We have lots of experienced traders on MoneyAM who would be glad to help if you have any trading questions.

Novice trader in need of some advice. Can anyone help. I seem to have got myself into a right mess with my AVZ deal. Shorted it at 509 (thought market was coming down) and again at 520. (As pros you wouldn't get yourself into this situation in the first place - should I sell or wait for market to come back down? Double witching on Friday - what is the chance I can get out and not loose too much?) I obviously need to learn a lot but do not know quite where to start. Can anyone suggest basic fundamental info which one needs to know to trade successfully. Good charting packages etc?! What would be good to learn before going on a course?
Thanks very much in advance for any advice.

Hamsa,

It is very difficult to give an opinion on another person's position in say something such as avz which I and many others like me trade regularly. Suffice to say that you take a look at the charts below on ukx and avz.




Technically, you will see that both charts 50dma and 125dma have crossed over (not a golden cross) the 200dma with the 50dma riding above 125dma, such that the dmas' are in correct sequence to favour the long side of the mkt. However, at some point, you would expect the price to retest the 125dma particularly after the chart breakouts above recent resistance. When that happens is for you to work out, but an rsi indicator should be helpful to you on this. One thing I am wary of in the ukx is a retest of the kind just described going right through all the dmas'. That would tell me that the "vicious" bull rally in a "bear" mkt is over with a vengeance with the broad mkt tacking back to the short side. If the test (when/if it comes - not guaranteed), as described, holds then this would indicate to me that we have a fully blown broad based "bull" mkt.

Hope that helps and, fwiw, every trader (me included) I have ever known only became successful by learning from their mistakes. Name any invention (technical or otherwise) that ever came about except by the inventor's mistake or some predecessor of his down the chain.
All the best,
TomL.

ps: there is a recent spike on avz at circa 575 - you may want to use that as a useful point of reference in determining your trading strategy from here.

Hamsa
I can not tell you what to do. As you know the minute you cover them they will drop like a stone and blame me ;-)

However looking at the chart it has a very stong upward support line which is ttacking the FTSE. If the FTSE falls back it probably will to.
However this is a bull market and personally I would prefer to be long than short.
Of course discipline says you should have had a stop loss in place and never add to a losing position.
If it was me I would get out and cut my losses
Best of luck whatever you do
D.

Hamsa.
I cannot argue with the above. Your trading strategy (long term plan - long term for YOU, that is) should be to trade with the trend, not try to guess when it will change. However, your question seems to be about getting out of this trade, which is about trading tactics (shorter term ideas to maximise gains/ minimize losses), of which advice is very hard to come by. If you can, instead of closing out and spending the rest of the day p***ed off because you lost, how about putting in a close stop in the market. AVZ doesn't gap too much, and it could drop enough for you to close even and still stay in the uptrend. It means risking one or two pence a point more, and you may close worse than just closing out now, but it could also go 10 or more points down to be able to close at a better price than now. From here, risk reward would be worth it, but, frankly, you should have had your stop in from the moment you entered the trade. Also, if it goes that one or two pence against you, you MUST close and suffer the loss - and learn from the loss so you don't do the same again.
Personally, I think we're soon heading down, but you must wait until it is clear before trading, especially investment trusts that will likely follow the indices. The uptrends are intact which means, as Croc says, it's a bull market, so you should be long if trend following or flat if sceptical of the rally.
But WTFDIK, I'm just a rookie learning too. How about more on trading tactics from the experts on here. If you're in a trade that you wish you weren't, how do YOU get out of it?
ZOLTAR

Thanks very much for the advice. Will see if market pulls back a little tomorrow am after rise today - otherwise I shall be out and take losses.

Can you tell me what the best indicators to use when buying and selling - any good charting packages or books I should read?

Zoltar do you put in stop loss when you enter order? I shall have to look to see if I can do this - I trade with GNI. I think market is coming down and if it does by the end of week I will be kicking myself for not trusting myself. Nothing worse than being on the wrong side of the market - also ties up margin.

Could someome please explain the basic concept of 'trading'?
In other words is it spread betting or actually trading shares through a broker. If so which brokers' trade shares. Do you still pay the 10 - 15 cost of each buy and sell as well as stamp duty?
Sorry if this seems a basic question but it would help if someone put me out of my confused misery about this subject. I had hoped to go the NW Traders Day but my transport let me down at the last moment as I am unable to drive any more (a medical condition not drink driving!!)
Regards

A question from another newcomer to trading.

Trading 'long' and 'short' - while I think that I understand what these terms mean, am I right to assume that these terms are used when trading CFD's?

