Your trading style depends on your personality, the time you have to trade and your knowledge on the market. So this is really dependent on the individual and his personality to a large extent and there is no right or wrong answer. I also think there’s a lot of work we could do to improve strategies that fit each of us individually.
However, if you are just looking for an example; one experienced spread better shared us his thoughts on his personal trading -:
I guess I would describe my style as opportunistic. “Get in, grab it, get out; don’t still be there when the roof falls in.”
Being OUT of the market, in cash, is the safest place to be – so I don’t hang onto a non-performing position with fingers crossed waiting and hoping for a position to come good.
I sift quickly through company charts, looking for any that show a convincing and ongoing uptrend or downtrend, and I use spreadbets to take a position in them, in the direction they are going. I find ongoing downward patterns far more reliable than upward ones, so most of my best gains come from downbets.
I don’t try capturing the entire upward or downward run, nor do I try getting in before a run starts. I am happy to capture the middle third of an established run. If momentum slows and the price chart begins to get twitchy, I get out and go find something else.
I maintain a watchlist for what appear to be the best upward contenders and another for downward ones. Some of them are best traded when the market as a whole is moving strongly the same way – such as now for downbets. I have around thirty bets in place this week, of which about 27 are downbets. In another week or month that mix might reverse or I might temporarily hold no positions at all with my portfolio 100% in cash ready for future opportunities, or because I want a few days/weeks holiday. I hold most positions for weeks, some for months, none for a year, some for a few days or less than a day, some for a few hours, and occasionally for just a few minutes. The most positions I hold at a time is 30-35, more often it’s around a dozen, sometimes just 2 or 3, sometimes none.
At 7am each day (in my Nov-Dec-Jan-Feb period) and on occasional mornings the rest of the year, I skim through the business news headlines, looking for whatever might impact the stock price of a particular company or sector, and I might aggressively trade something in the first hour of that trading day and then log off for the day. I get more satisfaction from closing and banking the gain (or quickly banking the smallest possible loss on those i get wrong) and walking away, than from constantly watching screens or constantly fretting over what my positions are doing. The positions I leave open when I’m not watching are ones in which my stake has been calculated to tolerate a worst-case scenario; and because I use spreadbets I can utilise the facilty known as a trailing stoploss – in which my designated safety net travels with the stock price when moving in my favour, but stays put and shuts out that position if/when the price turns against me. I appreciate that some countries do not allow spreadbets on stocks and indices, but here in the UK they are quite widely used in preference to actually buying stock.
I don’t employ fancy indicators or sophisticated software – I merely climb aboard what’s moving and jump off when it isn’t going my way. I don’t study company accounts attempting to calculate value – I just play the price movement and keep in touch with related news that might affect it.
Basically, every 2-3 weeks, I spacebar-tap my way through Sharescope 18-month charts of stocks at about two per second, from biggest downwards, just over a thousand of them, pausing at whatever catches my eye, and popping those into a portfolio titled ‘August longs?’ or into ‘August shorts?’ (and similar portfolios per other months).
At that stage I employ no indicators. I just look for stocks whose price is sloping convincingly down or up over recent weeks/months.
I then go to one or both of those portfolios and look a little closer. I note imminent results/ts. I toggle between linear/semilog and glance at candles. I note horizontal support/resistance levels and might glance at rsi, but no other indicators.I do a few minutes research on each, and pop them into two Advfn monitor lists (shorts/longs), deleting any with a spread greater than 5%.
I casually glance at how each monitor looks every day or two, and open spreadbets on the best looking ones – generally favouring those with the tightest spread. Normally open a quarterly bet, at a small stake, with an automated trailing stop loss. If it subsequently goes far enough the wrong way it hits my stop and closes. If it goes my way and into profit I manually shift the stop loss to breakeven setting. If it keeps moving my way I increase my stake once the opening stake is in profit.