I have been reading through this forum for a while now and I have decided its time to start thinking more specifically about how I want play this game.
I have read many times that I need plan/system, so I am starting this thread to hopefully get some advise. This is really just a bit of a brain dump as I am so new I dont really know where to start.
I have not traded before and dont know what kind of trading psychology I have, but this is my best guess so I might as well start here. When ever I gamble on sports (I know the 2 are different but I need a start somewhere) I always try and find an outside chance that I think is paying above the odds. Or to put it another way "I think I can outsmart everyone else". So applying this to trading, the idea of picking a stock that has taken a dive recently due to some news or event and trying to figure out when it will "bounce" back appeals to me. Or everyone else over sold and I correctly picked an entry point and outsmarted everyone else. No I am not a successful sports gambler, but I also do not take it very serious.
I read the thread where Tech/A and Ducati had an excellent discussion on Ducati's FA approach with no stops, so I would like to try and expand this idea further and apply some TA and money management to this style.
If there are any books out there that people think will help specifically to this kind of strategy that would be a great help?
Also I need some help in learning how to explore and test my own ideas. I am thinking the best place to start will be by looking at how often when a stock price dives does it bounce back and how long it takes to bounce back.
So maybe there is a program out there that will scan past data and I can ask, "how many times in the last 5 years has a stock had a 10% loss below the 25 day moving average in a single day and recovered the next day or week. And how much did it recover by?". Obviously I want to explore each of these parameters to find a particular combo that does give me a statistical advantage. If one exists.
I have a feeling that whether it is a bear or bull market might make a difference and also how that sector is travelling at the time, and a few other things I want to explore.
In paper trading backwards and forwards I think it will also be a good idea if I can identify what kind of news or event is likely to produce an over sell, if it exists.
Ducati's FA had to be highly accurate because he was prepared to hold indefinitely and accept very large losses where as I am not. I do think a good understanding of the FA will help me decide which trades I should enter and might add to my "edge". But I think I will more trading on the mood of the market?
Thanks for reading to the end. I am sorry for asking so many questions but if you can help with only one that will be great. I am sure I have asked questions that already have an answer on ASF and link will be greatly appreciated.
Looking forward to other people thoughts on my FIRST attempt at creating a system.