Tag: intraday trading

Develop your own trading style

There are so many styles of trading, so what makes sense is the direction we go.

However, we do spend an awful lot of time following what we happen to come across initially.

To a developing trader, I’d say try a wide field of methods to see what fits best.

But even a good find is constantly evolving.

In years gone by, day trading acquired a bad name. So much so that present traders, to make the distinction, refer to it as intraday trading.

Day or intraday trading has changed due to improvements in technology—and consequently tighter bid/ask prices—and greater liquidity.

More (if not the majority) proprietary firms are intraday trading today.

What I’ve liked recently is anything by Mike Bellafiore. Start with Chat With Traders episode 162, followed by One Good Trade (available on Audible) and The Playbook—an inside look at thinking like a professional trader.

As he is known, Bella teaches stock trading, but the material is excellent for whatever we have on our screens. For example, if you haven’t considered watching the order flow (also known as Depth of Market)—and the chances, like me, are no. Then Bella will make you reconsider.

The VWAP is an excellent tool for stocks and shares, commodities and (probably) indices. Not as valid for FOREX. Read The VWAP roadmap by Zach Hurwitz.

I trade gold (XAU/USD) intraday, which can provide a VWAP signal throughout the day (UTC+1) and recently the DAX (DE30) from early morning until early afternoon and watching again the US 500 (S&P) and US 2000 and US 30 from midafternoon (New York stock exchange open) onwards.

I watched bitcoin for a few weeks and decided to give it a miss—at least for now. A great introduction to bitcoin, and one that will change your mind if you have a negative bias, is the Digital Slowmad letter by Chris Lee.

Posted on by Day Trader 0

Trading methods that suit

A keen trader or investor has to use a method that they understand and that gives them an advantage, an edge – no matter how small.

That method, or way of trading, has to suit the trader’s personality. The technique could be fast-moving, lower time frame, or slow-moving, higher timeframe. Or a combination of both.

Emotionally, the method has to suit too. For example, most traders are comfortable trading relatively large positions on slower moving, higher time frame trades such as daily, weekly or monthly charts; however, are less objective with such trades on lower time frame situations such as intraday (day-trading) opportunities.

Once we sort our emotional tolerance, we then need to consider our ability to manage such trades. Do we have the time and the skills necessary to trade lower time frame situations? Where a trade entry and exit on a ‘swing’ trade can play out in 10 chart bars or less – which on a 2-minute chart is 20 minutes. The same trade using a daily chart would take some two weeks.

I use three clear trading methods with clear time frames. I feel that in each of the methods I have a small edge, and that is vital. The methods are:

  1. 30-year’s investing using detailed fundamental analysis of company figures. I’m primarily looking here at finding a company that is selling at half price or less and one that has been consistently excellent for many years (usually ten years). The company, importantly, needs to be a company that will still be here, and profitable, in 30 years. The calculations took Nick and me over 9-months to develop.
  2. I trade gold, silver, copper, crude oil, treasury bonds and USD/CAD both long and short, and only trade on precise signals. Each trade held for several weeks; this is where I mainly trade the Slow Trader fund. The strategy here is sound, tested and profitable.
  3. Intraday trading of any stock, commodity, index or FX that suits – my favourite is GBP/USD. Skilfully, managerially and emotionally intraday trades are the most difficult. Intraday is also immensely time-consuming and takes many years to become consistently profitable.

You will notice that each method avoids the market crash timeframe of 5 to 15 years. Yes, the 30-year plan will go through a few crashes during its investment period, but over 30 years the crashes provide a ‘dollar-cost-averaging’ opportunity to invest more. The only important crash in the 30-year method that is of concern is the last one. I appreciate that as its 30-years it may not be me making this decision!

Posted on by Day Trader 0