Thursday, September 29, 2005

Strategy Session: Liquidity and Rebate Traders

We have been following a thread on Elite about liquidity trading. After looking over at some ideas we have come up with a set up designed specifically to help rebate and liquidity traders maximize their returns. Remember that these set-ups are sketches meant to give you an idea how to model your own trading plan. Use this 'as is' or modify it to your own liking as many others do.

The Strategy
Liquidity and Rebate Traders Set-Up

Who Could Benefit
Rebate and liquidity traders seeking to maximize returns. We are assuming liquidity traders will always be adding size and we are trying to provide some protection, while at the same time pointing out the interesting moves.

How It's Modeled
Primarily this set up uses our Size on the Bid and Ask filter to only monitor stocks that have at leat 100,000 shares on the best bid and best offer at the time of the alert. http://www.trade-ideas.com/Help.html#wsf_MinBS

Thoughts on improving this set-up? We hope to get your feedback to make it better.

Tuesday, September 27, 2005

More Development News

Another set of alerts in the works at Trade-Ideas: Fibonacci alerts that span a year's worth of data in addition to the intra day ones currently available.

These new Fibonacci alerts will report support and resistance lines over the year. This is one of the most frequent and recent suggestions we've been acting on as we prepare for alot more innovations starting with the new year.

More news coming.

Monday, September 26, 2005

New Alert in Development (Options)

You heard it here first... an options alert is coming before the end of the year from Trade-Ideas. More details to soon follow...

The general idea is to alert you to anytime a contract strats trading unusual amounts of volume.

If you have any thoughts regarding an options alert, please let us know. We may reference your assistance by either naming it after you or giving you big acknowledgement in its Help section!

Friday, September 23, 2005

Strategy Session: 40+ and Going

We've got another set-up not found in our Proven Strategies or Samples section that comes to us from a strong advocate and subscriber of Trade-Ideas. Remember that these set-ups are sketches meant to give you an idea how to model your own trading plan. Use this 'as is' or modify it to your own liking as many others do.

The Strategy
"New Highs 40+" finds stocks that are trending up strongly during the day. Strongly is defined as a quality where Trade-Ideas only publishes the uptrend alert after its reported it 40 times to itself.

Who Could Benefit
Good for Momentum and Scalp Trading.

How It's Modeled
The main feature is the use of the count column as a filter to find only the strongest stocks. In this case the strategy uses the 'Min Count' filter to confirm the move. Look at the configuration window and click on the icon symbols to see how it is set up in detail.

Footnotes:
  • Original EliteTrader thread of DiamondTrim that mentions 40+ and Going here.
  • Configure this strategy for your own use here.
  • Link to other Strategy Sessions here.

Thursday, September 22, 2005

Strategy Session: Get the Golden Goose

Here is a set-up that is not in our Proven Strategies or Samples section. Today we are showcasing a set-up sent to us from a subscriber:

The Strategy
"The Golden Goose" finds stocks that had been trading down but are making a confirmed move up. Confirmed is a quality defined as making new daily highs after closing down at least 3 days previously. Look at the configure window for how it was set up.

Who Could Benefit
Good for Swing Trading.

How It's Modeled
Look at the configuration window and click on the icon settings to see how it is set up.

Footnotes:
  • Configure this strategy for your own use here.
  • Link to other Strategy Sessions here.
  • Remember that these set-ups are sketches meant to give you an idea how to model your own trading plan. Use this 'as is' or modify it to your own liking as many others do. Know, however, that Trade-Ideas.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, alerts and all other features are for research purposes only and should not be construed as investment advice.

Creating a Set-Up? Key Tip

We provide a list of starting strategies in Trade-Ideas to help users become proficient with the software.

As we receive comments and questions it is becoming obvious to us that there is more room for us to showcase how the product works. We already have started posting additional strategies on this blog. Using our built in collaboration tool in TI Pro ("Collaborate") it will be very easy for anyone to simply copy and paste these strategies into their TI platform.

