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Trading advise
Hi
My I have been trading for about 2 years now while working full time, I've tried to learn as much as I can and have lost a fair bit of money in the process which I don't mind as it has helped me learn a lot. One of the things I have learned is to have a good system and stick to it. So the system is and going to try is a simple one which I hope to adapt. Basically on the ftse 100 on days charts I am going to follow the rsi, buy on 33 and sell on 66 with 100 point stop loss. I have back tested this which has made a profit of 3500 a year which I would be more than happy with. I'd appreciate any input. Thank you
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Consider why anyone would give you 3500 a year. Is it because they are rich ? Is it because their head's gone a bit funny ? Is it because the money grew on trees, therefore anyone can just go pick some up ?
On the other hand, if that money belongs to someone, wouldn't they fight you for it ? Imagine you were taking 3500 off someone on the street, what will likely to happen ? Same will happen in the market.
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Hi, I understand that, and I do think this system seems maybe too simple but if it worked when back testing does this not mean it could work live? I understand that you can't predict the future but if it would of worked in the past isn't there a good chance it would work again?
Thanks for your reply
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Interesting. In what ways do you need to adapt your system? i.e. before searching for the answers, do you have the questions?
Do you have any other filters for entries? What are your exit criteria per trade? Is it one trade at a time or does your plan support multiple trades?
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you can try it, but rsi is lagging indicator, and simply follows price. i have experimented with simple systems like that, and haven't found them very profitable.
i think rsi is best used as an alert that a trend change is about to occur, and to be on the look out for a reversal or continuation pattern. another way i might use it is as a signal to take profits whenever rsi shows momentum is slowing.
i recommend to key off classic patterns, and use a breadth indicator for confirmation, ie the mcclellan oscillator. to get a good volume of trades swing trading you'll need to find patterns in the index's underlying components, as well as the index. if you want to just trade the index, you'll have to daytrade to get a good volume of trades.
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