Trading the US the Naz/Mr. Charts Way

[Salty Gibbon]

Try this.

Look at your last 100 trades and determine the average move against you per trade.

Set a mental stop 5 cents further out than that average.

Determine the position size that you feel comfortable with at that level of stop, bearing in mind that it is a mental stop and the position is "naked".

Voila !

You will not get stopped out too often and you should be able to trade with more peace of mind.

Keep updating the average " against move" after every trade.

 

[rdstagg]

Voila

Ah Salty

The mysteries of stop placement are many and wonderous!
Your maths is completely right of course BUT the stop needs to vary for each stock slightly.

The blue chips move differently to a stock like say Google/Tzoo. Because of this I currently run 2 portfolios - one which I select each day and another which has the same stocks. Currently I use the same strategy on both but my intention is to slowly "tailor" the second strategy to see if that helps.
I would prefer to get to "know" a stock so that if Intel wiggles this way I have an edge if I recognise a unique Intel pattern.

Volatility is also a key but that too can change at a seconds notice.

I keep quite religous trade details but still every now and again I get an AMGN - I have just learnt to accept it as part of mechanized trading.( in this instance it has lead me to alter the code slightly so that it can't happen again)

Thanks for the input though.
Russ

Try this.

Look at your last 100 trades and determine the average move against you per trade.

Set a mental stop 5 cents further out than that average.

Determine the position size that you feel comfortable with at that level of stop, bearing in mind that it is a mental stop and the position is "naked".

Voila !

You will not get stopped out too often and you should be able to trade with more peace of mind.

Keep updating the average " against move" after every trade.

 

[Salty Gibbon]

I tend to trade stocks with similar ATR's and similar volatility levels so it does tend to work for me.

 

[Mr. Charts]

Here is yet another of my quick early trades - the type which has an extremely high hit rate.
Short INTU 44.69
covered 25% 44.46
covered 75% 43.32

for average profit of +$1.08 per share inside three minutes
(at the time of writing the price is back up above 44)
Risk? Had this initially moved against me even a couple of cents I would have been out for a tiny loss of maybe 3c - a reward:risk ratio of 36:1

You can see the chart in the bottom left hand corner as my set up kicked in and my trigger activated.
Richard

 

[Mr. Charts]

Some of these fast movers can be extremely rewarding very quickly but they are too difficult to play for most people.
I had GOOG on my radar today because some of the IPO lock-ups expired. This proved to be annoying as it couldn't be shorted when I wanted to.
When my radar picked up TZOO, also a very fast mover, heading north, I bided my time looking for a good entry and boom got it as on the first screen capture.
That's a piece of classic TA but when combined with knowledge and experience of how these quickies move on breakouts, pull back on a micro level and then resume their move combined with being able to read the micro level pressures and actions it resulted in a nice juicy move in under a minute.
I know these moves look very uncertain at first sight, but with the right understanding and reading of the price action they are perfectly playable - just as indicated on the GOOG thread..
The second screen capture shows my exit under one minute later.
In my opinion. TA and price/volume alone are simply not adequate to trade shares intra day consistently and profitably.
Richard

 

[Salty Gibbon]

In my opinion. TA and price/volume alone are simply not adequate to trade shares intra day consistently and profitably.

Richard, interesting post.

Does your above comment relate only to the "quickies" ?

If so, I would tend to agree.

If it extends to all stocks then I would tend to differ with your opinion. I have been pulling out daily profits for a few weeks now trading a certain stock type with which I have got accustomed, and I use little more than basic TA, price and volume.

 

[Mr. Charts]

Hi Salty,
I was referring specifically to that type of fast trade, though the methods I use are very useful in other intra day trades when they indicate break outs that may fail, pre warn of imminent reversals and several other things. They reduce losses, increase profits and keep me out of some trades when TA, price/volume would suggest a trade and vice versa.
Richard

 

[keano]

Heeeeeeeeeeere's Keano!

Well. Im finally able to access trade2win and Ebay etc... on my own computer. The cure in the end was something to do with my internet settings and was fixed by me changing to a proxy server. Some guy on a forum told me to type in a certain number and a certain port no. and here I am! God knows how it all works. ( I cant actually get into my yahoo mail account anymore but thats for another time )

Anyways. Having spent all day playing with my computer i thought i'd see what the market was up to. I took a few quick trades. I didn't post any screen shots, although all the trades were taken in the last 10 minutes or so. ( I took my first trade about a minute after logging on and actually closed my trading platform a minute ago. 'Working out ' takes priority over trading! )

Look forward to seeing what others have been trading recently.

Good to be back.

keano

 

[Trader333]

Keano,

Good to see you posting again.


Paul

 

[Mr. Charts]

Here is an unusual trade for me as it's a low priced stock, but a no brainer is a no brainer whatever the price and when the news + chart + my price micro analysis said it was going up, well........a rather nice quick profit.
The price reached 4.40 and my micro analysis told me the move was probably about to turn towards penguin land so I exited though there was no hint of the impending downturn on the chart..........
The stock gained 11% in the six minutes I was in the trade.
Richard

 

[Mr. Charts]

What a great day's trading today, especially after yesterday's chop - entirely predictable on the inside day break.
Loads of trades this afternoon.
Here's just one of them.
Richard

 

[Naz]

DAE flagged up the return from suspension of RIMM in advance.
Pure level 2 momentum trading.
My screen was red hot!

I'm sure you didnt expect me to trade it and get my entry and exit charts when it was moving that fast.


