Swing Trading Experiment

    I was quiet busy for sometime now and could not make posts here. This happens usually when I am busy with work or when I am trying something new on the market. Well this time it is both.
  I found some interesting ideas on http://www.swing-trade-stocks.com/ and did back testing and live trading. It is just over a month and the results looks promising. Any way, proper money management is the key. I will write an update about this later.
   I have updated the portfolio also. I haven't done quiet a lot of trading during this time. Most of the stocks did well during this time, so I just purchased few more. I have opted for a fixed brokerage scheme with my broker, so I have to do a minimum amount of trading every quarter to take advantage of the schemes(One of the ways they make you trade more!) . Apparently when the market went south today, most of my stocks fared really well. I see it this way. My stocks are stronger than the general market and in my experience, if market continues to go down for another 2 days, these stocks will also give up and starts sliding down. That doesn't mean that I sell them today, Patience is the key here. Wait till it hits the stop loss, ignore everything else(financial TV, News paper, index etc)

Automated Trading - Getting Historical and ongoing Data

An important requirement for automated trading is the availability of data. The success of trading depends on how you look at the data. Back testing is the most important aspect of automated trading and with out enough data, we can't make any reliable decisions from back testing.

here is few links for getting historical and current stock market data

NSE India - historical data
http://www.nseindia.com/content/equities/eq_historicaldata.htm

NSE India - daily data
http://www.nseindia.com/content/equities/eq_markettoday.htm

BSE India - daily and historical data
http://www.bseindia.com/mktlive/bhavcopy.asp

NASDAQ
http://quotes.nasdaq.com/aspx/masterdataentry.aspx?page=historical-quotes

Some NSE historical data as zip file
http://groups.google.com/group/nsebse_eod/browse_thread/thread/14a895b56769b860/468743dcdddce451?lnk=gst&q=historical+nse+data&rnum=1&pli=1

Getting Trading Ideas

There is no shortage of ideas available over internet, stock market literatures blogs etc.

Technical analysis provides many ideas based on the movement of price and volume assuming that

what happens in the past will repeat in future. fundamental analysis does it by using the financial data.

But trading some idea with out really understanding it and proper pre-planning can be suicidal.

Following steps will help in you to increase the profitability and cut losses.

1) Validate the trading idea -Understand reason why you think the price is expected to move in your favor.

2) Back testing - Look into historical data and find out whether the the idea was successful in the past.

    Get historical data and automate this process and test in such a way that you simulate the exact way your           account will behave with real trading(Portfolio level back testing). This can take a lot of time, I have some testing running for few days, be patient. This will save you money.

3) Paper Trading - Many times real trading gives entirely different result from back testing results, do paper

    trading for sufficient period before you actually start trading a new idea

4) Control the risk - Decide how much of your portfolio, you want to risk in a trade.

5)Cut your losses - Ones you start a trade, 3 things can happen, price remain at current level, price moves according to your expectation or it moves against your expectation. Be prepared for all three outcomes before starting the trade and again be patient, separate your emotion from the trade.

6) Be creative, don't stick to one idea, trade different ideas at the same time. 

Here is what I am trading now

• Buy when there is an established uptrend
• Buy when there is a consolidation and it starts to move up after and uptrend
• Buy or sell when there is an expected trend change

Automated Trading - What you need

Here is few items you need to automate your trading
1) You have a basic idea about stock markets and trading manually around some specific method/idea
2) Basic understanding of software programming
3) Softwares like excel spreadsheet, Microsoft access to start with or oracle, weblogic server, or custom software like amibroker(These are the ones I use, I started with basic microsoft applications and found that they sucked for back testing performance and used oracle and weblogic, which runs really fast but requires a dedicated machine preferably, the startup time of a pc with oracle installed is very long. Currently I use amibroker for most of the time, this has a cool front end and super fast back testing capabilities.
4) historical data from stock market(at least for 2 years)