Directional Trades

[TheBramble]

Taking a directional trade in a trending market (opens +/-50pts) and only considering entry when the market is +ve for a Long or -ve for a short and having identified a stock trading at a 52 wk hi/lo - I enter...

But if we're using vwap as a target or (partial) exit point, just as we do with a pair trade,how can this work?

If a stock is at a 52wk hi/lo, surely it's already above/below its vwap. In the case of a Long, if it's above its vwap when we enter, how can we use the vwap as a target?

 

[LevII]

TheBramble,

My understanding is you (a) look for a trending market (opens +/-50pts) and (b) only consider entry when the market is +ve for a Long or -ve for a short and (c) the stock is trading at a 52 wk hi/lo then (d) wait for a retracement (pullback) then (e) pull the trigger provided there are no negative features on the L2 screen.

VWAP is nothing to do with this type of trade.

Hope this is correct.

LII

 

[Trader333]

Tony,

As LevII has said for the 52 Wk High trades you ignore VWAP. What is a good idea would be to aim for a 1% move in the stock sell half when it does and move your stop to breakeven and let the second half run.

I know that when I called BIIB on Thursday and I made 106 points profit that I didnt sell half at the 1% level but that was partly because of the strength of the move as it shot straight through the 1% and just carried on moving. Generally though this is a good rule to follow.


Paul

 

[DaveGos]

Tony

I agree with Levll my understanding is that the 52 week H/L is a strategy distinct from VWAP trades. I'm also not sure it needs a trending market rather we need to see how it behaves when the DJIA retraces. Perhaps Gray1 can comment.