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A new spread betting strategy http://spreadbettingbeginner.com/Forum/viewtopic.php?f=6&t=27	Page 7 of 8

Author:	SB_Beginner [ Thu Jan 13, 2011 5:29 pm ]
Post subject:	Re: A new spread betting strategy
I just wanted to post a quick note to say I haven't forgotten about this thread. I don't have time right now but I'll try and get time over the next few days to push this forward and get the strategy finished.

Author:	SB_Beginner [ Thu Jan 20, 2011 5:38 pm ]
Post subject:	Re: A new spread betting strategy
Ok I finally got some time to spend refreshing my memory of where we are up to with this. You can see what we have so far summarised on in the spread betting strategies section, under a new spread betting strategy. Off the list of things to do we have done the following: • Setup - DONE • Entry triggers - DONE • Stop placement - DONE • % of funds to risk - DONE • Position size - DONE • When to move stops - In progress • When to exit the trade • Length of the trade • Trade parameters to log We were discussing the topic of using a trailing stop. I think we had agreed on using a 1.5xATR trailing stop on the close price but we haven't decided on what number of periods we will use for the ATR. Spread betting trader suggested using the high of the value for the ATR over the last 3 months but off the lip suggested using a 90 day ATR instead. I think I agree with off the lip here. With the ATR using an exponential average for calculating the A(average) part, this gives more weight to the most recent values of the true range. As off the lip pointed out if we take the high of the ATR for the last 3 months it could give us a value from a time of high volatility. Using a 90 day ATR takes into account the last 3 months data giving more weight or emphasis on the most recent values. I think this could be a good solution for us. One thing I would note is that using 90 for the period of ATR isn't strictly correct. 90 days is roughly 3 months but in trading days it's more like 65 when you consider trading only takes place 5 days a week. 90 would be correct if you have constantly traded market but if we are using this for equities I think we should use 65 instead of 90. I think we suggested trailing at 1.5 ATR until break even then letting this widen to 2.5 ATR. So I think that summarises where we got up to. Your thoughts?

Author:	SpreadBettingTrader [ Thu Jan 20, 2011 8:02 pm ]
Post subject:	Re: A new spread betting strategy
I like the idea of 2.5 ATR, maybe even 3. Coincedently I made a post about this issue on my blog today at: http://spreadbettingtrader.blogspot.com/2011/01/todays-good-example.html. Briefly two of my profitable positions stopped out early because 2xATR just wasnt enough to keep me in the game, but thanks to todays drop in the markets it seems that my timing was near perfect. Any other day and I would have had to think hard about re-buying them and repaying the spread. So your idea of changing it to 2.5x, does that mean you stop using a trailing stop once it gets to breakeven, then manually changing the stop? I think this maybe a good idea if I have interpreted your post correctly. Its something that could be debated about forever I guess, and I'd be interested in what other methods people use when calculating potential stops.

Author:	edswifa [ Fri Jan 21, 2011 9:02 am ]
Post subject:	Re: A new spread betting strategy
I've been reading about Richard Donchian's weekly rule and the turtle traders. I particularly like the way the turtles placed initial stops and defined their exit rules. I have just started giving them a go, but its too early to comment on their success. The initial stop is placed at 2*ATR and the exit is on a 2 week breakout. cheers Andrew.

Author:	SB_Beginner [ Fri Jan 21, 2011 1:01 pm ]
Post subject:	Re: A new spread betting strategy
The following is a post from off the lip as he had problems with the forum. I'm working on getting these resolved so please bear with me. If anyone else has issues with the forum please e-mail me to let me know. I will comment myself later when I have more time. "I think we should go with 2.5 ATR, the reason being we set the initial stop at the low of the last three days provided it is between 1.5 ATR and 2.5 ATR. If we trailed at 1.5 ATR we would immediately move the stop to 1.5 ATR. However if we trail at 2.5 atr then the stop stays where it is until the price gap widens to 2.5 atr. Whatever logic we use to trail the stop it must tie in with where we set the initial stop." - Offthelip

Author:	SpreadBettingTrader [ Fri Jan 21, 2011 8:58 pm ]
Post subject:	Re: A new spread betting strategy
I'm happy with 2.5x (min.), lets go for it!

Author:	SB_Beginner [ Wed Jan 26, 2011 4:04 pm ]
Post subject:	Re: A new spread betting strategy
I have a little time so I've just read through the most recent posts. I'm happy to go with 2.5ATR. How off the lip said what ever logic we use it most tie in with out initial stop placement. The only question is do we let our stop widen slightly when we hit breakeven or do we just trail at 2.5ATR for the length of the trade? I think we should just trail at 2.5ATR for the length of the trade as this is a reasonably wide stop distance anyway. We could go slightly higher to say 3(this is what I use in my super trend strategy) But I think going any higher may mean we're losing out on profit. On the flip side not going higher could mean we get stopped out prematurely! Anyone else got any thoughts/ideas?

Author:	SpreadBettingTrader [ Wed Jan 26, 2011 5:07 pm ]
Post subject:	Re: A new spread betting strategy
I guess this is why having a fixed ATR in mind can become complicated. Some trades just wont fit in with the strategy and will stop out against a 2.5ATR prematurely, other trades may drop down and hit our original stoploss because we waited too long before upping the stop to breakeven. If we choose a fixed ATR then we have to stick with it, or you may aswell start with 3xATR if you are going to wait a little longer after the trade goes breakeven? I have found 2xATR to be too little, so I'm happy to go with 2.5ATR - 3ATR and moving to breakeven once it has moved in the right direction by that amount. Have to draw the line somewhere

Author:	SB_Beginner [ Thu Feb 03, 2011 10:48 am ]
Post subject:	Re: A new spread betting strategy
Ok so I think we should just trail our stop at 2.5xATR(10). I think we could discuss this all day long and still not have a solution. The problem is there are just sto many options. I think we're just going to have to take the 'suck it and see' approach. So to summarise • Setup - DONE • Entry triggers - DONE • Stop placement - DONE • % of funds to risk - DONE • Position size - DONE • When to move stops - DONE • When to exit the trade - In progress • Length of the trade - In progress • Trade parameters to log Now, when to exit the trade. I've included this as I know some startegies have profit targets and when they hit that target they take thier profit and move onto the next trade. Since we are using a trailing stop I think we should just trail the stop and let that take care of 'When to exit the trade'. This also means the length of the trade would be determined by this and could potentially stay open forever. I think it may be a good thing to add a time limit on the trade actually doing something. For example if the trade has failed to move in our favour in say 10 weeks then we exit the trade and move on. I dont know why I've suggested 10 weeks just a figure I plucked out of the air. Anyway I'll throw it open to the floor now. Your thoughts on 'When to exit the trade' & 'Length of the trade'?

Author:	offthelip [ Thu Feb 03, 2011 4:33 pm ]
Post subject:	Re: A new spread betting strategy
one thing that I have been trying to assess is, when in a bet that is going nowhere, trying to exit it at least at breakeven. For example say after 10 days the bet is still going between +0% and -2% of our original price , I then set a limit order to sell at somewhere near the top of the range. The trouble is it sometimes doesn't get hit and I panic and sell at -5%. Any thoughts anybody??

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