Before we start I am going to refer to one of our MOST IMPORTANT FAQs:

Are the alert and filter conditions combined with an "and" or an "or"?

Different parts of the alert window are combined in different ways.

Each alert type is combined with an 'or'.

If you select multiple alert types, you will see stocks matching the criteria of any one or more of the alert types. For example, if you check both the running up (confirmed) and the running down (confirmed) alert you will see all stocks which are running up or down.

The alert specific filters are each associated with only one alert type. For example you can request to see stocks only which (((are making new highs) and (these are 5 day highs)) or ((are making new lows) and (these are 10 day lows))).


The window specific filters are typically combined with an 'and'.

For example if you set the minimum price to $5, and the maximum price to $90, you will only see stocks trading between those two prices. Read the detailed help for each filter for some exceptions and other details.

The alert types combine with the window specific filters using an and. A stock must satisfy at least one of the alert conditions and all of the window specific filter conditions for you to see it.

Some conditions are available as both alerts and filters. This gives you more options when you configure a window. For example you can use the high relative volume alert and the running up alert to see stocks meeting either criteria. Or you can use the running up alert with the min current volume filter to see stocks which meet both criteria.

You can create multiple alert
windows for completely different alert conditions. This way you can see all
stocks which match either one set of filter conditions or a different set of
filter conditions.

An alert message is always caused by a specific event, which we organize by alert type. The filters allow you to suppress alerts meeting specific criteria. For this reason you always need to specify at least one alert type, but can specify any number of additional filters. This shows one of the biggest differences between an alerts server and a stock screener: The alerts server sends a message when specific market events occur. A stock screener responds to different types of events, such as when you hit the refresh button.

In general it is not meaningful to combine two or more alert types
with an and. Alert types, unlike filters, are events which occur
instantaneously. While it is possible that two alerts will happen at exactly the
same time, this is usually coincidence. (The quickest, easiest way to see a lot
of alerts at once is when the exchange reports a really bad print.) What you
probably wanted in this case was one alert event happening or almost happening
near the same time as another alert. The window specific filters smooth out the
data, allowing you to achieve this.


Understanding this FAQ is the cornerstone of making powerful alert set ups. It will make all of the strategies we post on the blog and little easier to understand (hopefully). Remember more descriptions of the reasoning behind how set-ups are created are available by clicking on any of the HELP links here.

Tuesday, September 20, 2005

Strategy Session: Modeling a Breakout

Time to focus on examples of strategies and how they are modeled in Trade-Ideas. The purpose of this entry is to not only learn a potentially new method of viewing the market, but to understand the thought process in creating a set-up that you can use to develop on your own.

The Strategy
The preconfigured alert window, "3 Day Breakouts on High Relative Volume," finds stocks crossing above their previous 3 day high for the first time on high relative volume.

Who Could Benefit
Our Momentum and Swing traders use this alert window setting as a starting point.

How It's Modeled
This alert window uses one key alert called, "Crossed daily highs resistance" set specifically to 3 days, to generate interesting trade ideas.

This window also has several preset filters. To isolate stocks moving up on strong volume we set the high relative volume filter to 1.3 which only shows stocks trading 30% above their normal volume activity at the time of the breakout. Additionally we set a Min Up from the Close filter to 10 cents to make sure the stock is positive at the time of the alert.

Conclusion
The best method we know of getting a good set-up in Trade-Ideas is to think of what the pattern looks like, then find the filters in Trade-Ideas that create that pattern over time (days, weeks, etc.) and then choose the alerts that identify when the target is in play. As an exercise you should try to model what a 3 day breakdown looks like and check your settings against the one we have on our website.

More explanations of other strategies can be found here. Click on the Help link.

Friday, September 16, 2005

Strategy Session: Get Gap Trades Like This

Our friends at TradingMarkets.com, The World's Largest Site for Traders, publish a weekly stock picking lesson in an article called, "The Market Next Week." The valuable advice is provided by Brice Wightman who is their editor-in-chief. Below is an example of how Brice's strategy is modeled in Trade-Ideas.

