Stock market dealing

[Justin Passing]

#Indicators
That's the term used for things which help guide.
You can use them to indicate where to buy and sell, directly. They won't always be right, but most of the time. You can combine different ones looking for "confluence" - agreement.
They're mostly based on either a Moving Average of the price, or the Volume of buys and sales, or both.
It's important to realise they're all Lagging - none of them predict the future, though some try, using a sort-of momentum idea.
You can usually access dozens on a chart. Have a play.
They can quite useful for "swing" trading/investing, where you use the fact that all prices go in waves. You should read about them, at least.

Here are two

The price of the "instrument" (a name for any stock, bond, fund, etc) here is the one marked POLR for Polar Capital, it's on the London exchange.
The pink/green histogram bars are Volume. Taller is more, green is up pink down. On this scale not so useful, much moreso on very short term charts.
The steppy purple line and the pnk dashed one, are both something referred to as SAR or Parabolic SAR. You can look up all of them at Investopedia, linked from the Indicators heading.
The difference between th two is sensitivity, which you can fiddle with in their Settings ( always marked "..." ).
In this case they're timing/damping settings. As you can see, the steppy one ignores more of the wiggles. Buying and selling has a cost overhead, and timing errors, so doing it too frequently is often a mistake.

You can see where the Sell is indicated, the price is dropping. Being in cash there might save you from a big drop, so the error if any, is a sort of insurance. Notice that where The Buy is indicated, the price is actually HIGHER than where you sold, so with hindsight you would have been better just holding on.
If you look at the dashed line though, see that if you had reacted as soon as the line went FLAT, you would have got an advantage, just.

School maths - remember that the slope of the price line is the first derivative.
Like speed in a car, positive means you're making progress.

The second derivative is like acceleration/decceleration.
If you want an early sign to "get out of" (or into) an instrument, you react if the slope is starting to go flat. The speed, while still positive, is starting to reduce, like you're braking.
The rate of rise is reducing.
If you get out early, you miss some distance/ price increase, but you don't lose any money.
An Indicator which USES that idea is called MACD .
It shows where a TREND is not being conformed with by the price.
" a "divergence" is the situation where the MACD line does not conform to the price movement, e.g. a price low is not accompanied by a low of the MACD." That's what you look for, with this indicator.
If you follow say the S&P 500, it'll show that, perhaps 2,3,4 times a day. One of them might be wrong for a very short time.
On the lower part of the chart, MACD, you'd buy where the blue line goes above the red.
Again, you can change the numbers referring to the lengths of the periods it uses as moving averages. The default ones 12,26,9 are OK for swing trading, ie days to a few weeks. . For day trading or other periods, ask AI, it'll tell you how to alter them.

One reason to USE these indicators, along with some others (eg Anchored VWAP, or long term Moving Averages (50 day, for example) and those LEVELS I go on about ) is that the trading bots use them. So you buy when they buy, and the price goes up. Jolly good.


Questions?

 

[Justin Passing]

The SM has been "on one" for a few weeks now. It is not taking MUCH notice of the Iran war. Even Oil is not changing much (yet?).
It's been responding largely to the happy times for three memory chip makers, Sandisk, Micron, and SK Hynix, with similar performance from Samsung, in Korea alongside SK Hynix.



That's got a bit overheated now, and there are pressures of course on oil supplies to the far east. They'll be mostly OK for a very few weeks, then all hell could break loose. Same, when Trump starts bombing again.
Nvidia has been lacklustre, relatively. It is the most important single company in Tech/AI. It release results on Wednesday, and I'll be out of much of the rapidly rising stocks in the market again, by then. Excellent results can trigger a massive drop if they aren't what people expected, and then it all rises. I'd try to catch that rebound, it's safer.
The "fast" stocks are down 5% in the last day or so, but still up 80% in the same period . I am "overweight" in those.

With hindsight - and I did think of it at the time but didn't act, I should have sold stuff. Ordering Wednesday night. It would have sold Thursday, and missed most of the wobble down. I did see a flattening but not enough. That would have been Insurance for if the market goes down 30%. I didn't so I'll hope and HODL. I'm out of the fastest movers, for small losses, but a day late. I've bought sensible stocks which were hit over-badly, while they were low. Some have come up already.
Some people have "put" options which pay out if the market drops say 20%.

 

[Odds]

“The sad truth is we are in hock to the bond markets … We are already paying many billions more in debt interest than we would be if markets were charging us the same as they are charging other countries. And it is notable that the premium really began at that moment of maximum instability – the Truss premiership”.

Paul Johnson

 

[Justin Passing]

Stock market was in Stupid mode today. Again.
Memory makers like Micron, Sandisk, SKHynix, and a few other niches like Space companies, quantum computer cos, anda few others are going nuts.
They go up so much in a day you can nearly double your money at 5:1.
So I did. Well Micron went from 750 to 913 so I got some of that, x5.
It's similar stocks, all the time., but not every day, so they aren't hard to spot.

