I day trade the currency pairing GBP/JPY with 5-minute bars on my chart. My edge for these trades includes: the recognition of context, or where the chart is in regard to a trend or a trading range; my strict minimum trade requirements (as I’m a retail trader I have to pay and, therefore, consider the spread); and, finally, my Green Line Entry Measure (GLEM).
Each of these points contained within a strategy that I’ve proven through ‘live’ trading and rely upon to provide consistency over time for all of my trades; a plan – because of the nature of the game – that is always open for amendment. An approach that makes us more like a casino; the management of the casino rather than the gambler.
A casino – after taking into consideration all the big winners, the big losers and everyone in between – will consistently take 4.5% in profit from all takings, over time. That is because they too (the casino) are working to a tried and tested strategy. My volume is, of course, nothing like a casino, so I need to take trades that are 60% probability or better. If less than 60%, on the rare occasion that I select low probability trades, I need to have a consistent reward/risk that makes the trade worthwhile.
Moreover, I also trade the Slow Trader Fund in several currency pairings, the commodities of gold and oil and Nick’s top FTSE 350 companies. These we trade with the 4-hour bars on our chart. I’ve chosen 4-hours as this provides multiple trading opportunities a week. Moreover, with my day trading, my charts need to be linked to my broker as I require an accuracy here of 0.1 of a pip. These charts (British broker) do not provide the New York close bars which would be necessary if I were to select entries from daily bars. Hence, another reason for 4-hour instead of daily bars.
About Nick’s top FTSE 350 companies, please do not miss read me here, they are, for investors, a long-term consideration. They came to the fore because of their strong fundamentals and ‘value’. Because of their strength, fundamentally, these companies could ‘weather’ a market turn down (or two) better than many. I have placed them in the 4-hour trade cycle but: with my context, probability and price action strategy, it could almost be any ten companies.
As an aside, the best index for technical judgment of the longer-term market cycle, I consider, is the weekly or even monthly bars of the S&P 500 index. Yes, even for companies within the FTSE 350. The FTSE follows the S&P. I’ll provide an S&P synopsis soon.
To finish, we have detail on short-term trading (my day-trading and 4-hour chart work) and information on the very long-term investment considerations (Nick’s top ten). However, we do not have information on the mid-term investment/trading opportunities; this is not my area.
Steve, however, has an excellent track record in this regard, and one that is just getting better and better. A vital member of a ‘high energy’ company, Steve is responsible for a budget that annually goes into the multiple millions. Therefore, not a full-time analyst but someone who has put his working skills to good use in selecting mid-term investments. From many examples is his purchase of Sky PLC in early December, and before Sky made a 25% definite jump.
I will ask Steve if he’d contribute to this blog and share with us his mid-term ideas and thoughts. I hope he will agree.