Lost some cash yesterday trying to play the New Years Eve rally. I felt sure that stocks would finish the last half an hour strongly as traders unwound positions but it wasn’t to be. Onwards and upwards.
It’s 2015 and a Happy New Year!
Udemy are currently offering over 9,000 courses at just $10 each. You can check them out here.
That’s all for now.
On the whole, it’s better to avoid trying to pick market tops and bottoms. If you try and pick the tops and bottoms every single day you’re going to get frustrated very quickly and wind up losing a lot of money.
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Last week’s picks*:
VA: LXFR +0.69%
MR: LYB +0.99%
ST: EXPE +3.31%
SS: BLKB +2.77%
SS: IQNT -6.71%
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The following day trading strategies are meant for beginners and experts alike but remember that day trading is full of risk and the majority of those who attempt to day trade end up losing money.
One reason for this is that financial markets are dynamic and extremely efficient. Markets are dominated by machines which means they are very hard to beat.
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Trading in the financial markets is not an easy thing to do but it is something that I decided I would set out to achieve many years ago when just a young man. Besides, finance is a passion of mine and I like nothing better than fiddling with trading systems and scouring various stock charts. Along with music and travel, it’s one of the things that I’m most interested in and it’s been that way since long before I even got a job in the industry.
It’s because of this passion that I decided to put together my own course on stock market trading but this wasn’t an easy decision at first. You see, at first I worried about giving away my knowledge. I worried that if I gave away all my trading systems (and code included) that it would be harmful to me and that people would get all this knowledge for just a tiny cost.
Most courses are not worth a penny
You see, in the past, traders have been extremely secretive about giving away their systems but what I have found is actually the opposite. In fact, I’ve found by giving back to the community I’ve become a much better trader myself. I now have a responsibility to provide students with the right information and that gives me the motivation to learn even more about trading.
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Day Trading Futures For A Living
I worked as a futures day trader for a year between 2008-2009. It wasn’t a particularly good time to start in the markets because the volatility from the credit crunch was intense. Having said that, some experienced day traders really benefitted from the increased volatility and made a lot of money.
Nowadays, I do very little day trading. I have the upmost respect for day traders who are able to make it work but it’s a style of trading that just isn’t for me. I have a hard time sitting in front of a screen all day watching price movements which is why I prefer slightly longer time frames.
Day trading is basically very difficult and most of those who try it will fail.
Source: Trading Technologies
What I used to trade
When I first started trading I was given two products to focus on; German Bunds and London’s FTSE. These are popular futures for day traders in Europe as they are highly liquid with tight spreads. On occasion I would also trade the Dow, GBP/USD and STIRs (UK short term interest rates). We had one Bloomberg Terminal in the office and would use E-Signal and Trading Technologies to play the markets. We also had a squawk box, CNBC and 4 screens each.
Can anyone day trade futures?
Of course the simple answer is that not everyone can day trade futures. To be able to trade futures our firm had to have a large margin account with our clearing broker. Upwards of GBP30,000.
Aside from that there are high daily costs with futures trading. To trade at our firm the desk fee was around GBP100 per day and that was cheap compared to most other brokers.
This was the desk fee and included trading software, data, phone line and connections to the exchange etc. Comparatively, the cost to trade was very small at just GBP$1 per trade per contract (GBP$2 for a round trip).
So for the ordinary retail trader it’s not possible to trade futures. But, it is possible to trade futures products in other forms for example as CFD’s, spread bets, spot products or ETFs.
Day trading futures products for retail traders
By using a spread betting firm or a CFD provider it’s possible to trade the FTSE100, the Dow, German Bunds, Gold or any of the popular futures products.
It’s worth noting that the spreads on these products are higher than they are for futures traders. But on the flip side, the fixed costs are much lower – no $100 a day desk fee, no huge margin requirement and there’s no concern about rolling over different quarter futures contracts.
