Setting up everything for trading. This is where I am not quite clear and would really appreciate some help. I guess the next step in my progression requires that I reveal a little bit about my personality so here goes:

I would like to begin by bringing in consistent small profits because I need to work on my self-confidence with this and I have a fairly small account balance of $5500 or 11K with margin. I have more money on deck, but will not touch it until I get much more consistent. I am a guy that likes to see profits regularly however small because I feel I am moving in the right direction this way. My last statement is not meant to sound like a "duh, everyone wants to make consistent profits", rather I am trying to explain that I am cool with making $100 a day right now. Throughout my 7 month trading experience, I experienced the highest highs and gut wrenching lows of this brutal game and now realize I don't do well with such crazy mood swings. I made $1400 in about a four hours period one day and was on top of the world. On the flipside, I lost $2700 in about a four hour period which led me into the hole I am in at the moment. All of this now tells me that I do better trading slower time frames, but not too slow, having a higher accuracy rate and smaller profits at least until I get better at this.

I developed some really bad habits and need to break those. My major bad habit was not having a money management principle in place which caused me to lose $3700. I am not gonna let it get me down though because I also made a good bit of money not knowing what I was doing. Basically I know with the right coaching, I will do very well, but I need someone patient and willing to show me what needs to be done.

I would like to swing trade and was on stockcharts.com reading about technical indicators and how to set them up. I have used RSI, Bollingers, EMA, SMA, and On Balance Volume. I am not opposed to learning a new indicator if it is better than the ones I mentioned, but I realize I need to keep this simple.

Stockcharts says using more than 5 indicators is futile and recommends using 2-3 and knowing them front and back. That's great because I don't need or want information overload. Does the volume meter that pops up on all charts immediately count as one of my 2-3 indicators? If so what are the other one or two indicators that will go best for swingtrading?

Lastly, I asked about settig up a screen on another post. I want to swing trade because I feel it fits my personality profile the best. I tried daytrading and hated it and similiarly feel that position trading is way too slow for my liking. My wife works full-time so we are covered there until I can get this off the ground. I want to be involved in the markets, but not let it consume my life to where I have nothing else.

Thanks to whomever reads this long post and I promise future posts won't be this time consuming.

Hey Tigerman11,

Glad to here from you and that things are progressing along for you. Here are a few comments on what you have written.


I think your line of thinking here is very good, and I think if more traders took the approach of starting off small and proving their methods, even when they have more money they could be trading, the success rate would be a lot higher.

A second comment that I would make here however, is that $100 a day is still pretty aggressive on a $5500 account. As there are 22 trading days in the average month if you multiply that by 12 you get 264 which if you multiply by 100 gives you $2640 a year. Then if you divide that by your starting capital of $5500 this would give you a 48% return for the year.

While certainly not impossible in one year, if a trader was able to consistently generate that type of return they would be listed among the top traders in the world.

One of the goals of this forum is to help take people to the next level so if you are willing to communicate on the forum I am glad to do whatever I can to help.

There are lots of different opinions out there about indicators as I am sure you have seen. All to often however in my opinion, new traders tend to look at indicators as standalone systems rather than for what I think they were designed to do which is give you an indication of what is happening with a certain aspect of the market.

So for example if there is a significant support or resistance line that a trader is considering placing a trade around, then the proper use of an indicator would be for example to check and see what the momentum of the market is going into that level. So with this in mind my advice here would be to learn as much as you can about the primary indicators out there focusing not on how you can use them to generate signals, but on what they tell you about the market. Then when you are observing something about the market like a trend that you think may be developing, then you will know which indicator or indicators that you can use to give you more information about that.

Generally after doing this one or two of the indicators will come up more and more as the one you want to have a look at to tell you about the market and these will become the primary indicators that a trader uses.


While I guess volume is technically an indicator in my opinion indicators are really things that are based off of price and/or volume. While I agree with stockcharts and would never have any where near 5 indicators on a chart, I disagreee that one should simply disregard all the other indicators that are out there.

In my opinion a better way to go about it is to learn a bit about all of the major indicators that are out there and then throw out the ones that don't tell you anything about the market that you want to know and keep the ones that do. This does not mean you put all of the ones left up on the chart when you are doing your analysis but rather think of them like a tool in the toolbox that you can grab when you need it.

Lastly I would say that the first step before making a live trade is to have a strategy outlined that you are comfortable with for trade entry, management, and exits that you are comfortable with. Do you have this already and if not what are you missing that you would like help developing?

Best Regards,
Dave

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Disclaimer: Trading is risky and can result in substantial financial loss. As always my posts are simply one traders opinion and should not be taken as trading advice. I am not a financial adviser so everyone please do their own analysis and take responsibility for their own trades.