It can't continue - can it?
I have funds in several accounts which I try to leave alone. They're up a several times the % the S&P 500 is up since start of year, but it could all come tumbling down tomorrow. I don't manage to leave them alone, so I'm always fiddling. It takes up too much time.

Enough.
Every stock there is, and most bonds, will take a dive if the SM collapses. The stuff making little growth dives with the rest, nothing is safe.
Most of the safer bonds which I used to quote, have vanished. So I'll sell up and use funds which are safe. They only slightly beat inflation, but are safer than a building soc and give better returns.
That'll do.
If the SM and Trump calms down, I may put some in growing sectors, from time to time. The AI bubble could pop, or take a big "correction" any time.
Just for amusement, I can keep a lump to play with on a daily basis when I feel like it, going to cash every night. Just 2-3% say.
I'll do that with Spread Betting, to save buggering about with Tax. It's the same as trading, just with a different name.

I may leave bit in $3KOR (S Korea) when it seems right. That's gone from 2900 to 4300 in the last 4 days.
And $SOXL (4x semiconductors) That's up 7.3x since April 1st.

 

[Justin Passing]

You're misinformed, sir.
Trading 212 and IB are at opposite ends of the range of brokers for UK people.
Trading 212 is pretty crappy. It doesn't show you the buy and sell prices, doesn't offer trailing stops, doesn't let you use a "Take Profit" as well as stop-loss, and doesn't have any OEIC funds. If you do any buying and selling, let alone active trading, it's designed to skim you on many things.
You can hold multi currencies, which is about the only advantage there. Their spreads are wide which cuts into a fx fee. You don't get to see what price you're going to get - I've been fleeced for 2%.

IG is generally a better bet - and tax free if you want to use that.
You don't get "eaten alive" on fees anywhere really, except some banks.
Even Hargreaves Lansdown doesn't work out to be much, and in a lot of ways they give you extra value.
It's 0.35%pa I think, but capped.
I really don't like eToro, but I put £1000 in it to be silly with, last October. It was a distraction I needed at the time. You can use the trailing stops etc and 5x, or 20x on indices. The hidden fees are outrageous. I got fed up with it as it's so small, so I sold out today, at about 7500.

If you think you will beat a little intelligent input by just using the S&P500, then you haven't tried it, you're way off.
Day trading beats it by a country mile.
Since 1st Jan, the S&P is up 11%.
I made more than that yesterday. Several of the current hot stocks rose well over 10%, and you can leverage 5x so 50+% in a day is common, though you need to be there.

Even a few obvious funds leave the S&P 500 for dead, and you switch when something happens.:

The S&P500 is the grey one.
I was using Orange for the first 3 months (carried on from last year), stopped out of blue in March at 42%, and got back in on Trump's day early April. You never get it RIGHT, but you don't have to.
I wasn't using Brown or Yellow until recently. Those and the other top 3 are up 20+% in the past couple of weeks.
People say to use less volatile stock in case a of a drop, but are they right? Not if you ease yourself in slowly. Sure, blue dropped most in April, but it never went below a gain of 20%, and it was back to 40% in a week.
The S&P went down to about minus 8%, and a month later was "rocketing" at 2%.

Just use a screener- there are loads out there. Lots of sector funds like Asia Pacific are up 20% in a month, over 45% since 1st Jan.

I've been using some of the obvious shares as well, like Micron, up 260%, Sandisk, up 1800%, Bloom Energy up 290%, 3x Korea up 550%, and since it came in May, 3x sandisk, up 6000%.

 

[Justin Passing]

I'm practically all out, starting from a couple of days ago. "Everyone" was waiting for something to crack the picture, so I've been pulling back for a w bit. When Broadcom (possibly the biggest company you've never heard of) didn't please with their figures, I sold a few overblown stocks, and was glad I did.
One of my trading/investing pots dropped about 4%. That's more than "the market" because I tend to use riskier stocks. That's a lump of money but crazily, it's barely a week's gains. I was lucky not to get more caught, tbh. Some of those names in the previous post have been hit, 20% from peak, but again that's only only a couple of weeks.
I wouldn't be surprised if they dropped another 40%. If you drop 50% you need to rise by 200% - difficult.
I really do think that "this time it could be different".
Also, I've been using "funds" like OEICS, and you get stuck in those because you can't sell quickly.

The most stuck are in HSBC, who move at treacle pace, so there I'm doing what "the wise experts" say, holding on. We'll see.
AJBell are nice to use in some ways, but not good for foreign shares. Having too many platforms on the go is a pain, so I'll shift the cash from there.
An ISA is up 40% on the year to date so that may as well stay.