"One stock shop"

[Salty Gibbon]

Has anyone ever tried a trading method whereby you select just one stock and follow it extremely closely all day , every day for a whole week and trade the moves according to your particular system ?

I have done this on paper and provided the stock is an established " great mover" ( ATR $1.50 or more ) and very liquid, it seems to me that the profit potential is very high indeed.

I cannot think of any drawbacks to this approach unless of course the stock selected, for some reason or other, has an uncharacteristically quiet week.

Moves are usually plentiful, profit potential is high and it saves the bother of casting around for trade set-ups and missing out on moves as you monitor too many stocks.

 

[Mr. Charts]

Salty,
Many pro traders concentrate on a small handful of stocks and become very familiar with them so they will often find good moves which are not apparent to those who have a much larger number of stocks on their radar e.g. bounces off 50 and 200 day emas etc.
Richard

 

[Salty Gibbon]

Yes Richard. I have previously attempted to monitor too many stocks and missed trades because I spent more time looking than actually trading. You can spend a whole afternoon looking around and by the time you find a good one, your wife is calling you for dinner.

I am now chopping my list of tradeable stocks down to a very small size and will go with a strategy very similar to the one I described above. Maybe more than just the one though.

 

[timsk]

Hi Salty,
I only trade a pre-selected basket of stocks. I have a core list of 10 and a secondary list of 10 also. Both lists are selected on the basis of their volatility; ATR of $1.50 or more and a high daily volume. As a spread better, the critical factor is that I CAN trade them - in my case via D4F. If you want to trade in the way that both Richard (Mr. Charts) and Alan (Naz) do, you'll need direct access or, at the very least, a good CFD broker. Their only concern is whether or not their respective brokers will allow them to go short under the up tick rule. IMO, spread betters have to limit themselves to a small basket of stocks because of the limited selection available. I monitor the stocks on my list on a weekly basis and drop them if the ATR is less than a dollar a day.
CORE SOCKS: AMZN, EBAY, ERTS, GILD, KLAC, MXIM, MERQ, QLGC, QCOM, UTX.
SECONDARY LIST: AMGN, APOL, BRCM, CAT, GENZ, GS, ICOS, PCAR, SYMC, VRTS.
I had a serious blow up in late March and haven't traded since. (Back to the drawing board!) Prior to that, the above list provided consistent profits.
Cheers, Tim.

 

[bigtimetrader]

I trade CSCO almost exclusively and have done very well with it. I like it because it works with my strategy has decent volatility and is very liquid. There is some measure of "getting to know" a stock involved IMO, but that may be all in my head.

 

[CityTrader]

Salty, I have about 25 stocks on my watch list, but I would say on any given day I'm following maybe 8 or 10 of them. ( and probably only trading on average once a day) As a market maker, I found it impossible to have a decent view on my whole "book" ( sometimes up to 60 stocks) and would find myself having a decent view in perhaps 8-12 of them.

Timsk... what on earth is ATR? a measure of volatility? thought a stocks "beta" was the measure of it's volatility?

 

[Salty Gibbon]

ATR=Average True Range and is just an average of the daily high / low range. I base it on the past 14 trading days.

 

[adrianallen99]

ATR is average true range. True range is the difference between high and low of day. Average True Range is average over so many days, So and ATR 20 would be true range averaged over 20 days.

Looks like I was too slow

 

[schoe]

Salty, I have about 25 stocks on my watch list, but I would say on any given day I'm following maybe 8 or 10 of them. ( and probably only trading on average once a day) As a market maker, I found it impossible to have a decent view on my whole "book" ( sometimes up to 60 stocks) and would find myself having a decent view in perhaps 8-12 of them.

Timsk... what on earth is ATR? a measure of volatility? thought a stocks "beta" was the measure of it's volatility?

ATR Stands for average true range basically the number of points between high and low over a given period.
Three replies saying the same thing I was too slow at pulling the trigger ,no wonder I need to improve my daytrading!

 

[Rognvald]

ATR -

You're all right guys but here is a "tablet of stone" from an expert (Not me of course-))

"a volatility measure using a non-statistical measure of volatility.
True Range is always a positive number and is defined as the largest of the following:
• Distance between today’s high and low
• Distance between today’s high and yesterday’s close
• Distance between today’s low and yesterday’s close
The Average True Range is a moving average of these True Ranges."

 

[CityTrader]

Now I know, why I'm not a chartist!!