Is trading indices better than trading stocks?

[dmedin]

Is trading indices better than trading individual stocks?

Trading individual stocks is potentially more diverse, but then again the same factors that work on the index as a whole tend to work on companies too (interest rates, state of economy/sector etc).

It almost seems to me that it's not the instrument you trade but the time frame that is the biggest differentiator.  For example almost everyone here uses short-term charts, but the IG analysts never use anything less than hourly charts. 

The other day IG live-streamed on Youtube, advertising it as 'how to trade the FOMC decision'.  But all the two panellists did was discuss fundamentals and long-term charts, and CB didn't make any effort to trade on the minute charts.  Maybe he has better sense?  Or is that part of the 'game' - using longer-term charts to appear respectable but 'real' trading involves scraping and scalping on minute-by-minute charts?

For me personally I see the value in both, although I'm starting to go off trading long-term on stocks as they seem to be influenced by the same kind of things as FX and indices are, making it pointless.  The escalation of the trade war sent the likes of MSFT and Apple into reverse, and when all the big U.S. stocks are falling at the same time because of a Trump tweet you might as well give up and speculate on short-term movements on Wall Street or S&P 500 instead.

Any thoughts, my wee bairns?  😊

[Nelsy-Boy]

I only trade indices and some fx pairs using just the daily charts. I just don't have the time to sit and watch a computer screen all day waiting for my strategy to line up. I just scan through about 8pm GMT and see if anything lines up. I never trade stocks only because I don't have the time to look through and pick out the ones I think are worth watching. Plus, I do find that they are definitely harder to trade. Although saying that, you flagged up shorting greggs @dmedin and that turned out good for me on the daily. I prefer to watch what the majority are trading and then make my own decisions based on TA only. The only thing I would say with my strategy is that you can go through a number of days before a trade shows itself.

[WallStFoxy]

40 minutes ago, Nelsy-Boy said:

I only trade indices and some fx pairs using just the daily charts. I just don't have the time to sit and watch a computer screen all day waiting for my strategy to line up. I just scan through about 8pm GMT and see if anything lines up. I never trade stocks only because I don't have the time to look through and pick out the ones I think are worth watching. Plus, I do find that they are definitely harder to trade. Although saying that, you flagged up shorting greggs @dmedin and that turned out good for me on the daily. I prefer to watch what the majority are trading and then make my own decisions based on TA only. The only thing I would say with my strategy is that you can go through a number of days before a trade shows itself.

@Nelsy-Boy

It sounds like you have a plan that works but I would urge you to swap your Daily charts for H4 charts at the max, if you try them both at first you will see the advantage. 👿

Daily Chart:

H4 Chart:

H1 Chart:

I could go on but these three charts are exactly the same just different time frames, I know which one I would use!!  I would also wait until 09:30 - 10:00 unless I had Already made a move at 06:30- 07:00 because I move either before the European open or after the u.k. open settles down. If you have limited time you could try waiting until about 18:00 or 20:00 there is very often a big move late in day due to Wall St.  👿

[Nelsy-Boy]

Thanks for the tip @Foxy. I will have a look but it has taken me quite a few years to get comfortable with the plan I have right now. I will see how it fits the 4hr charts as I only ever log on and review about 7pm til 8:30pm due to work and life stuff.

[Caseynotes]

11 hours ago, dmedin said:

Is trading indices better than trading individual stocks?

yes

11 hours ago, dmedin said:

Trading individual stocks is potentially more diverse, but then again the same factors that work on the index as a whole tend to work on companies too (interest rates, state of economy/sector etc).

no and yes

11 hours ago, dmedin said:

The other day IG live-streamed on Youtube, advertising it as 'how to trade the FOMC decision'.  But all the two panellists did was discuss fundamentals and long-term charts, and CB didn't make any effort to trade on the minute charts.

yes

11 hours ago, dmedin said:

Or is that part of the 'game' - using longer-term charts to appear respectable but 'real' trading involves scraping and scalping on minute-by-minute charts?

yes and no

11 hours ago, dmedin said:

and when all the big U.S. stocks are falling at the same time because of a Trump tweet you might as well give up and speculate on short-term movements on Wall Street or S&P 500 instead.

yes and no.

 

With indices you are trading a managed portfolio of stocks and therefore the trials and tribulations of a single stock are of no importance. They are managed because poor performers are dropped and good performers are added. So long as GDP continues to rise as it has done for the last hundred years indices will also continue to rise so really a long term one way bet. 