This example demonstrates how our subscribers can test the advice from quality sites like TradingMarkets or, conversely test the snakeoil from Charlatans on the merit of their ideas.

First the article and then the strategy follow:

Keep Your Eyes And Ears Open And Get Trades Like This...
By Brice Wightman

Keep Your Eyes And Ears Open And Get Trades Like This

CNBC runs down all the top news stories of the day before the open, everything from mergers, earnings, FDA approvals--you name it. Friday morning before the open, Joe Kernan mentioned that Southwest Airlines (LUV) was added to Merrill Lynch's "Focus 1" list, and that 16,000 brokers would be telling their clients to buy the stock. (Certainly brings back the old days for me---that's what I used to do, and for none other than Merrill Lynch). Picture this: within minutes, everyone and his brother is either calling their broker or placing orders online to buy this stock. So, at the open, guess what happens to the stock? It gaps up, which is really no big surprise. The way to play these, in my opinion, is to wait for the pullback and then jump on board when the stock rallies from the pullback. Here's how it looked (Ed.: 5 minute chart for Friday, March 18, 2005):





No surprise on the gap up. The stock pulls back and then flattens out before starting its rally from the pullback. I am showing you this not because the dollar move was large, but because you can find trades like this almost every day...you just have to keep your eyes and ears open. So look for these starting on Monday--but don't be the guy placing the order before the open and getting the top tick!


The Strategy as Modeled in Trade-Ideas

The pattern described by Brice above is called a "false gap retracement". This is where the stocks attempts to fill the gap but then changes direction and continues past the gap price from the opening. In addition you can tell Trade-Ideas to look for all the stocks that cross below the opening price as the pullback begins.

Here is the strategy modeled in Trade-Ideas. There are several conditions that will generate alerts: 1. When the stock crosses below the open price 2. When the stock pullsback 25% from the retracement 3. When the stock retraces to its Fibonacci 68% amount and 4. When the stock crosses above the open price after finishing its pullback pattern. Both conditions are subject to a filter which only considers stocks that have gapped up from the open by $0.20 or more. Note that the alerts for these conditions are mutually exclusive - the only filter they are all subject to is the requirement that they gap up at least $0.20 or more. Make sure to click on "Configure" to see the actual settings or "History" to see the backtest of this strategy across several days.

Gaps Up and Waiting for Pullback to Enter

Thursday, September 15, 2005

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Wednesday, September 14, 2005

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Monday, September 12, 2005

Critic's Corner

The latest review of Trade-Ideas appears in TradingMarkets.com. This is the article that Dr. Brett Steenbarger recently wrote.

We'll try to post the good, bad, and the ugly with regard to reviews we find about our Idea Generation Technology (IGT) called, Trade-Ideas. Realize of course that the bad and ugly will be immediately worked on! In addition to these blog reviews, browse our Testimonials.

Here is a list of our opinionated barbs:

  1. http://taylortree.com/2005/07/part-ii-automated-trading-tools.html
  2. http://www.woodingtrading.com/trade-ideas.html
  3. http://mytradingroom.blogspot.com/2005/08/trade-ideas-stock-scannerwatchlist.html
  4. http://www.brettsteenbarger.com/weblog.htm - September 10th entry
  5. TradingMarkets.com article
  6. Article in UK publication, The Trade

Friday, September 09, 2005

Trader Development: One Size Does Not Fit All

Many thanks to Dr. Brett Steenbarger for his recent article which mentions Trade-Ideas. The article's premise: if we all have different trading styles and plans, why trade using the standard tools in standard ways (e.g., chart configurations, top gainers/losers, CNBC, etc.)? Thus the need for flexible tools for varied styles of trading.

Here is his bio.
Here is the article "September 10th: Trader Development". Dr. Steenbarger contributes to TradingMarkets.com and other publications which will run this article.

