This must be my first post for over a year, and my first post that will not mention any tech. indicator!
I am sharing the following because I have learnt a lot from various folk in this forum, and just maybe something in this post helps someone else and/or helps me again.
5-6 weeks ago I got bored being in cash, and either in a 4 am flash or at the traffic lights, decided to see if it was possible to do all of the following in a trading system:
1. Make a decent living with CFDs (as against my usual form of losing money trying to get rich quickly) starting with $8500 (the balance in the CFD acct at the time
2. Take out almost all the fear associated with the CFD leverage
3. Make money regardless of whether the market is bearish or bullish or whatever
4. Reduce the likelihood of a very nasty morning on the back of a terrorist attack or other calamity in NY!
I decided to:
1. keep position size small and constant.
2. Stick to the australian market
3. be short and long in approximately equal $ amounts all the time
4. Use the technicals to get me into and out of trend following positions in a robotic, emotion free fashion
5. Not put stop orders in the market. Rather, check each position at end of day to see if a new stop loss order was due. This might be at 3.30 pm, or after market close.
Result.
After 6 weeks I now have 42 $3000 positions, with slight lean to the longs - maybe 22/42. I have always been a bit biassed to the long side - it seems to be difficult to stop myself thinking as a trader for upside profit!
Account balance has doubled as of Friday (on unrealised profits).
I am astounded at how this is going. I expect it to kick me, but I have only had 1 bad day, and no bad weeks.
Would love to here if there is a basic flaw here, or how more experienced CFD traders would improve the system.
Aim number 4 has yet to be tested. I guess there could be an overnight disaster where the market sells my longs and buys my shorts ferociously. Am thinking about that possibility, and how to be ready for a 5% fall in leveraged account balance (ie, at the moment a capital loss of 5% of $128,000. However, even that result would leave me with a $2000 gain (about 20%) for the 6 weeks or so.
I intend continuing reinvesting profits. Am making about $1500-2000 per week now.
Some might think that having to check the charts on 42 stocks every day was a bit tedious. However, the decision as to whether a trend has stopped takes about a 3 seconds look for most of the positions, and a maybe 20 seconds if there is a bit of doubt. I will check 200 stocks in an hour every night if I have to, if the $ is still flowing in the right direction!
A disadvantage will be coming up next week if I cannot get on IC while overseas for a few days. However, the indicator used to alert me to put on a very tight stop loss or a sell order is available in the CFD provider and on yahoo charts.
Look forward to any comments and helpful advice.