Trading thoughts for the week ahead

My week ahead

Firstly an overview of the bigger picture

I'm not an investor and I don't have the financial education traders half my age have had. There are a bewildering array of instruments to trade: Forex, bonds, shares, commodities, funds, the options (ooh options too) are limitless. I would have to train for years to educate myself to the standard required to truly understand how the whole market is inter related.

The way I see it I only need to be good at one or two. I like Indexes as they represent the fortunes of 30 companies (FTSE 102) and are therefore a barometer of general sentiment and are not reliant on a single sector or an individual companies report/health on a given day. I know support and resistance on various time frames and through the reading of candles I can see when demand is close to saturation and when oversupply will mean prices have to drop to become attractive to create more demand. This is true on all timeframes but by scalping daily I reduce my exposure to the market, therefore my risk. If I don't have money in the market overnight I can't lose money.

I have a good background in running small businesses (at my peak I employed over 20 people) and I have 35 years experience managing cash flow, selling, producing and delivering. I've been responsible for generating my own income since 1987. I have a business that gives me a modest living income now so I have to have confidence and belief in my ability to succeed.

I recently found notes in a scrap book I kept from the year 2000 where I wrote about the possibility of trading CFD's so my interest is not just a relatively recent affair. Here I am 18 months after beginning trading and I've found the manner in which I wish to trade (spread betting) and the instruments I want to trade (DOW, FTSE, very occasional FX) and the timescale I wish to trade (scalping in minutes).

I'm a simple man with very basic needs and £10'000 net a month would see me just fine thank you and allow me to help my family live a good life. I don't want to drive a Bentley or Ferrari but I do want to be able to contribute more financially to my children's education, to their daily living and to make my Mum's autumn years joyous. I've had one holiday in 7 years and I'd like to take one a year. As the narrative in the header of my blog says, 10 points a day at £50 point is £500. I have a flair for scalping, I can collect 10 points a day but to do that my account needs to be funded adequately and I need to be ruthless in jettisoning losing scalps quickly. This is not about sitting in front of my screen for hours hoping to pick up 100 points at £5 point. I can achieve the same £500 target in 10 minutes at £50 point.

I'm really most comfortable scalping, I've written that time and time again and it really does represent my core personality in it's most comfortable and truest light. My ideal timescale is a trade for less than 5 minutes, Friday's scalps were measured in units of seconds. The best time for me to trade is market opening as the volatility and volume is at it's highest. I seem to have a flair for picking the right moments and direction and so I will make that my premium trading time. I'm trading at £30 point and right now that's the maximum I'm comfortable with. So if my target is 10 points a day I should be satisfied with £300 a day right now and £1500 a week.

I don't mind supplementing my scalping with the occasional trade for a few hours (on a smaller stake, max £10) if I see a resistance or support on the 30 minute candles and I have a strong conviction but I really identify with the mentality of a scalper and that's what I am.

Trading that way means I'll miss out on big swings but also potentially big losses too (as long as I learn to cut losing scalps quickly). It's so important to know what makes you as an individual tick. Scalping floats my boat, turns me on, rings my bell, tops and tails me and that's how I'm going to trade this week.

The week ahead

My target is simply to post 5 consecutive profitable days. My minimum figure is £300 each day but if I'm in a good scalp and can pick up £500 for the day I'll do that. If and when I hit £500 profit for the day I'll stop trading. That's a mistake I've made in the recent past that I shall not make again.

DOW trading range

I don't have the same conviction for my forecast this week but I'll put my neck on the block and say a high of 16200 with a low of 15850. I see the floor in this right now at 15750, if you're short lower than that good luck.