How does major averages influence your trading style?

B

breadmann

Hi all, just a short introduction of myself. I am 26 this year and learning how to trade for myself, i have read numerous books on trading and trading psychology and i am currently trading with TOS paper money a/c. however, i am thinkin of going live soon with a bit of money. my question to the more experienced traders is, how does your trading style get influence by performance of the major averages? my trading plan at this point in time is that i want to trade with the trend since i am a beginner,n i shouldnt try to devise any complicated trading plans, thus no osicallators and just monitoring of major averages (long when averages are up), basic spotting of support/resistance, volume plays, tight money mgmt.the time frame i used would be daily charts as my trend indicator, and to enter precisely with an hourly chart. i was initially thinking of doing daytrading as i think it wld enable me to learn more, but i do not have the 25,000 dollars i need to kickstart a daytrading a/c. that said, however, i will want to trade intraday professionally (for myself or hopefully a firm). i understand if i am doing swing trading now with average holding period about 2-3days, market noise intraday will not really affect my position trades, but if i were to scale down and do it intraday, how do u guys let the performance of the major average influence ur intraday styles? do u still try to short when the major averages are up (trading counter-trend) etc..?

would really like to be enlighten on how the more experienced traders view this problem, as i never seem to be able to comprehend how to integrate that into intraday trading. it just seems that an infinite amount of work and to have 2 diff sets of trading plans prior to the opening. (1 for short, 1 for long) i might be wrong, so pls go easy on me. hope u guys can entitle me with ur experiences. thank u!
 
here is my advise, give up. 99.9% sure you will lose.

More than 90% of small traders lose (newbies and amateurs)! They just lose!!!

This is what i foresee. When you begin to trade live, u lose. In the next 5 years, u will be spending thousands of dollars on 3rd party educational vendors, and continues to lose.

By the time u give up, your ltotal loss more than $20K. Such a life for those 90% losers.
 
Quote from breadmann:
----how does your trading style get influenced by performance of the major averages?
----trade with the trend....
----no oscillators....
----I was initially thinking of doing daytrading....
----I am doing swing trading now with average holding period about 2-3 days....
----market noise intraday will not really affect my position trades....
----how do you guys let the performance of the major average influence your intraday styles?
----do you still try to short when the major averages are up (trading counter-trend)?
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1) Simulated trading can have some "value" but everything will change when you're trading a live/funded account.
2) Whatever method you start with WILL undergo some changes.
3) To trade with the trend and avoid using traditional "indicators" are good ideas. Avoid counter-trend trading while you're a rookie.
4) Since most stocks correlate more closely to the major stock indicies than ever before, it isn't necessary to look at something else to "confirm" your trade signals in what you're actually trading.
5) You can consider daytrading AFTER you have some experience with longer time frames. The number of trading decisions you'll make and the stress that accompanies them will overwhelm you too quickly. Your brain isn't "in shape" for that type of activity.
 
Your question is a good one, and should be near the top of the list for any new trader.

Whatever your timeframe - minutes, hours or days - monitoring the overall market is always very important, especially when planning entries and pulling the trigger.

Your odds of success are much improved when you are in tune with the market, and not opposed to it.

You may think of intraday market data as "noise", as you put it, but it isn't. It is often a significant factor in a successful entry. And it doesn't need to be anything sophisticated. Just throw up a chart of SPY and keep an eye on it.

In fact, that's a good place to start in your training. Pick a few stocks, put them up beside SPY, and watch the correlation. More often than not, they'll move in similar fashion.
 
duly noted. thanks for contributing to my trading education. no trader starts out w/o being a newbie once, so i appreciate all the encouraging and good advice i've gotten so far. thanks again!
 
Quote from emg:

here is my advise, give up. 99.9% sure you will lose.

More than 90% of small traders lose (newbies and amateurs)! They just lose!!!

This is what i foresee. When you begin to trade live, u lose. In the next 5 years, u will be spending thousands of dollars on 3rd party educational vendors, and continues to lose.

By the time u give up, your ltotal loss more than $20K. Such a life for those 90% losers.
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i aint ready to start thinking what is going to happen in the next 5 years. im new, i admit, but i believe we all start at the same level where i am at (u included), given the right attitude, most will improve eventually. most ignorant newbies blow their a/c up and stop trading entirely. i will want to control the amount of loss i know i will evitably make being an inexperienced trader, thats why i am educating myself in all aspect i want to have a good education before i dive in n get that much needed live experience. i believe in educating myself with everything i can find and given a small amt of RISK capital i can start to trade live and gain more market exp thru that, improve as a trader. the questions asked is part of my education.

i wouldnt necessarily thank u for ur negativity, but thanks for letting me know ppl like u are out there. n i truly hope ure part of the 10% who actually made money trading. hating is not my thing.

cheers
 
Quote from emg:

here is my advise, give up. 99.9% sure you will lose.