When you are taking a 'long' position but are not trading CFD's, is 'long' the correct term or are you just trading shares and hoping for a move in the upwards direction?

This is a really useful thread for people like myself - thanks to all of those experienced traders who take the time to educate the less well informed. It IS appreciated.

Thanks in advance

Rich

Here's another question

When you hold shares that go ex-dividend, what are the rules about who gets paid the dividend?
Do you just have to hold the shares on that date or do you need to hold them until the payment date? - or is there some other formula?

Thanks again.

OK

Harlosh:
Trading is, in a sense, whatever you want it to be, but the essence of a trader is that you are not into buy and hold, you're looking to scalp a quick profit, either in minutes, hours, days or weeks and long or short, if long either by buying shares or long or short using a derivative method i.e spreadbetting or CFDs.

Richstuch:

Most of your answer is above,
long - you have bought in any of the above hoping they will go up
short - you have sold stock you don't own - usually by a derivative method, hoping they will go down and you will buy them back later

When shares go ex div, you need to be hjolding them on the ex div date, i.e. own them from any point up to the night before so that at the open on ex div date you own them. It doesn't matter whether you own them on the payment date. However, most stocks will drop by the dividend amount on ex div date but make it up again in the days / weeks following.

Hope this helps.

Hamsa

Get yourself on a 'money management' course.

When you enter a trade you should have a clear picture of your exit strategy - ideally a target price and a stop loss. You should have a feel for the risk/reward that you have exposed yourself to, and have a plan for the trade.

After you've planned the trade, all you have to do is trade the plan.

This isnt a lot of help to you now, because you're drifting rather than following a charted course. What you could do to exit is to retrospectively set your stop loss and target (and possibly your escalation/sizing policy) - and stick to them. In other words, treat it as a new trade.

I do, of course, agree with all the other advice you've been offered above. The message that's coming from all of them is: "Set a stop loss and stick to it"

richstuch

Also consider that if you're short when the market opens on the day the share goes ex, then you have to PAY the dividend! Ouch!

Gausie

richstuch
Ex Dividend
Use Legal & General's as an example. The share price was 74p paying a 3.25p dividend. Now that was approximately 5% so how can we take advantage of it?
Well the plan is to BUY them before market close on Tuesday and hold them overnight. If you do this through a conventional broker you will get the dividend paid into your account. If you do this on CFD you wil have to check what percentage of the dividend they pay. Usually about 95%
Now as that dividend is paid from LGEN the opening price on Wednesday morning should be 70.75p (74p - 3.25p) to reflect the dividend paid out and consequently the reduction in value of the company.
However often you can get out at a better price next morning as many people have not got a clue they are ex divi. Also it is in the interests of certain organisations with large holdings to try and keep the share price from falling as much as possible.
So if you can close next morning near to the previous nights closing value you keep the 5%. As long as the market itself is not to strong you can alternatively reverse your position and go short knowing they should be 5% lower,

Note: If you are short on the stock on Tuesday night as Gausie says above you pay the dividend! So you should always check this if you keep positions open overnight.

Another interesting point is that the dividend payout affects the technical analysis & sentiment on that share and a 5% drop can often trigger a sell signal. Perhaps dropping it through a support or completing a 123 sell pattern.

Croc

I'm suprised to hear that some CFD firms pay less than 100% of the dividend.
If they only pay say 95% then do you know if they only charge you 95% if you are short at the ex-div date?

If that is true then there is a potential arbitrage opportunity by going long with a 100% broker and short with a 95% broker as the share goes exdiv. :-)

thanks to Croc, Gausie and Seymour for that information

Hamsa, you are making the same mistakes all new traders do, you must learn correct position size , discipline, and always stop loss when you are wrong, (easyer said than done )

a couple of good books that will help you are,

1/ alexander elder - trading for a living & come into my trading room

2/ tony oz - how i take money from wall street & stock market wizard ( if you can find it )

both of the above authors are actual day traders, the books are easy to follow and understand, they cover the importance of correct money management, discipline, trading rules,

you might have to go to www.tonyoz.com for his books or you see them regularly on ebay just type in the authors name in search,

ttt

I've just read the post about the witching hour tommorrow and was considering setting a buy limit on a FTSE 100 share. For example setting a buy limit at 5% below the current bid price for, say, TESCO or SHEL or BP or LLOY.
I was wondering what people think is the best one to go for.

M5Martin
I go for AZN, Logica, Barclays, Diageo, Cadbury, III
A nice mix

M5-SGE and AVZ imho!