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Strategies & Market Trends : Candlestick Charting--The unknown indicator -- Ignore unavailable to you. Want to Upgrade?

To: ftth who wrote (1015)	12/21/1997 12:30:00 AM
From: Esteban	Read Replies (1) \| Respond to of 1589

Hi Dave, Lots of SPY questions, my favorite subject! So tell me about your SPY experiences: What in particular attracted you to them? The main attraction for me is that I feel indices are much easier to play using technical analysis than individual stocks. I have daytraded bellwether techs quite extensively, and I based the trades on PSE index movement using 2 and 5 minute charts. After a while I realized I was doing a good job of predicting the direction of the index, but the stocks weren't mirroring the index much too often. And it was difficult to play the short side in my time frame because of the uptick rule (you're right, there's no uptick rule.) I was looking to open a futures account to play the indices when I found out about SPY in October. I could trade SPY in my already existing Datek account for $10 a trade ($5 if I reverse positions) in a vehicle (a stock) I was already familiar with. I really didn't feel ready to take on all the futures issues of leverage, slippage, etc. while trying to learn index trading. MDY is similar, it just tracks the Midcap 400, but the spreads are generally larger and the volume is much less. I think SPY has a much better liquidity factor. what trading time frames have you experimented with and what sort of ballpark results have you been getting comapred to a passive index strategy? The method I am currently using has been averaging about 3 trades per week. I am always in the market, either short or long, so one trade is a position reversal. If the market doesn't trend one way or the other for a day or more, I will at times trade more than once a day. At the same time I'm amusing myself with paper daytrades on the same nstrument. The idea is to margin the original position but not pay any margin interest by not holding overnight. These daytrades are cherry picks, not always in the market. Going for a 1/2 point two or three times a day. The results so far have been very good with the standard positions (but not the daytrading so far.) I don't want to get specific because I'm new at this and the results so far could be due to luck or just reflect current market conditions. I managed to get a hold of 6 months of intraday data and back tested on this. Then I paper traded for a few weeks and got similar results. It's been about 3 or 4 weeks since I started actually making real trades, and so far the results have exceeded the average, but are basically within the deviation I would expect. After 3 months or trading everyday, I'll probably be more forthcoming as far as results go. At this point I'm still trying to prove this to myself, and that's all the pressure I'm willing to assume. Is there a more leveraged approach (puts/calls)? I follow the Tech Stock Options thread quite often, and OEX puts and calls are all the rage over there. I'm actually more interested in futures eventually. Plenty of leverage without the time decay and premium manipulation that seems to make it hard to show a profit (or avoid a substantial loss) on small moves. any recommended reading on different strategies.. If there is a form of technical analysis you are already comfortable with, I think you'll find it will work even better on the indices. That's were I'd recommend you start. The big jump for me was to apply these principles intraday. There's a lot of price movement to take advantage of intraday and that's were a percent here and a half of percent there can add up to big returns over a not too lengthy time frame. BTW, Monsieur Steve and I have been experimenting with using candlesticks analysis to trigger index trades. I'm especially interested in intraday periods to help with the daytrading portion of my trading. The longer period candlesticks already lag the signals I get from the intraday chart trendlines, support and resistance that I use. Hope I've pointed you in the right direction. I'll be glad to offer more info if I can help. Remember, I'm no expert. Esteban