More than 90% of small traders lose (newbies and amateurs)! They just lose!!!

This is what i foresee. When you begin to trade live, u lose. In the next 5 years, u will be spending thousands of dollars on 3rd party educational vendors, and continues to lose.

By the time u give up, your ltotal loss more than $20K. Such a life for those 90% losers.
More...

i aint ready to start thinking what is going to happen in the next 5 years. im new, i admit, but i believe we all start at the same level where i am at (u included), given the right attitude, most will improve eventually. most ignorant newbies blow their a/c up and stop trading entirely. i will want to control the amount of loss i know i will evitably make being an inexperienced trader, thats why i am educating myself in all aspect i want to have a good education before i dive in n get that much needed live experience. i believe in educating myself with everything i can find and given a small amt of RISK capital i can start to trade live and gain more market exp thru that, improve as a trader. the questions asked is part of my education.

i wouldnt necessarily thank u for ur negativity, but thanks for letting me know ppl like u are out there. n i truly hope ure part of the 10% who actually made money trading. hating is not my thing.

cheers
 
Dont give up even before you start. Ignore all the negativity.

What I d say is study charts. See what works and what doesnt work. Follow blogs of people who want to share ideas etc. Some stocks work in co relation to SPY/DIA etc some dont. Sometimes even the ones that work in co relation have divergences. BUT try to trade in direction of major indices esp as an example when there is a big gap up or strong uptrend. Ignore trading before the first 20 mins so you can do a dip-test of the market. Only tip I can give you is whatever you study should be based on price-price is all that matters. You ll be stopped cause of price-you ll take a big loss cause of price and your profit will be based on price.

In the beginning someone told me it would take 10,000 hours of studying to turning the corner around-keep that in mind. As far as the stat for 90% traders failing-no one has ever shown an actual study that was done. Everyone just pulls that stat out of thin air.

It was much difficult to trade ideas prior to web 2.0 but just like you asked a question now and some one responds -helpful or not is for you to weed out the wheat from chaff. I think thats real helpful.
 
Quote from GG1972:


In the beginning someone told me it would take 10,000 hours of studying to turning the corner around-keep that in mind. As far as the stat for 90% traders failing-no one has ever shown an actual study that was done. Everyone just pulls that stat out of thin air.
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I have negative troll types and am NOT to be confused with one, lol, but many of those studies have been done and some showed far worse. Lookup the TUCO Trading numbers that were divulged in an investigation.
 
Quote from NY0BScalper:

I have negative troll types and am NOT to be confused with one, lol, but many of those studies have been done and some showed far worse. Lookup the TUCO Trading numbers that were divulged in an investigation.
More...


I dont think I have to go into too much detail about prop firms and snake oilmen to make my point. And that too at the height of a frenzied market. OP seems like he wants to prepare himself for something that he likes and finds challenging.

BTW congress can fudge any numbers to pass any bill-I think that should be clear by now esp. sine the financial meltdown. Wwaiting for fat tax now :) I aint fat btw but wth.

'According to the Commission's complaint, the defendants provided securities day-trading capability to Tuco's over 250 traders who had approximately $10.2 million in reported equity balances at Tuco. They permitted traders to day-trade securities in Tuco's own brokerage accounts at registered broker-dealers through sub-accounts created at Tuco for each trader. The complaint alleged that Tuco provided traders with services not permitted at a registered broker-dealer. As alleged in the complaint, the defendants allowed traders to day-trade without meeting the $25,000 minimum equity requirement under NASD regulations for such trading. The complaint also alleges that for each $1 in the trader's sub-account, Tuco and Frederick allowed the traders at Tuco to use up to $20 of Tuco's equity, which had been invested by other traders, to purchase securities (20:1 buying power). NASD and NYSE regulations, however, only allow a day-trader to have 4:1 buying power.

The Commission's complaint also alleged that Tuco received transaction-based compensation for its traders' securities transactions, and Tuco's traders conducted substantial day-trading through Tuco's brokerage accounts both in dollar amounts and number of trades. As a result, Frederick earned substantial commissions on the trading as the registered representative for Tuco's main accounts at a registered broker-dealer. The complaint alleged that Frederick then used substantial amounts of his commissions to pay Tuco's operating expenses."

Just a random guess at prop firms they probably want you to trade for pennies gain with 100's of trades every day-again just a guess :)
 
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