Sharescope and Power Plays

September 1, 2016 by tradingsimply2 337 Comments

I did some more digging about spread betting and realised I might do well since I keep abreast of economics and the stock markets.

So wife and I went to Birmingham to a free seminar about spread betting and we decided that I should take the training that was being sold at the seminar.

The seminar was over 2 days on a cold weekend in February close to Earls Court in London. It was very intense and there was more information than I knew what to do with. I came home excited and exhausted.

Since then I’ve increased my trading fund by 13% and, like many novices, it’s been very up and down. However, I’ve been told, by someone who now makes a living from spread betting, that I’m already ahead of many novices who normally lose money for the first few months.

At first I didn’t really know what I was doing apart from how to limit my risk to no more than 1% of my trading fund.

Most of the time I only do trades called power play, which is a simple reversal patter. It’s proven to be a good trading strategy and I’m getting better at it.

As my confidence improves I’m beginning to look at more complex pattern trades. And I’m sure I’ll explain as I go along.

I use a charting package called Sharescope, which provides me with good charts and supporting indicators. I use a filter for power plays and they help me identify potential trades.

A reader asked me:

I would really appreciate it if you could explain to me what is power play. I always hear in being mentioned on the web. Is it difficult to grasp?

A power play is a 7 day spread betting tactic.

In effect it’s a reversal pattern based on the 3 day movement of a trending share price. It’s ideal for ‘end of day’ traders.

I’ll do my best to explain it:

Let’s look at ABC stock today today (9th Sep 2016).

Yesterday (Sep 8th) the stock was up for the 3rd day running but the longer term trend is downwards.

Because of the trend we’d expect that the share price will continue downwards at some point soon.

So, the trade is set up like this:

The sign is: a stock that moves 2 days in a row against its general trend. The last day’s close needs to be higher than the previous day’s high if the trend is downwards.

We place a trade order, going with the trend (sell if downward, buy if upward) to activate only on the following day (if it doesn’t activate then the order is cancelled).

If we’re going short (a downward sell trade) then the open price needs to be one trade increment below the low of the last day.

The stop-loss would be placed one increment above the day’s high.

In the case of ABC stock the order would be to open a sell trade if the price hits 135.25 on the following day (9th Sep 2016).

The stop-loss would be placed one increment above the day’s high at 151.75.

We follow the trend for the next 4 days and look to trail the stop-loss at the end of the 4 day after the trade opened. It’s trailed until the trade closes by hitting the stop-loss.