Developing a profitable strategy

Discussion in 'Strategy Development' started by mgabriel01, Dec 8, 2007.

  1. I'm going to post some first steps and my reasoning process for taking them --- in anticipation of hearing some commentary from more knowledgable folks

    (I anticipate some bashing too - after all it is an online forum)

    New to trading
    Employed full time --- work at home consultant. I have enough schedule flexibility to spend time learning to trade as well

    Capital to trade with - $50K cash as well as a rollover 401k account
    (capital to trade is less than 5% of total assets -- the other 95% is off the table as I have kids and a wife)

    First sources of information:
    "Technical Analysis and Stock Market Profits" -- reason for choosing it: its free - I borrowed it)

    Forum Thread - "Profitable strategy for struggling traders" -- reason fo choosing it: its free - and I understand some of it

    Investools Traders tool box --- reason for choosing it: impulse buy(save the bashing for a tougher taget this ones too easy :)

    First steps:
    Fund a TOS account with $3500 ----- reason for choosing it: posts here and elswhere generally point to good customer service and a decent tool set
  2. Key points:

    Find a meaningful trend
    (Higher Highs, Higher Lows)
    (Lower Highs, Lower Lows)

    Symmetric triangles point to important movements

    Shabaker says the same thing - so this is good :)

    So off we go hunting for useful trends........
  3. and some notes:

    1) Trading goal ---- dont lose money.
    Reason: I am coming to the conclusion one cannot succeed at this unless one has the mindset not to lose on trades.

    2) I am going to trade with real money.
    Reason: Understanding ones own tolerance for risk appears to be key.... so I'm gonna use real money instead of paper trading
  4. ammo


    go to big charts , its free,and pull up there java charts and learn how to draw channels and look for support and resistance lines ,good practice. go to bar charts and pull up markets and see volume leaders,pu ll up 5 or 6 of those and draw your channels and resistance points and see how much further they will go or if they may hit line and reverse ,pretty simple really,but the $3500 i dont think is enough to start trading options,not even 1 lots, so you will have to do some more research
  5. timbo


    I'd fund the account with the full 50k, and index 60% and trade the residual. There's not a whole lot you can do with 3.5k; except give it away.
  6. I'd fund the account with the full 50k, and index 60% and trade the residual. There's not a whole lot you can do with 3.5k; except give it away.

    I'll do that as soon as I can find it documented on their web site that the 50k is insured


  7. Big Charts:
    So Im thinking due to all the news around financials I will look at BSC and GS

    Hard to determine resistance levels -- maybe because of all the uncertainty?

    GS ---- Im gonna say resistance in the area 200~210
    But my main observation is: Not enough data points to really know

    BSC ---- Im gonna say resistance in the area 89-93
    But again - are there enough data points to know this?

    Is there a reference book on how to determine support/resistance levels? Or is it simply:
    Look at the chart and use 'gut feel'
  8. buybig


    i use gut feel some times and adhere to the specific level other times.

    for instance look @ FCX and GRMN both have firm support and resistance levels but they get blown through regurlarly.

    you need to know the stock personality. is it a traders stock?

    SMA's in conjunction w/ trendlines, support resistance, volume indicators, RSI is the way for me.

    Keep it simple:)
  9. buybig


    GS - what yourlooking for is support not resistance. chart a 200 period SMA on a daily chart. you will see that the 200sma is whats holding the stock up. also note mid march to mid april there was a consolidation period where the stock sat on its 50 period sma. coincidentally that level is were the 200 period sma is at now.about $213

    is that a hard and fast number? NO.

    note the the 14 period ATR is$9.57. you can expect to see a 5% swing in a day.

    note: it looks like consolidation via pennant. look for a trendline break on some news.
  10. buybig


    #10     Dec 9, 2007