Wednesday, November 30, 2005

Strategy Session: OOPS Swing Pattern

This strategy session revisits a set-up devised awhile ago that I've picked up again and revised to better model the intended strategy. The strategy comes from an interesting article, "The OOPS Pattern", from http://www.guerillatradingnation.com/ - a site that features 'proven strategies for small investors'.

The author notes the following caveats:

  • First you will only need to follow the market for the first hour or so of the day. The reliability of the strategy is less after 12 noon EST.
  • Second, this will provide you with the discipline to trade only high probability setups.
  • Third, it will provide you with a daily routine to execute in order to find and research the OOPS stocks that will be played the next day. (Using Trade-Ideas' End of Day scans, I'll describe how this can be done.)
And we'll add the following caveat which we've said before: 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.

The Strategy
As the author states,

    We are looking for stocks that have been in an upward trend but have experienced a recent pullback. We need the stocks to be in an upward trend because this indicates that the stock is under accumulation. There is interest out there. Very often, when institutions accumulate stocks, they will pause, and even sell, for several days in order to shake out the small investors and avoid the price running away from them. It is important that the market as a whole is heading in the same direction as your trade. At the very worst, the market should be flat. Never take a position counter to what the general market is doing.
    How Its Modeled
    The set-up includes the following conditions:

    • Average daily volume > 0.5M Shares
    • Share price > 20$
    • Above the 50 day MA
    • Preferably above the 20 day MA
    • The 50 day MA must be pointing upward
    • It is very important that the last day be a wide range bar (WRB), meaning, a bar wider than usual, that closes at the low, or very close to the low of the day

    Here is the picture we drawing with these filters:


    The alerts we select as triggers within this filtered universe are stocks that: run upwards at a higher than usual rate, break out of their 5, 15, or 30 minute opening ranges, reverse their gap downward (fill the gap), OR begin hitting daily highs resistance. After noon EST we stop evaluating new opportunities and just manage the ones already entered.

    Who Could Benefit
    The author clearly states that the OOPS Swing Pattern is for swing traders and that the opportunities that meet its criteria can last for 1 to 8 days. Those who paper trade or anyone else who wants to test this before using capital might also find this strategy useful. If you are looking for an active alert window that publishes alot of results to choose from throughout the day - this is NOT for you. If you examine the History of this strategy, you'll see an average of only 20 alerts published per day.

    Footnotes:
    Original OOPS Swing Move post here.
    Link to "The OOPS Pattern" article here.
    Read the original article's FAQs (important) here.
    Using End of Day scans to preview what to look for in the next day's session:
    Copy the list of stocks from these relevant scans into an Excel column or Word table and look for which stocks show up in multiple lists:

    Tuesday, November 29, 2005

    Scans: Know What's Coming

    The Bottom Line:
    Know in advance what the alert windows will show. That's the benefit of our end-of-day scans.

    Description:
    We publish a series of free, end-of-day scans that are meant to attract new potential subscribers to our realtime service. However this information is helpful to more than potential subscribers, they can be used to great benefit by existing subscribers who want a feel for the long term trends affecting the opportunities they'll see in realtime during the day.

    These scans bridge the gap between long term trading and short term, intraday trading because they identify what stocks are in a particular long term trend and therefore are likely to appear in the alert windows you create. Here is an example of how these scans can spot opportunities: make a symbol list containing the stocks in this scan and use the alerts in Trade-Ideas to identify either continuations of the trend, small countertrends to use as entries, or signs that its time to fade the trend entirely. Just know that if you create a symbol list you won't need to use many filters because your universe is already screened to only show the stocks in your symbol list. For more of an explanation on this distinction between alerts and filters, click here.

    We'll repeat this point in future posts and provide a detailed description of what each of the scans does, but for now here is the complete list under the header, "Stock screener":
    http://www.trade-ideas.com/StockInfo/

    Monday, November 28, 2005

    Special Invitation


    If you are reading this and will be in Las Vegas the week of December 13th, we'd like to invite you to the Traders Expo (free attendance is available to those who register) and to a special happy-hour on Wednesday, December 14th, at the Paris Las Vegas. It is our way to express thanks to subscribers and partners who have contributed to a great year of growth at Trade-Ideas. If you stop by and say hello we'll also share what new features and plans for Trade-Ideas will make the coming year even better.

