone for you, besides I believe you need to create your own, there is no use after something you don't completely and whole heartedly know and think in. It will not function as system and it will not work, just pick up bits and pieces from here and other threads and piece something together that works for you - and stick with it.
Cheers,
Mick.