A lot of his recent research involves the examination of tools and methods that process large amounts of data into rapidly assimilated and easy-to-understand information - something that Edward Tufte of Yale University (one of our honorary mentors) describes as, "information throughput". I hope he writes more articles that develop this theme.

Thursday, September 08, 2005

Strategy Session: How to Hunt with the Pack

I've taken a great interest in the well written entries of Dr. Brett Steenbarger's weblog lately. Besides the fact that he wrote an article with a positive mention of Trade-Ideas, his study of what moves markets and what movements are statistically relevant (and therefore tradable) make him a good read.

Here is an excerpt from his entry that describes the market on Friday, August 26th 2005: (emphasis in italics and bold added)

"I am preparing an article for the TradingMarkets site on the topic of who is in the market (see yesterday's blog). Here's another interesting finding from Friday's market:

one and two-lot trades comprised 55% of all ES trades for the day, but only accounted for 3% of total daily volume. Conversely, trades of 50 lots or greater were only 10% of the day's trades, but these accounted for over 70% of all volume.

Not surprisingly, large trades of 50+ lots were concentrated during the first 90 minutes of trading and during the last 30 minutes. The frequency of large trades during a 30 minute period was significantly and positively correlated with the frequency of large trades in the next period--and was also significantly correlated with the average price movement during that period.

One implication is that filtering trade ideas based on the presence of large traders in the market could improve trading performance."


Here's how Trade-Ideas was built to look for this exact situation. Start with the alerts needed for such a set-up:

From here you can create two set-ups: an alert window for upward trending opportunities (where large traders could be buying or selling) and one for downward trending opportunities. Click on "Configure" and scroll down to the filter section to see what ideas would pass. Click on "History" to see what this set-up reported during the most recent market session (History available to subscribers only).

These can certainly be improved upon. Use them as a starting point to your own ideas and interpret them according to your own trading plan.

Monday, September 05, 2005

Trade-Ideas Pro is now available on Download.com

We recently added Download.com as yet another place where you can download the latest version of Trade-Ideas Pro. Here is the link:

http://www.download.com/Trade-Ideas-Pro/3640-2057_4-10420741.html?tag=tab_ur

Remember that in Trade-Ideas Pro if you are only using the High/Low Ticker the service is FREE.

Once again we want to thank all the bloggers who have added our tickers to their blogs.

Thursday, September 01, 2005

Trade-Ideas Affiliate Program Explained

Trader Mike brought to my attention that Alchemy of Trading's blog recently announced that their content, well regarded for providing valuable insights on economic data and the markets, will soon be available only on a subscription basis. The reaction from the site's regulars was largely disappointment. A few understood and asked, "Who can blame him?"

Anyone who consistently derives valuable knowledge from a site's content should expect to reward the provider in some way - especially to individual practitioners.

Many sites and blogs are beginning to charge for their content as a path towards compensation. We at Trade-Ideas offer an alternative way for content providers to be compensated and still maintain a large audience. It's our affiliate program that I outline below:

Benefits:

  • Maintain and grow your existing audience
  • Deliver valuable real-time information on the market's technicals to your readers using Trade-Ideas
  • Receive commissions for subscribers to Trade-Ideas referred from your site
  • Access reports and audit your referral efforts using Trade-Ideas' admin tool
Features:

  • Give your site valuable real-time alert information in the form of a banner that's powered by Trade-Ideas' Idea Generation Technology (IGT)
  • Offer anyone who clicks on the banner and creates an account an extended 2-week trial (vs. the 1-week trial offerred on the Trade-Ideas website)
  • Use our database and admin tool 24/7 to track subscribers and estimate quarterly compensation

Most importantly those readers who subscribe to Trade-Ideas via a content provider's banner know that they are getting a clear advantage in terms of a cutting edge research tool and are helping to keep their frequently visited blogs free.

The customizable tickers and banners appear here. A picture of one of these banners is below:

For more information on how to get started and compensation, please take your first step by telling us who you are at info@trade-ideas.com