IG are not allowed to give trading tips in their broadcasts or give advice. None of the commentaries ever do. 

IG commentators are just trying to aim for the middle ground in their time frame selection and for retail that means trading on daily through to hourly.

Institutions trade on long term time frames only, anything less than daily is considered just noise but they look to stay in positions for months and years, none of us has the financial backing to allow us the patience to copy that approach. They would consider those who trade the short-term movements are feeding off crumbs and they are correct, if you are a big player it can take days and weeks to get your full position on (or off), they couldn't just jump in and out even if they wanted too. Which is why major markets take days or even weeks to turn, and that's why trying to pick 'the day' is daft.

[WallStFoxy]

11 hours ago, Nelsy-Boy said:

Thanks for the tip @Foxy. I will have a look but it has taken me quite a few years to get comfortable with the plan I have right now. I will see how it fits the 4hr charts as I only ever log on and review about 7pm til 8:30pm due to work and life stuff.

@Nelsy-Boy

I get that trading is a very personal thing, Its taken me years to work out my own strategy but I still keep finding ways to improve. I would think H4 will help but if not nothing lost keep going with D1. I wish you all the best with your trading. 👿

[WallStFoxy]

17 hours ago, dmedin said:

Is trading indices better than trading individual stocks?

@dmedin

For me it's a no-brainer, with Indices you get a much lower spread and greater daily movement compared to trading stocks, so for short term trades the advantage is clear. Many people choose Forex for the same reason but I find there's a more stable trend to trade in Indices making it much easier to understand. If you consider the last 100 years stocks have been a long term bull trend but for the last 10 years in particular Wall St. has been a world leading bull market offering opportunities for both day traders and trend followers so why spend hours trawling stocks looking for less profitable options than the obvious opportunities before you.  👿

[dmedin]

So getting a diploma in TA is for a respectable suit-wearing job at a big company, but minute-by-minute charts and scraping are for the stay-at-home trader.  Got it 😎😋

[nit2wynit]

Hi.  Trading the FTSE for instance with a small account means you a limited to (in my case) £2 per point., as I only have £800 available now.   Where it's been stated the daily may only be 50points, the max you could make is £100 on average.

Trading individual stock that has a smaller value means you can gain bigger, providing it moves the right way.

This is what I have come to realise over the last three weeks.  If I can be pretty sure of a direction and find the right in point then I can use a small stop and capitalise on small moves with bigger PPP.   However, since i've been using only 50p per point I've worked my **** off and made very little and still lost another £200.  Over trading.

I've been confusing myself based upon the advice in on the forum.  However valuable it has been it has never been advice that suits my goal.  Small moves.  Bigger Profits.

 

[Guest Tino]

Best advice stop taking advice from anyone else ...

[WallStFoxy]

1 hour ago, nit2wynit said:

I've been confusing myself based upon the advice in on the forum.  However valuable it has been it has never been advice that suits my goal.  Small moves.  Bigger Profits.

@nit2wynit

I don't think there's anyone on this forum that has a system such as the one you are looking for. I may be wrong but a £5.00 pp trade with a 5 point stop loss or similar, is not a strategy any one here uses as far as I can tell. That is why people keep giving you advise other than that you wish to hear. I fear you are looking for the impossible and worse still, if you don't try to adapt your strategy soon you may be staring at a margin call. I wish you the best with your trading and who knows maybe one day you may be the one giving everybody else advise on how this strategy works but please remember if things go wrong it is not because you didn't get good advise but more you didn't like the advise you were given. 👿

[nit2wynit]

6 minutes ago, Foxy said:

I wish you the best with your trading and who knows maybe one day you may be the one giving everybody else advise on how this strategy works but please remember if things go wrong it is not because you didn't get good advise but more you didn't like the advise you were given. 👿

Foxy you seem to have taken that personally.

I proved to myself yet again 2 weeks ago when I made 20 trades in 2 hours with a £50 up and £16 down and 17 winning trades.  If i'd only gone long I might have made £20.

If i had a larger account it would have been more.

However, it was not sustainable as I was exhausted.  I lost it all again in less than half the time for a mistake i keep making.

I'm not losing money coz it doesn't work.  I'm losing for another reason.  My psychology is still learning.  My discipline is still to come.  What i do is on a minute time frame.  It's not rocket science.  Get in get out, get in again.  I didn't invent it.  There are thousands of Day Traders doing the same thing.  I've only been doing this 5 months.