Tips & tricks for day trading futures for a living
Without doubt, day trading is a difficult thing to do. I don’t recommend day trading for most people but from my experience, the most successful day traders are those who possess the following skills:
The best day traders are those who focus on just one or two products. They watch the tape each day (not just the chart) and get to know them inside out. By doing so they are able to trade with a high level of gut feel. That level of intuition can’t be taught, it only comes from studying the product and some traders may never learn it.
One of the keys to successfully day trading futures for a living is having the right mentality. Successful day traders take responsibility for their trades and trade with a huge amount of discipline. Most importantly, successful day traders do not self sabotage. They have a high level of self confidence and make sure that they are compensated for the risk that they take on. They don’t gamble and they understand the relationship between risk and reward.
Number of trades
If you’re a futures trader on a desk you can place more trades because the cost per trade is smaller (although that doesn’t mean you should). On the other hand, if you’re trading CFDs, spot products or spread bets, you need to seriously cut down on the number of trades you make a day. Spreads on the major forex pairs and stock markets are low but they are not insignificant. You should try and make only one or two trades a day if you want to consistently make money.
Another thing successful day traders need is a good appreciation of the fundamentals. To be sure, technical levels are very important for short term traders but fundamentals also need to be understood. Knowing how to react to certain news releases and events is essential. Combing fundamental and technical is the best way.
Day traders need the flexibility to go with trends or to trade against the flow. Short term markets are choppier than long term markets and traders need to be able to switch from long and short easily. They can’t get caught up only playing one side of the market and they should cut losses quickly. Pivot points, moving averages and RSI are good indicators for day traders.
A word about bank traders
A lot of people get confused with day trading, primarily because of the way it is portrayed in the media. It’s important to understand that 90% of traders at investment banks like Goldman Sachs and Citigroup are not engaged in real, directional trading. What they actually do is make the market for their clients. They quote prices to their customers and take a couple of points profit from the spread.
Let’s look at an example. Say a customer rings up Goldman Sachs and wants to buy Apple stock. The trader at Goldmans simply buys Apple direct from the exchange for $90.50 and sells it to the customer at $90.60, thus making a risk free $0.10 per share.
Bank traders have direct market access and this model is how most investment banks run their books. They also use order flow and volume to further reduce the risk of their trades going wrong but this is essentially a very low risk business model.
So, this is how Goldman Sachs are able to go weeks at a time without having even one losing day. Real, directional trading can never have such a successful win ratio.
Getting into day trading?
See my favourite intraday trading techniques and check out the resources for brokers, books and systems.
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In this post I talk about two high quality courses where you can learn how to use the immensely powerful trading simulator Amibroker.
* If you intend to take either of the two courses below (or both), use the discount code ‘Marwood’ at checkout to receive 15% off the usual price. *
Regular readers of this blog will know that my back testing and trading software of choice is Amibroker. It is an incredibly quick and flexible platform, easy to use and comes with awesome support. In fact, when you purchase Amibroker you are entitled to 24 months support from the developers – something that I’ve really benefitted from.
Regular readers will also know that every now and then I talk about a product or two that I believe is worthy of recommendation. And sometimes I earn a small commission from doing that and sometimes I don’t. The main point being that I never recommend a product that is a scam or offers little value to my readers.
Learn Amibroker at Trading Markets
Now, as I said already, Amibroker is my favourite tool for analysing the markets and I have found it superior to the vast majority of much more expensive programs.
However, Amibroker is still just a tool. It is immensely powerful but only if you are able to learn Amibroker in the right way.
Previously, in order to learn Amibroker, Amibroker users have had to pretty much teach themselves. When I was learning the program, I basically had to make do with Amibroker forums and Dr. Howard Bandy’s books (which isn’t to criticise any of those because they are excellent).
It just would have been a lot easier and quicker if there had been some way to sit down and learn everything in one go.
And that’s why these 2 new courses from TradingMarkets.com are so valuable. They allow beginners to learn Amibroker from the ground up, doing it the right way.
