Hi everybody, first of all, I am fascinated by the world of trading. I see a lot of potential there. I've never been the kind of person who would think that a 9-5 job is the way to live well. I would like to ask for advice on how to become successful. I am part of a little commodities trading group, where two succesfull mentors are teaching their strategy. It seems to be a great working strategy, but the problem is that the specific occasion occurs only 2-4 a week. (it is a special kind of bar, specific point on the CCI, eventually the MACD). It is very difficult to be watching the graphs for several hours a day and wait for it to occur only 2x a week. I am also curious to start with stocks now. I talked to a good trader who recommended me that I could start with two things,1. look at the stocks in let's say NASDAQ that do the best or the worst in the first 4 minutes after the market opens. They should gain or lose at least 4%, then either buy or sell them and hold them for a few hours. Do this with 2-3 stocks. 2. use a slow stochastic (80 and 20), 3 MAs (20, 50, 200) and based on those enter trades. If the stochastic is over 80 then sell, if under 20 then buy. Also based on the 20 and 50 MAs to cross and follow the trend by the 200 one. Does any of this have sense? would anyone improve that? Where do I find good live stocks chart data for free to start with? I plan to start with approx. 2000-3000 USD. Thanks for the help.
Hi, This is a great site for stocks and other instruments and its free www.freestockcharts.com. Regarding your method, you could look back and see how it performed on previous periods.
I'm confused: Are you intending to buy stocks that are 4% down and sell those that are 4% up or do you mean the other way around? The description of stochastic trading sounds like counter-trend trading. P.S., your comment about a 9 to 5 job tells me you have too much bias and ego right now to trade live.
my ego and bias is going down the more I research on the topic... it seems to be extremely difficult and most likely that I won't make it from what I've read... what goes up the first 4 minutes by more than 1-2% would be a buy what does down would be a sell so what about I would forget about intraday (too high requirments, too risky) and do position trading with the 3 MAs and the 80-20 slow stochastic?
You don't have enough money to trade stocks. Buying stocks that gain 4% in 4 minutes or selling stocks that lose 4% in 4 minutes and holding for a few hours is a recipe for disaster even if you had the money as they may move the other way. What if Google at over $600 per share is one that goes up? You could buy 4 shares. How can you sell a stock that loses 4% in 4 minutes if you don't own it to start with. Buying and selling stocks based upon the stochastics is only a small part of the equation and another recipe for disaster. I am very suspicious of this stock pro who gave you the stock advice when you don't have the money to trade with. Develop a strategy and then try options after you have learned everything about them. So what are the details of this commodity trading you are doing? If that is working then stick with it until you develop a portfolio.
Yes, every bit of this advice is a terrible way to begin a trading career. If you want to be succesful, you need to backtest for a number of years, and then when you find your holy grail, drink your fill. None of those strategies will ever be profitable long term, but the CCI, MACD is nearly always curve fitted, which, can work periodically, but not forever. Nothing I've decided to use long term has these issues. You've got to find your own and you should start by buying and reading active trader magazines, coding up the strategies in them, then making your own decisions.
well I wouldn't be buying expensive stocks, another advice I have is buying stocks that are $20-$40... So the strategy involving stochastic and 3MAs is not good either? (that is actually one that is not for intraday, pod position trading, where oneholds it for weeks/months, appranetly). The commodities strategy I am doing is waiting for a "falling star" + watching the CCI at a specific point going up or down when the candlestick happens... I'm not so far yet to see about the MACD, but that is another one. The advantage of commodities is that I have a good broker that actually lives around the corner and I can start the account there with almost anything. (So those 2-3000k USD are fine). Plus, I can do E Minis, which are definitely not so expensive. 0.25 index point for the mini s&p 500 is only $12.50
Both methods are good. When a successful trader tells you a method (in your case he told you two methods!), you'd better listen. For free data, open an account with a broker. You will have a simulation account. You can play with fake money there.
D0n, You described two methods for trading stocks. From my experience, the best way to figure out whether those methods will work or not is, as others have said, by testing them. Back-testing, forward-testing, simulated real-time trade testing. As 2steps said, if you are interested in getting real-time data, you can open an account and begin simulated trading with a demo account. Another option for simple daily or weekly chart data would be to check out finviz.com. Don't know if it's what you're looking for, but it might be of some help.