UK Stockmarket 2009 and beyond

JonnyBravo

barneygumble wrote: »

MXP down quite a bit today, I'm assuming you bought early December.

3rd week of Nov actually so didn't get the bottom quite right. Such is life.

tradetime

cloud_dog wrote: »

Ok, so I need help.......... I've always believed a big part of investing / trading is psychology or psychological and now I find myself in that psychological turmoil of when to get back in.

I am approx 50% cash atm and even though I recognise the situation / mindset I am struggling for my logical side to override it. What has made it worse is that I was in the verge of increasing positions during the December low but decided not to and now....... I'm kicking myself and cannot get over the 'hump'.

Ah, just ignore me I'm just feeling sorry for myself

It is true, for trading at least, psychology is a very large component, maybe in the realms of 80%. The easiest way to control this is to be very structured, methodical, and consistent in your approach. This will allow you to formulate a rule based method that will remove emotion from the decision making process.

sabretoothtigger

Every remotely successful trader I have ever spoken with has a trading plan. These traders do the same thing every time, occasionally tweaking one aspect of their plan at a time. Trying to change everything at once makes it impossible to tell what is working and what is not. We will go through the important aspects of a trading plan below, and we will go over how the FX360.com technical analysis works with these principles.

First off, I believe it is imperative to identify your entry, stop, and profit target(s) before entering every trade. If you try to determine your exits once you enter the trade, your emotions will skew your view of the facts unless you are a robot. If the exits are planned before entering, it is tough for your emotions to screw you up. By placing your exits in the system when you enter the trade, it is much easier to stay disciplined to your plan. Another advantage is that you don't have to stare at your computer 24 hours a day waiting for a place to exit.

I also feel it is important to know your risk:reward ratio before entering a trade. How on earth can you determine your risk reward:ratio if you don't plan your stop and profit target(s) before entering the trade? It can't be done. To measure this ratio, simply divide the distance between the entry and the profit target by the distance between the entry and the stop. Everyone's concept of a "good" risk:reward ratio varies, but I prefer to have a risk:reward ratio around 1:1.5.

Once you have planned your entry and stop, you can also determine your position size. Your position size should generally be the same percentage of your equity each trade. Most traders risk 1-3% on each trade, using the same percentage for every trade. In other words, all trades are weighted equally. The same amount of capital should be risked on a trade with a 300 pip stop as a 30 pip stop. In order to determine your position size, simply multiply your total equity by your percentage risk per trade (typically 1-3%), which is the amount of money you should risk per trade (X). Next, multiply the number of pips between your entry and stop by the currency's pip value (Y). You can also draw a line from your entry to stop using the value calculator to get Y. Then divide X by Number Y to get the number of lots you should trade. Once you practice this, it is easy.

The methodology we use (geometric pattern recognition) makes it very easy to follow this plan. Everything is already planned out, all you need to add is your total equity and percentage you want to risk for each trade (typically 1-3%). By planning your trades out before you enter you can now trade on any time frame because you are risking the same amount for each trade. This will lead to much more consistent results that using static numbers when determining position size.

JonnyBravo wrote: »

Happy New Year all.

Currently marvelling at MXP and EMED. Both doing me proud at the moment.

Reckon STT should start us our 2010 thread as he's one of the most prolific posters in this one.

Tony is on holiday I think and he is the master of these things. I'm half expecting a mini crash because he is away

I put emed on my list of 5 stocks for what could do best in 2010 along with other small caps and an indian IT





Barclays and lloyds are maintaining an uptrend, RBS is most volatile predictably I guess

JonnyBravo

sabretoothtigger wrote: »

I put emed on my list of 5 stocks for what could do best in 2010

:T

(I hope)

cloud_dog

TT, STT.... Thanks, I think your both saying the same thing and unfortunately I didn't follow through with my plan.

I think I'll hold fire for a little while longer. Unfortunately the dip in December occured and I didn't really want to be (pretty much) fully invested over the holiday period.

I was previously thinking there would be a dip / pullback in mid / late Jan but was considering if the dip in December might have been it.

turbobob

It's pretty much impossible to predict when a dip will occur, at least I don't know of any way! Certainly don't rely on media commentators to get it right. Its easier to react than to predict IMO.

cloud_dog

turbobob wrote: »

It's pretty much impossible to predict when a dip will occur, at least I don't know of any way! Certainly don't rely on media commentators to get it right. Its easier to react than to predict IMO.

I am comfortable with my own feelings, thoughts, predictions, guesses (not saying I always get it right), but its just getting over this psycological 'thing', which I know is irrational and having been through a number of in and out decisions over a number of years you'd think I'd have it understood / controlled by now - BUT apparently not.

turbobob

I'm with you there. Following your own rules can definitely be a challenge!

I've heard this is a good read on the subject of trading psychology, I think Kittie has mentioned it before (I've not read it but it's on the list of to do's) - http://www.amazon.co.uk/Trading-Zone-Mark-Douglas/dp/0735201447/ref=sr_1_1?ie=UTF8&s=books&qid=1262792413&sr=8-1

ricll

ses6jwg wrote: »

Oil and Gas to be the sector for 2010 IMO.

I have very high hopes for GKP and AEX

a few of my high risk/high reward favourite shares for 2010: GKP, DES, VIY, CHAR, MXP, AEX and TRP.

[Deleted User]

well azn triggered on a limit buy. Unbelievable as I didn`t expect it to happen so soon and I placed a limit below where I thought it would go as there is often a probe or so. These high cost stocks can`t half move at times and they are pretty nice for spread betting by the way. It is in profit already and nice to welcome azn back into the fold