    We look forward to raising a glass to you.

    RSVP in the comment section.

    Friday, November 25, 2005

    Strategy Session: Dummies

    Background:
    A few weeks ago a subscriber introduced me to "the Dummy" strategy and asked how it might be modeled in Trade-Ideas. The strategy is credited to a well known and respected trader and teacher called, Chairman MaoXian, who provides over a 100 examples of how the strategy was used to pull opportunity out of the market. We found that some of the best results from modeling the strategy were generated using the maxim, "less is more" when choosing from the many possible alert and filter combinations. One version appeared on EliteTrader for others to see and report their experiences. A slight variation is below.

    One of the practionners of this strategy says it best, "Remember, 'dummies' is not the golden key to unclasp the treasures of the market. Its just one simple strategy. That's all."

    The Strategy:
    Characteristics of Dummies:
    • Often appear in the morning session
    • Mostly an intraday strategy
    • Contain unusual movement in price
    • Occur on higher than normal volume
    • Trade with the trend, not against it
    • Look for an inside bar or countertrend to form as the entry
    • Best traded on 30 minute charts or 15 minute charts for those more 'frisky'

    Those seeking more certainty with the trend add another characteristic that says the stock should close up the previous day (1 day at least).

    In this post we share the uptrending or long version: Dummies - Up Trend

    How It's Modeled:
    The basic filters were:
    1. Min share price = $9, Avg daily volume = 700k
    2. Min current volume = 1.85 or stocks must be trading 85% higher than normal
    3. Previous days up = 1

    Some additional filters to increase probabilities of a trend were:
    4. Min up from previous close = $0.05
    5. Min position in today's range = 65%

    The alerts chosen all attempt to spot small pullbacks or countertrends in the overall movement upwards as ideal entry points before the stock resumes its course.

    Who Could Benefit:
    It is a simple strategy so it can apply to many types of traders. Those trading intraday will find this strategy appealing as well as those who swing trade and are looking for good places to enter positions.

    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.

    Footnotes:

    Chairman Maoxian archive of Dummy set-up examples: http://www.maoxian.com/archivecat.html

    The Dummy Journal started by 'Babak' on EliteTrader: http://www.elitetrader.com/vb/showthread.php?s=&threadid=54717&perpage=6&pagenumber=1

    Thursday, November 24, 2005

    Happy Thanksgiving

    We wish everyone a Happy Thanksgiving and urge everyone to walk off the big meal with a little exercise. I read an article today that says in addition to a little exercise, you can avoid the sleepy stupor after the meal by doing like the Europeans do ... and drink during the meal.

    Here's a list of what was opened today:

    Zull, Gruener Veltliner, Austria (white)
    Dr. Burklin Wolf, Reisling, Germany (white)
    Roads End, Pinot Noir, Oregon
    Showket, Sangiovese, Napa Valley, CA

    Good stuff. Cheers!

    Tuesday, November 22, 2005

    Service Interruption

    Follow Up Message from Trade-Ideas:
    Dear Customers,

    The service outage that you experienced Tuesday was a result of a server shutdown in the early morning during our usual maintenance routine. The outage lasted as long as it did because our back up servers were offline for maintenance as we are moving to a newer and more redundant facility.

    We replaced the failed hardware and added additional redundancy to prevent this from happening again. Please accept our sincerest apologies for this interruption in service.


    The Update:
    As a result of Tuesday's outage, the History of strategies for Tuesday only are not available. Market data for Tuesday is included in our historical database, but no History data for Tuesday, November 22nd will be available. We apologize for this inconvenience.

    Tuesday, November 15, 2005

    Scottrade Selects Trade-Ideas

    An official press release is pending, but ScottradeELITE® traders are now more efficient predators in the market thanks to the integration of Trade-Ideas' Idea Generation Technology (IGT). The official rollout begins after today's closing bell.

    ST. LOUIS, MO and ENCINITAS, CA – Scottrade, a leading online brokerage, and Trade-Ideas, publishers of real-time, custom filtered market data, announced today that they have partnered to offer Trade-Ideas' Idea Generation Technology, to Scottrade customers who use ScottradeELITE®, Scottrade’s advanced platform for active traders. Scottrade is the first major discount brokerage to offer Trade-Ideas on its retail active-trader platform.