Right now, there are couple of places still available I believe, which will have you fully up to speed, ready to build high performing trading strategies in just a couple of days.
Before I go into more detail about the two courses it’s worth saying a word or two about TradingMarkets.com because they’ve been involved in the financial markets for quite a while. In fact, TradingMarkets were founded back in 1999 by Larry Connors and Kevin Haggerty, and if you think you’ve heard those names somewhere before it’s probably because you have:
Larry is the author of a number of bestselling finance books including Short Term Trading Strategies That Work, High Probability ETF Trading and Trading Stocks and Options With Moving Averages. He’s also famous for developing the ConnorsRSI technical indicator and is regularly featured on CNBC and Bloomberg TV.
Trading Markets TeamWhilst Kevin was a former head of trading at Fidelity Capital Markets in Boston where he was responsible for all U.S. institutional Listed, OTC and Options trading. It’s fair to say that the team at TradingMarkets have a wealth of knowledge at their disposal, and in Matt Radke, they also have a teacher with a huge amount of technical experience.
Introducing Programming in Amibroker – Learn How to Backtest Your Best Trading Ideas in One Day
The first course from TradingMarkets, taught by Matt Radke, starts on the 5th June and is your introduction to using Amibroker. It’s taught over the course of one day and consists of 6 hours of interactive online learning. It includes the ability to talk with Matt directly, download a number of AFL code templates and involves several hands-on sessions where you can get to grip with the software.
During the course you’ll learn:
• How to import data correctly
• How to use the automatic analysis window
• How to code in AFL (Amibroker Formula Language)
• How to scan
• How to run an exploration
• How to code and add custom indicators
• How to perform back tests
You also receive free:
Quantitative Trading Systems by Dr Howard Bandy (book).
The best thing about this course (and the one below) is that they are taught by experts in Amibroker. Connors Research and Trading Markets use Amibroker daily to build their own high performance trading strategies so they know exactly what it takes to teach others.
The introduction to Amibroker will leave you with real confidence in your ability to program indicators, run scans and create profitable trading systems. At $1000, it’s not cheap, but it’s not that expensive either. Especially when you consider the potential rewards from running your own systems.
For more information about the course, and to book your place, click on the banner below and you’ll be taken through to the course booking page.
Advanced Amibroker Coding – 2 day course
If you are already fairly experienced in Amibroker, or if you have taken the Introduction to Amibroker course, and you want to advance your knowledge to expert level then the 2 day course of Advanced Amibroker Coding is going to be your best bet to learn Amibroker.
This course runs over two days and covers everything you will need to run your high grade strategies and harness the full working power of Amibroker.
Specifically, you’ll learn how to use the often misunderstood Custom Backtester (CBT) interface which will allow you to create complex backtests, optimizations and portfolio simulations.
During the course you’ll learn:
• When to use the three levels of Custom Backtester (CBT)
• How to add custom metrics to the CBT
• How to utilise multiple time frames
• How to design for a portfolio
• How to perform optimisations correctly
In addition you’ll learn:
• Advanced functions such as LOOP, LOOKUP & _TRACE()
• Using the Switch function
• TimeFrame Compress/Expand and Set/Restore
• Scaling and position size array
• High level and low level CBT
• How to implement a portfolio test
As well as this, the course goes over the mistakes traders make when designing systems and how to best avoid them. By the end you should be able to produce historical results for a system that mimics exactly the way you want to trade and thereby gain insight into how the system will stand up in the future.
The course, again, is taught by experienced Amibroker programmer Matt Radtke and is an intensive, hands-on couple of days with lots of examples and exercises. As I said before, if this was around when I was first learning Amibroker I would have snapped it up, it probably would have saved me several years of trial and error learning.
For more information, check out the full Amibroker courses below:
Remember to use the code ‘MARWOOD’ to get a 15% discount at checkout.
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