Naz

 

[Naz]

RIMM.

An level 2 momentum play.

If a stock is suspended it's normally because of some news effecting the stock.Hence when it returns from suspension there will probably be some strong reaction.If you can find the time its coming back great.Otherwise i just leave the chart open somewhere on the screen and wait for it to come alive again.

This is not for the feint hearted but for daytraders that want to earn a days money in minutes.When the direction is confirmed go with the flow.If its going down work your short in on any hesitation.I don't look at a one minute chart because its moving that fast it wont show you the story.I concentrate on the bid.

Know exactly in advance how you're going to play it.If something is powering down at some stage its going to bounce,know exactly what you will do at any bounce. Hot keying your orders is great or having another level 2 screen open with an order already in place on the same stock is another option.Trying to type anything in an order box will cost you money and slow down your response time.

The trade has to go your way immediately if it goes against you get out quick within your own stop parameters.If you get it right the momentum will power you into fantastic profits almost immediately,lock it in and dont loose it.

If you miss an initial drop think about any major bounce.If you're short a double and reverse order will do the same job.

The chart is a 15 min chart of RIMM showing its movements before and after suspension.

Naz

 

[TheBramble]

Naz, good to see you posting again.

Your style of trading would leave me breathless, drained and with (what remains of) my hair on end, but a number of really interesting points I'd like to ask you about.

"When the direction is confirmed go with the flow" - what exactly do you mean? Presumably these moves can get faded like any other. What mechanism do you use to determine 'confirmation of direction' as I don't think you're using a chart are you? How do you interpret the Bid in these instances?

"If something is powering down at some stage its going to bounce,know exactly what you will do at any bounce" - Do you play the bounce as a reversal (i.e. exit and/or reverse) or as a potential retracement and add to your position by selling into short-term strength?

 

[Naz]

HI Bramble.

I trade many different styles.Some trades i take over days and weeks in one type of account with both UK and US stocks.With many styles i use charts only, and i trade many different styles intra day,some of these last many last hours and are very slow.This is the fastest style of trading i use.

Go with the flow is to go in the direction of least resistance.Some dont realise that a charts latest plot is taken from the time and sales.Therefore at times charts can behind the true action because they only reflect what has happened and not the price at which the next orders will have to be executed at. By studying the bid it puts you in front of any chart and astute watching of its movement will alert you to any changes in momentum before others spot it.This is particularly important at at reversal points.I normally like to demonstrate this on live markets.

Personally i dont add to any position i just work with what i have.The only time you could argue i do this is where i double and reverse.As with any trade its how good you are at managing the trade that counts coupled with having the right tools to do the job in the first place.

With a fast Nasdaq momentum trades you need Nasdaq level 2 direct access.I use the same one as Keano does pictured a few posts above this.

Naz

 

[TheBramble]

Thanks Naz. I really need to use LII more fully than I currently do.

All I use it for is market depth. The T&S just hypnotises me!

I use IB and DAE pretty much equally for trading, but the DAE front-end is simply superb.

 

[rdstagg]

Rimm - lucky trade

Every now and again you get lucky - my system happened to take me long 30 mins before the news of the law suit being settled. I missed the initial rush as I was having a cup of tea - I thought I had mis-read the chart!

I didn'tt trade the suspension - too fast for me Naz!

 

[Naz]

rdstagg

I'm glad you're a tea drinker like myself.

Here's some thoughts for others on trading Nasdaq momentum stocks.

Although i agree trading stocks back from suspension can be fast.Its just another momentum play.Slower momentum plays are to be seen every day on the open with certain Nasdaq stocks.You dont have to get the whole run, the momentum will give you enough profits pretty quick.Just make sure to lock them in and dont give them back.

You can make a very good full time living just by playing these moves.A move of just one dollar equates to $1000 profit for the 1000 share trader,$500 profit for the 500 share trader and so on.

Here are some light hearted ideas with truth in them which may fly in the face of conventional thought.

Get a good Nasdaq level 2 direct access platform and dont quibble about any fees just get the best.Learn how to use it,perhaps in demo mode and then with small amounts of shares.Dont think all i need is a smart order routing order learn them all.Learn how to trade it without typing in lots of different instructions.If yours cant do this get another one.

(Although trading after 10 am est is good advice for beginners.)
When you've had practise dont listen to others that tell you not to trade the market until after 10am est time, you've packed up for the day by then or your momentum stock is just going to earn you another $2 run and these late to the party guys are the ones that are going to give it to you.

Have a nice cup of tea in-front of you so you dont get withdrawal symptoms half way through.

Larry Williams once wrote about momentum "that there is no need to play silly technical games of wiggling and waggling during the day." Trading momentum on the open can give that first initial longer move before all the wiggling and waggling sets in and you give all your money to your broker in commissions.

Our mind feels comfortable in the wiggle waggle zones but the money is to be made from momentum moves, perhaps we just have to condition mind to play it.

The attachments show the APOL run from the open yesterday .The charts to the left of the open (14.30) are the pre market activity.My run on this stock was a shade under the dollar run in about 7 minutes.

 

[rdstagg]

Nice move Naz

I totally agree with the tea point - many a time when I get emotional about a trade I put my stop in and pop off and make the tea - has saved me endless amounts of money.

Do you have any recommendations/thoughts for direct access L2 platforms?

 

[Mr. Charts]

I now keep a pot of coffee bubbling away in my trading room, not to mention a loo ten feet away.
These are basic items of trading equipment........
Richard