I really don't see the issue here.  If you can see clearly that a chart oscillates 20 points at a time, then go in for £5 and take 10 of those points and get out.  I can't do this with Indicies and only £800.  But i can do it with Individual Shares.

[WallStFoxy]

@nit2wynit

12 minutes ago, nit2wynit said:

Foxy you seem to have taken that personally.

I am sorry to say you have totally missed my point.

 

9 minutes ago, nit2wynit said:

I proved to myself yet again 2 weeks ago when I made 20 trades in 2 hours with a £50 up and £16 down and 17 winning trades.  If i'd only gone long I might have made £20.

One nice day doesn't make it Summer.

 

12 minutes ago, nit2wynit said:

However, it was not sustainable as I was exhausted.  I lost it all again in less than half the time for a mistake i keep making.

I don't think it will ever be sustainable.

 

13 minutes ago, nit2wynit said:

I'm not losing money coz it doesn't work.  I'm losing for another reason.  My psychology is still learning.  My discipline is still to come.  What i do is on a minute time frame.  It's not rocket science.  Get in get out, get in again.  I didn't invent it.  There are thousands of Day Traders doing the same thing.  I've only been doing this 5 months.

Have you any idea how daft that sounds? You are in total denial.

 

16 minutes ago, nit2wynit said:

I really don't see the issue here.  If you can see clearly that a chart oscillates 20 points at a time, then go in for £5 and take 10 of those points and get out.  I can't do this with Indicies and only £800.  But i can do it with Individual Shares.

It's not the fact that it oscillates 20 points, it's the randomness of the moves means you will keep getting stopped out and you will keep on finding another reason for it other than your stop is to close. 👿

[nit2wynit]

3 minutes ago, Foxy said:

I don't think it will ever be sustainable.

It's not; that's why I said it.
 

 

3 minutes ago, Foxy said:

One nice day doesn't make it Summer.

I'm not an imbecile; I know this.  That's why I'm £1200 down since Feb.

 

 

4 minutes ago, Foxy said:

Have you any idea how daft that sounds? You are in total denial.

I'm not in denial.  I'm down £1200!  I'm not denying it.


Foxy why don't you put down here a Live Chart example and show me how you would approach it with £800?
 

 

 

[WallStFoxy]

6 minutes ago, nit2wynit said:

Foxy why don't you put down here a Live Chart example and show me how you would approach it with £800?

@nit2wynit

I have done several charts showing how I trade I even did a walk through on a real trade on the FTSE for @dmedin but you aren't interested in how I trade, only how you think it should be done. 👿 

[Guest Bojk]

I traded with a small account (SGD500) and able to profit via trading however there are many elements required line up in place for a winning streak.

There was once sometime between May & Jun which Trump started tweeting on tariffs etc and what I in front of computer was to short TP 20 SL 50. I ended 20+ trades with 70% wins. My point is, I am happy to have got the right call however this has quite to do with luck and not much of trading skill sets.

Last month, I became daring and funded account with SGD10k, shorted DJI at 27000 at 11 pips and ended 2 weeks of sleepless nights when it was hovering 27100 - 27350. The paper loss was, to be honest hard to stomach with each period staring at $5k losses. Fortunately but sadly, I closed my position last Friday (again thanks to trump) which it dropped below 26900. For this trade i entered at 3 various position and each time pulling away my stop losses while TP at a terrible timing. It was more of a relieve to get out of position rather than wait for the big fish (which happened right now).

I am still a very amateurish trader even after trading for past few years. 

[nit2wynit]

46 minutes ago, Foxy said:

 but you aren't interested in how I trade, only how you think it should be done. 👿 

I'm tired of your tone.  Unfortunate I've said this once before.

How you pointed out on that chart is how I would also attack it.  Or did you miss that.?  I simply wasn't trading it.

But you can't prove **** with £800.  So prove it will a small account.

You want to prove something prove a success with £800.


Actually never mind.

What do you want here??

Dmedin posted, You replied, I replied something different.

Try not to worry about it ey?


I've also shown my successes and losses.



 

Edited August 5, 2019 by nit2wynit

[dmedin]

A lot of advice out there flat out contradicts other advice.  But unless people can demonstrate effectiveness with their system (and the only way to do that is to demonstrate consistent or net profits over a given time frame) then they are full of hot air.  (Or in other words, a professional technical analyst.)

For example, it seems reasonable to let profits run and cut losses short.  But some people will tell you to aggressively take profit at a certain level.  And there is all the nonsense of whether to have a stop loss or not.

I always remind myself that 74% of people doing this lose money.  That puts a lot of what you hear into perspective.

