Yesterday's standard behaviour was one which happens very frequently. Textbook stuff so I took some screenshots. Things drop or rise rapidly for not much reason, very often "off the open". Then they spend the rest of the day coming back. If you join the off-open slope, you don't know where it'll end, so it's risky. If there's a catalyst ie some exogenous push, then you can safely assume it'll last a while . 9 times out of 10 you can benefit from that, just maybe losing a little of your gain when the trend comes to an end. On the 10th out of 10, you lose before it goes your way enough..
In the last days not much is going on, so these moves on Apple were minor examples of that. The US market opens at 14:30 so that's "the open".
We saw the rapid no-reason drops, and it came back again. The Yellow moves were the comebacks. Even though they didn't go all the way back, they were slow enough (each vertical line (candle) is 10 minutes wide) that one could close when the pullback stopped. One can use a "trailing stop" to close when the price drops a little.
The whole stock market did it yesterday, as represented by an index. Here I used Nasdaq futures, a "standard" index.
It's a useful one because one can with normal leverage, get a decent % move in the value of your trade.
I screenshotted these , the second about the time I posted the previous post.
The index I chose is called USA Tech 100 - it's the tech (Nasdaq) index. Yellow indicates where the next chart comes from.
To the left of the blue line, I did go "short" (betting the market will fall) for 3 of the red legs, but was waiting for the pullback, where the blue line was broken. You draw your blue line to join the "falling highs". It should be to the left a bit.
So I went long where the trace rose through the blue line. You know it's going to pull back (ie go down again) sometime. That really extended "wick" at about 15:50 is the clue so I closed there and waited for the next "bottom". Same sort of thing going up. Those are 1 minute candles. You have to stay awake but it's not critical to the odd candle. You can go short on the downward pullbacks once you 're reasonably good at see it coming.
That rise overall then was from about $21300 to $21560 (It's an 'expensive' stock.). So every one share you hold would gain you 260 bucks.
You don't need $20k per share, because you're " leveraged", it's an
Index not a normal stock so it's 20:1, therefore you need about $1k.
WHen the trace got back to pretty much where it started at the end of the previous day (no surprise, that's common) it started "ranging" . AGain that's everyday, it moves between some fixed levels for a while. You can trade it each way. I don't try to be cute about getting the perfect entry, some do. I prefer it to be
obviously going my way.
This is one of those "legs" at the bottom of the yellow line in the earlier chart.. The trade opened at 21525 shown by the blue line about 18:08. I closed that leg where the Bid line is 21554.
You can tell in advance it would stop about there because that's the previous high, and look at the wicks on the candles - they slow the rising, and if you're 1 minute late it doesn't matter much.
Explaing the numbers on that - the trade is shown as starting at $21525.8729, closing at 21554.39. "Quantity" is number of shares which was 58. So that 9 minute trade yielded 58 times the difference, which is the £1305.16 (they convert to £) on the right.
The sum of the range trades was about £4.5k.
Margin is the other figure. That's the amount which is used. The actual number of shares bought by that is 20:1 so 20x £49.8k. The Margin amount is reused each time.. In fact you use a portion of it, but can use most of it. The approx 50k here is the amount you could lose if something which never happens, happened. You don't lose the 20x number.
Risk of 50k? Crazy? Not really . Zoom out a bit to the earlier chart.
The overall rise was $21300 to $21560, that's $260 on the face of it, but by skipping some of the drops it's nearer 300. Adding on some of those profitable drops from the going-down parts of the earlier move it comes to about $400. That's around £20k profit.
I wouldn't recommend trying to get the profits from the downtrend there until you practiced a bit because you have to be used to reading the candles on multiple timeframes to not get caught, but even the 260 x58 is around $15k.
That 50k margin only takes a few days like that to accumulate.
Today that same index is jumping around, usual way with refernce to levels, trends and the rest, The lmarket hasn'y opened yet and it has shifted about $100 . x 58.
If you learn this sort of stuff, you won't need to go out to work again. Some days it doesn't work, so learn to recognise that.
The best advice I can give is to step back and see what's happening.
If it's up and down every few minutes, wait. If there's no trend, don't trade.
WHen there's a trend, look at the levels, only enter on a pullback, never at the top of a rising trend or bottom of a falling one. Practise with fake money.
With real money set your loss tolerance and stick to it. If it's £1, close and you won't lose more than £1. You might miss some profits, but that's life.
If you know you have mental hangups and an ego in the way, you will lose. Ask Arbu.
clearer numbers:
