Daytrading - entry exit signals

[kevin546]

At present I am working off of 3 chart timescales the 5 and 15 minute and to a lesser extent the 1 min chart.

I tend to favour the 5 minute chart and look to supporting pivots from a closing line chart with Bollinger Bands and a 4 period SMA. I use the same settings on the 15 minute chart except that I have a 2 period SMA.

Personally I would prefer to work from a 3 and 10 minute chart but I am currently working with CMC charts but intend to move over to esignal. I find the 1 minute provide to many false signals and the 15 minute can be to long so a balance maybe provided by the 3 and 10.

Anyway my question for those of you out there that daytrade watching the charts and price closely. How do you approach a situation where it appears a signal to buy or sell presents itself during the current period where the chart is yet to be updated.

In other words there appears within the 5 minutes tick a possible higher lower pivot appearing on the line chart as the price passes the previous 5 minute close. Is this sufficient to support your entry or is it a case of holding on to see this movement confirmed with a plotted closing position. I have to say that often the price tumbles further having given such a signal. This is a particular problem for me when applying it to the 15 minute chart looking for reversal points. By applying the supporting pivot approach on the 5 minute chart I do rather well and there are a lot of signals throughout the day, obviously using this method on the 15 minute chart the deals are rather restricted but offer bigger gains. If you include the intraday price cycle reversals on the 15 minute chart then there tend to be around 5 -7 good deals a day, if you get the reversal right that is.

Would be interested in any views

regards Kevin

 

[NickW]

If you're using d4f your going to find it tough - quite frankly the d4f charting sucks. However my advice to you would be to ditch the bollinger bands, and your fast sma's. Replace with either RSI, macd or Stochastics and try a 20 period ema on the 5min chart. Unfortunatly with d4f you will run out of screen space with more than one bottom indicator up.

When you get esignal ditch that setup as well and try the 3min charts with 34ema, and use CCI for entry/exit. Remain aware of the price action but with this setup you would get better results with following cci setups rather than price.

As far as waiting for the price bar to close goes - I tend to anticipate provided I have other confirmation signals - otherwise wait for the close on a similair setup on the 1min charts.

Hope that helps - I don't mean to lecture - just my way.

 

[kevin546]

Hi Nickw

thanks for advice I set my charts with the tools because of the poor display from the lower indicators so I had to adapt and this I find is the best way to use CMC charts. I do not like their RSI.

I have heard others mention CCI positively but have not had access to it but will when I sign up with ESIGNAL. Who do you use. What is the significance of the 34 EMA.

I have adapted my trading style so that I can use CMC for small point gains but with better software hope to identify better positions.

regards Kevin

 

[NickW]

My dealer is IB and I use TradeStation and QuoteTracker.

The 34ema gives you the trend. The 100ema on the 1min is watched by many.

 

[neil]

Kevins Starter for Ten

Here you go Kevin:

A site frequented by CCI traders and expert "Fitzy."

http://www.talkstox.com/forum/showthread.php?postid=16237#post16237


And a UK site for Eurostoxx50 traders who use the CCI...Helen created the site.

http://www.eurostoxx50.co.uk/

Look for posts by"TBS...The Blind Squirrel" a full time trader.

 

[kevin546]

Thanks for that info and a lot for me to go through.

I am aware that people use CCI a lot for the US and it is rather similar to RSI which I have used to good effect on UK shares.
Does CCI work in a similar way as RSI, failure swings (top/bottom)- divergence in additon to its own trendline and crossover. Can it be used to good effect on any instrument like the FTSE or is it best used with the DOW or S & P 500.

regards Kevin

 

[Helenqu]

Hi Kevin,

Yes it works very like RSI, patterns, trends divergence etc. As well as 0/100+/- crosses and rejects. It works well on the FTSE and the STOXX and on the Dow. Have yet to try it on the Dax or S&P.

 

[Naz]

As we are talking about entries and exits for daytrading no one has mentioned the level 2 Nasdaq screen.Here is a chart from the t/a and level 2 thread were i closed the first part of my week long short trade and posted it live at the time at 18.07.I believe adding Nasdaq level 2 skills to your trading arsenal alows traders to become even better exponents of entering and exiting a stock?

These entries and exits are found by Nasdaq traders who use NO oscillators or moving averages at all and yet can find turning points with very good accuracy.

 

[NickW]

It's on my list - however I'm put of having to trawl through and get to know multiple stocks. For know I've learnt to trade the ES Futures, which works for me in that I only have to learn the personality and levels of one product.

Is there a stock thats a good proxy for the Futures, qqq comes to mind and the obvious big cap high-volume stocks - e.g. MSFT. I could use that idea.

 

[kevin546]

Naz and Helenqu

thanks for your posts, just been going through some of the threads on the above site and I can see that the charts are very sophisticated compared to what I have used before.

The trendlines on the CCI for the 1 and 3 minute charts appear to be excellent indicators. I have only ever used RSI on delayed charts so this feature looks to be a must. When I have observed 1 minute charts from the likes of Lycos.com/quote.com/advfn.co.uk they appear to give a number of false signals yet from the charts displayed in the threads look sound.

Naz I am going to show my ignorance now (and the junior member reference to my record appears very appropriate in this company) what exactly is level 2. I thought this had something to do with access to the order books.

With reference to the chart you attached from my limited knowledge the price pattern on the chart suggests to me that at the low around 16.50 would most likely have been at a time when the RSI or CCI would have displayed a failure swing or divergence or its own trendline break following the price sequence.

Without current access to such tools from your example I would have been buying from my method at the time you closed because it would be a supporting pivot and ultimately a break to the upside. Without the support of the lower indicators such as CCI or RSI I find trying to time a reversal very difficult hence for now my approach with the CMC charts. I stuck with them because I previously believed that more profit could be achieved through spreadbetting compared to trading the likes of futures or CFD's. So I persevered with the CMC charts until I came up with a selection of the tools that could work for me.

Having got involved in some discussions on this site concerning spreadbetting and direct access brokers I now realise that greater profits are available (certainly in the case of the FTSE) by trading the smaller FTSE Futures spread with an instant fill being available for larger orders which can expand my present daytrading unlike trying to pursue deals with CMC in excess of £20 (or 2 contracts) without a considerable delay while they pass the order to there dealing desk rather than go straight to the market.

Maybe I am getting carried away by all this but the charts displayed on the above sites appear to provide excellent signals and if you are making use of such signals you must be doing rather well. I can see I need to get my act together and stop using bit parts to do my trader but get hold of a decent direct access account and some professional charting such as esignal or sierra. It looks as if I have been wasting my last 2 years with inappropriate tools for the job. Just like this site I only registered a few days ago and yet the wealth of information and advice on this site knocks spots off anything I have found before. Again I wasted my time going into iii.co.uk most of the time you wade through rubbish and abusive posts of no interest whatsoever, at least here the topic is followed in a responsible manner and very useful and of great assistance to someone like me who after 2 years is still rather green. The only thing I can fall back on over this time is my knowledge of most charting theories and a bit of knowledge on how the FTSE price intraday cycle moves.

Thanks again

regards Kevin


regards Kevin

 

[kevin546]

Just a thought I would pose, I have been trading the FTSE cash through the day when I get the chance. When the US opens I stick with the FTSE but do you move over to the US.

At this time of day when viewing the FTSE intraday chart should you consider it a complete new start and what has gone before cannot be followed but better to let the chart pattern develop before placing further deals between 2.30/3pm or do you consider that the price will continue to follow the price sequence in general that was in place before the US start. Just that it tends to 'shake it up a little.

Kevin

 

[NickW]

Without a doubt the European markets follow the US markets.

I trade the European markets in the morning, but still watch the S&P Futures. I trade the S&P emini Futures when the US markets open but I no longer pay any attention to Europe.

I don't think its a problem just sticking with the FTSE, but you should at least watch the S&P.

 

[kevin546]

Nickw

presumably if the S & P decides to trend the FSTE will follow and will it not seen as such on the chart virtually at the same time.

I am not sure of what happens on the exchanges but when I have monitored the FTSE against the DOW with CMC some moves are more exaggerated than others and while the FTSE will go in the same direction it will not necessarily be as strong. I can recall getting into a deal becasue the DOW put on 50 points in quick succession but the FTSE moved about 5 and faded while the DOW remained positive.

Your e-mini trde will be with IB what is the normal deal size and like the FTSE is there a figure that you should avoid (FTSE best to have orders at £20 - 2 contracts at a time for quicker fills).

regards Kevin

 

[NickW]

Kevin,

The US markets have a higher beta than the FTSE and also the FTSE has little technology c/w US. In other words the US markets are more volatile and swings will be greater. Similarily you can see the same affect comparing the Dax with the FTSE, the DAX has a higher Beta so the swings are greater - which is one big reason why many traders prefer the Dax.

One emini contract is the same as a $5 point bet, however the spread is 0.25 and the tick size is 0.25. Wheras on D4F the spread is 0.7 and the tick size is 0.1. Comission is $2.4 per trade, exchange fee is free provided you do $30 commission per month, otherwise it's $10 per month.

Lately I've been trading up to 5 contracts and always get instantly filled without slippage.

Nick

 

[Naz]

I have been a day trader for some years and i know the pitfalls.You have to trade a market that is volatile because things have to move for you to make money.This means that individual volatile stocks offer some of the best moves in my opinion, not indices.What market offers this more than others? The Nasdaq.

Now i hear people say "don't trade the first half an hour of the US day because the stocks are to volatile! let it settle down."

Isn't this what we want.For instance i show a chart of BGEN on its first hours move.Ask a US trader how he would trade this or any open move and he will look at you and say with Nasdaq level 2 direct access of course.He might use t/a to find the the stock in the first place (ie a gap at a fib level).But if you told him you were a serious daytrader who wanted to trade this move with a sb company and oscillators he would fall off his chair laughing.But then what does he know?Its only his home market.
By the way try it.Phone up some of the day trading companies in New York and ask to speak to any of the traders.

The ax initiated and participated in the whole of that move down.Period.

When the job was done he moved away.For every 1000shares a Nasdaq trader trades he makes $1000 on every $1 move in a stock.

If you daytrade there are some fantastic oppertunities in Nasdaq stocks but use the right tools for the job.

Of course this is only a personal opinion and any trading can result in losses.

 

[Helenqu]

Hi Naz,

You are quite right about volatility being what you need in trading. But for people like me with a small trading pot the volatility at market opens often means that you can't place stops within the tight risk criteria we need to survive in the game

Not disagreeing with you just explaining why some of us are cautious.

 

[Naz]

Yes Helen,

I can see that.But with margin stocks like this can be played with £7000 in an account.

"The volatility at market opens often means that you can't place stops within the tight risk criteria we need to survive in the game"

I can see this as well.This is the beauty of direct access using level 2 Nasdaq.I'm not dealing with one company who is making a price and prone to bias.I'm dealing with many many traders and mm out there.I can keep such tight stops, UK traders can only dream about and keep them even in fast markets because i can see who i can hit and know exactly in the blink of an eye where i can transact and which orders i need to hit them with.

Many UK people only know how to trade with antiquated UK techniques and if they appreciated how fast and how open it can be it would make their jaws drop.Just like it did me when i first saw it in action.

Believe me if you are a daytrader you owe it to yourself to find out just how good these level 2 direct access screens are.Otherwise you are commiting one of tradings worse sins.Denial.

I take it for granted now but to see the look on traders faces when they see it in action for the first time is a joy to behold.No wonder the US companies arent allowed to advertise it here.

I realy appreciate why many are cautious.But if you read some of the feebback on t2w on NL2 dosnt it make you wonder about it?

Get the right tools for the job and the right tool to daytrade is a Nasdaq level 2 direct access screen.Ask any trader on t2w who's seen it in action.

and..........at some stage Helen i would like to show you.

For others here is a link to what some t2w traders who have seen it have got to say about it.
http://www.trade2win.co.uk/boards/showthread.php?s=&threadid=3560

For others that dont have the time here is one little snip bit.............."Now I know Naz was lightning quick and obviously a real pro but we made $1375 on paper in 20 mins (1000 shares) just by following the major market maker's moves! We did have a chart next to us but we didn't use it. He was shouting and leaping about. It was a real buzz and you can see it must be addictive"

Now seriously ask yourself this as a daytrader.What oscillator,moving average any other charting instrument allowed me to follow that stock for 20 mins.As it says i didnt even look at the chart even though it was next to us.

It was purley the level 2 Nasdaq screen NOTHING else.
Even if you want to put it together with your own favourite charting techniques then you're getting extra confirmation of an entry or exit.

 

[Trader333]

Why is it that Nasdaq Level II advertising is not permiited in the UK as this is just anticompetitive practice and probably illegal if it were pushed through the courts. Who is preventing the advertising ?


Paul

 

[Naz]

Hi Paul,

I've never got to the bottom of it.But it has something to do with our governing bodies.It's still in place because 2 weeks ago i saw an e mail from the CEO of a Nasdaq level 2 brokerage talking about not being able to advertise but still being able to open UK trading accounts.

 

[neil]

Advertising

I've just written to the Saturday FT and Investors Chronicle, plus an email to LIFFE pointing out that there are many US Brokers who charge a lot less than the ones each publication mentions.

Is there a UK cartel ? I asked them.

Would be amazed if any of them replied and/or published details/articles on US brokers.

But one must try.

Having said that I note that Interactive brokers does advertise now and then in the "Chronic Investor" magazine....maybe if US brokerages opened UK offices they might be allowed to advertise here?