[Nelsy-Boy]

I only trade using the daily chart and usually put the deal on about 8pm. I always use stop losses and I only trade FX and Indices where it's 0.5 a point. Sometimes when I'm not overly confident, rather than risk my money, I put the deal on in the demo to keep me interested. I don't get many opportunites to trade as there are not many options at 0.5 a point but at least it keeps my risk low which suits me. Here is a trade on the demo, which I have set up the same as live but was a bit hesitant. I saw divergence in Stochastic and divergence in RSI so sold down. I don't look at the news feed anymore for announcements and this has not affected my trading. It seems that the price is moving with the expectations of the market and as such, the TA can be followed. It is when something unexpected happens that can affect the outcome of my strategy but there is not a lot you can do about that other than use your stop losses without fail.

[nit2wynit]

34 minutes ago, Nelsy-Boy said:

It is when something unexpected happens that can affect the outcome of my strategy but there is not a lot you can do about that other than use your stop losses without fail.

Hi.  Can I ask how big your Stop Loss is?  thanks

[Nelsy-Boy]

@nit2wynit on that US dollar deal, the stop loss would have been above the most recent high. I don’t tend to focus on ratio-ing my stops and limits. I might have a target that is two or three times greater than my stop but you never know if you are going to get there. Therefore, I always review my trade at the end of each day, usual time. If I don’t think it’s going to reach the target, I will close out for the profit. If it’s really taken off in the right direction, I will move the stop to small profit and see what happens the next day. If it goes against me but doesn’t hit my stop, I might wait and see but if it’s glaringly obvious it’s a wrong-in I’ll close it for a loss before it hits the stop. Some will say that my strategy is wrong but that doesn’t matter. It’s working for me with the limited funds I have.

[nit2wynit]

20 minutes ago, Nelsy-Boy said:

Some will say that my strategy is wrong but that doesn’t matter. It’s working for me with the limited funds I have.

no, that's cool i do similar.  I rarely let my stops run.  I'm always watching.  

I've been saying how i used to pay higher PPP and get in and out early.  Made a lot lost more than a lot.  Interesting you only play the Day Time frame though.  you must use a considerable stop so playing for the Day or Swing trading I'm guessing at least £50 at 50ppp?

Just need an insight buddy.  Not being nosey about your finances.  my account is £800.

[Guest trade small]

On 03/08/2019 at 07:58, Caseynotes said:

but they look to stay in positions for months and years, none of us has the financial backing to allow us the patience to copy that approach

you do if you take a small position

[hart]

1. index are for deep pockets.
2. ig charges will fend u off hence be vigilant

[dmedin]

I'm amazed at how different your perspective is based on the time frame of the charts you're looking at.  What looks like a down trend on a 15 minute chart can actually cause you to short into an uptrend, which you will easily see when you switch to 4 hours or daily.  That's why I think it's safer to take a position than trade on short-term movements.  Safer, but not necessarily more likely to win. 

[BoJK]

Can anyone advise hammer appearing on wall street D1 chart is a short or long call?

Fundamentals did not change overnight so we put FA aside..

[Nelsy-Boy]

@dmedin the stop loss I set could be as much as £50 but that is the max I will go to. Therefore at 50ppp I am limited to waiting for the right entry point. For example, in the attached US Tech, there is good divergence in the RSI and small divergence in the Stoch and the stoch has crossed up. However, to enter a buy now would be too risky based on the level the price has moved up as my stop would have to be set below the the prior red candle.  I like the daily charts because I can spend time on reviewing my positions in the evening and pretty much the whole days trading is reflected on the graph and indicators.

[BoJK]

On 06/08/2019 at 16:54, dmedin said:

I'm amazed at how different your perspective is based on the time frame of the charts you're looking at.  What looks like a down trend on a 15 minute chart can actually cause you to short into an uptrend, which you will easily see when you switch to 4 hours or daily.  That's why I think it's safer to take a position than trade on short-term movements.  Safer, but not necessarily more likely to win. 

The type of charts we trade depends on the expected time you want to TP. For 20-30pips in indices, I trade in m3 and rarely look beyond H1. The bigger chart are for a direction for the day, minute chart is where the execution is.

[dmedin]

Yep, this is really easy to trade ...

[dmedin]

Is it worthwhile to do 'relative strength analysis' in terms of e.g. a FTSE 100 stock to the index itself?

Seems pointless to invest/bet on FTSE 100 stocks individually if they are just moving in the general direction of the index itself.