Trade and still have a full time job
Many of our UK readers tell us the biggest frustration for them is not being able to trade and hold down a full time occupation at the same time. We agree it can’t be easy, but there is certainly a way of combining the two…..
From Monday to Friday, we pretty much have the opportunity to trade on one market or another, 24 hours a day. This enables a trader the ability to trade in different time zones to the one he or she is in. So for UK investors who work during the day, the easiest option for them is to trade the US markets which are open until 9pm GMT.
The good thing about trading the US markets after coming home from work is that you can find plenty of movement between 7pm-9pm UK time, as this is the afternoon trading session in the US.
Very short term traders can use this 2 hour window to get in and out of positions, but we appreciate that many of our readers trade over slightly longer time periods than that. For example, you could see a chart pattern develop in the evening and want to take advantage of it, but won’t be around when it triggers the following day.
This is where the use of different strategy orders comes into play. Let’s start off with a relatively simple strategy that you can trade even if you are not around. We covered this strategy in the January edition so I suggest you re-read that article if you missed it the first time. This is simply when a stock/index/currency forms a ‘box’ consolidation as in the diagram below.
In this strategy, price needs to have made two highs and two lows within a parallel channel (read Jan article for the specific rules). Let’s assume you are watching a stock in the evening as it forms this pattern. The market is going to close shortly and you know this pattern is going to break in one direction or another the following day while you are at work.
Let’s also assume the price at which this pattern would break out to the upside is $40 and the price which would trigger a short sell is $39. So you place a buy order at $40 with a stop just below $39 and then a second order with a sell at $39 and a stop at $40. You can set these up so that whichever one triggers first, the other order will be cancelled.
For the purposes of this exercise, we will assume the pattern breaks to the upside.
Your buy order is triggered at $40 and subsequently, your sell order at $39 is cancelled automatically. You still have a stop loss in place on this order at $39. The final order you needed to put in place was a contingent order.
So, you would have placed a contingent order to sell when the price reached your target. The target for this strategy is straight forward as it is the width of the box which we know is $1. So you would have place a contingent order to sell at $41 if the initial break comes to the upside of the pattern at $40. Obviously you would have also placed a contingent order to close the position if the initial break had been below $39 and set these up as one cancels another.
You are now in a situation having set up your orders that you simply don’t have to be in front of your screen to make the trade or take profits. You can literarily set up contingent and one cancels other orders so that you can be triggered into the trade no matter what direction it breaks. You still have a stop loss in place as well as a pre-defined price at which you will close the position to take profits. All this can happen whilst you are out at work.
I have just given one example here, but you can place these types of orders around any number of different chart patterns you trade (triangles, flags or even pullbacks to trend-line support).
The key is having the right broker that has the facility to set up multiple orders. I know many readers spread bet and I know you can establish these order types with Finspreads and I’m sure others can do it too (although I know CMC can’t at this point in time). For normal share trading accounts, Interactive Brokers have the facilities to establish multiple ordering too.
With brokers offering facilities to establish multiple contingent orders, it is becoming easier for individuals to analyze the markets after work and establish orders for the following day whilst they are back at work.
Darren Winters
For more information, please visit the sites listed below.
www.wininvesting.com
www.wininvestingnews.com
From Monday to Friday, we pretty much have the opportunity to trade on one market or another, 24 hours a day. This enables a trader the ability to trade in different time zones to the one he or she is in. So for UK investors who work during the day, the easiest option for them is to trade the US markets which are open until 9pm GMT.
The good thing about trading the US markets after coming home from work is that you can find plenty of movement between 7pm-9pm UK time, as this is the afternoon trading session in the US.
Very short term traders can use this 2 hour window to get in and out of positions, but we appreciate that many of our readers trade over slightly longer time periods than that. For example, you could see a chart pattern develop in the evening and want to take advantage of it, but won’t be around when it triggers the following day.
This is where the use of different strategy orders comes into play. Let’s start off with a relatively simple strategy that you can trade even if you are not around. We covered this strategy in the January edition so I suggest you re-read that article if you missed it the first time. This is simply when a stock/index/currency forms a ‘box’ consolidation as in the diagram below.
In this strategy, price needs to have made two highs and two lows within a parallel channel (read Jan article for the specific rules). Let’s assume you are watching a stock in the evening as it forms this pattern. The market is going to close shortly and you know this pattern is going to break in one direction or another the following day while you are at work.
Let’s also assume the price at which this pattern would break out to the upside is $40 and the price which would trigger a short sell is $39. So you place a buy order at $40 with a stop just below $39 and then a second order with a sell at $39 and a stop at $40. You can set these up so that whichever one triggers first, the other order will be cancelled.
For the purposes of this exercise, we will assume the pattern breaks to the upside.
Your buy order is triggered at $40 and subsequently, your sell order at $39 is cancelled automatically. You still have a stop loss in place on this order at $39. The final order you needed to put in place was a contingent order.
So, you would have placed a contingent order to sell when the price reached your target. The target for this strategy is straight forward as it is the width of the box which we know is $1. So you would have place a contingent order to sell at $41 if the initial break comes to the upside of the pattern at $40. Obviously you would have also placed a contingent order to close the position if the initial break had been below $39 and set these up as one cancels another.
You are now in a situation having set up your orders that you simply don’t have to be in front of your screen to make the trade or take profits. You can literarily set up contingent and one cancels other orders so that you can be triggered into the trade no matter what direction it breaks. You still have a stop loss in place as well as a pre-defined price at which you will close the position to take profits. All this can happen whilst you are out at work.
I have just given one example here, but you can place these types of orders around any number of different chart patterns you trade (triangles, flags or even pullbacks to trend-line support).
The key is having the right broker that has the facility to set up multiple orders. I know many readers spread bet and I know you can establish these order types with Finspreads and I’m sure others can do it too (although I know CMC can’t at this point in time). For normal share trading accounts, Interactive Brokers have the facilities to establish multiple ordering too.
With brokers offering facilities to establish multiple contingent orders, it is becoming easier for individuals to analyze the markets after work and establish orders for the following day whilst they are back at work.
Darren Winters
For more information, please visit the sites listed below.
www.wininvesting.com
www.wininvestingnews.com
posted by Darren Winters at 1:26 PM
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