    Covering stocks, futures, ETFs, indices, and other derivatives on every U.S. exchange, Trade-Ideas acts as thousands of eyes watching the markets in real-time for customer selected set-ups and patterns. Trade-Ideas improves a customer's market performance and risk management by offering:

    • Answers to active traders most common question: "What should I be trading today?"
    • An easy to navigate and graphical interface for modeling customer trading plans
    • Filtered ideas published in real-time that match customer preferences for trading.
    • Backtesting of any model to determine the quality and frequency of alerts generated

    ScottradeELITE is a fully customizable platform that offers advanced tools to help active traders find opportunities in the market and make quick trading decisions. These traders demand the idea generation and risk management that Trade-Ideas offers, as well as the other advanced tools and technical indicators available through ScottradeELITE. Trade-Ideas can be used in conjunction with the other trading tools, including charts, news and research, already available through the platform. Trade-Ideas will be available to ScottradeELITE users for a monthly fee. That fee will be waived if they execute a certain number of trades each month. Details are soon to follow.

    About Trade-Ideas
    As a pure pattern recognition tool, Trade-Ideas' focus is on providing next level analytics and decision support via its browser-based or downloadable platform. Via Trade-Ideas clients customize an inventory of alerts and filters to produce a unique view of the markets: theirs.Recent reviews from Barron's, HedgeWorld, Active Trader, The Trade (UK), Stock & Commodities magazine, stock newsletters, and leading brokers describe the service as an accurate, discriminating alert provider that is flexible, simple to deploy, and easy to use. A free demo is available and requires no payment information to get started. For additional product information visit: http://www.trade-ideas.com.

    About Scottrade
    Now in its 25th year, Scottrade is a leader in online investing and was named Highest in Investor Satisfaction with Online Trading Services by J.D. Power and Associates (http://www.jdpower.com/) for the sixth consecutive time. Scottrade serves individual investors who are comfortable making their own investment decisions. Scottrade is unique in the industry because it boasts very low commission rates while offering easily accessible, local branch office support of online trading in 244 locations nationwide. Scottrade.com is the online trading site of Scottrade and offers customers the convenience of placing market orders online for just $7 per trade. In addition to its online capabilities, Scottrade staffs each branch location with a licensed branch manager plus additional brokers and assistants.

      Friday, November 11, 2005

      Harrisdirect, Brown|Co Pilgrim?

      Welcome to Trade-Ideas. Grab a chair and come to the table for a tool that delivers a feast of new ideas and your best trades. If you are looking around and revaluating your broker's tool set in the face of pending mergers, make sure to sample what Idea Generation Technology (IGT) can do for your risk management and trade performance as a compliment to the new tools coming.

      Trade-Ideas connects to any platform and therefore fills a real and valuable need missing in your previous situation.

      Sample our free, limited demo here
      Subscribe here

      Paper Trades: One Off, One On?

      I see the Englishman transitioned from paper trading to trading in earnest and want to pass along our best wishes for good trades. (Thanks Mike)
      http://englishmantrader.blogspot.com/2005/11/trading-summary-11102005.html

      I read the hilarious musings and descriptive misery of Slovak trader and suggest he might do well to give paper trading a go: http://slovakchart.typepad.com/main_street/ (jk Frank!)

      TurtleTrader describes paper trading this way:
      No capital is actually invested when you make paper trades, so they become
      a great learning tool. Simulations like paper trading force you to make
      decisions and then show you the consequences of those decisions again, without
      risking your capital.

      The only behavior to adjust for is the one that says, "it's not real money". In a positive way the effect can make you looser and undistracted from what the market and set-ups are telling you. In a negative way the effect can make you more aggressive than you would otherwise be with real capital on the line.


      An individual trader can paper trade to:
      * establish a track record
      * develop trading discipline
      * test trading strategies
      * evaluate new markets
      * build trader confidence
      * make trading career decisions

      Good luck, stay focused, maintain your discipline. It's been said before, "the only holy grail ... is you."

      Thursday, November 10, 2005

      Atlanta Chapter of the MTA meets

      I go to these meetings regularly for the quality speakers this chapter attracts. I helped this year in creating the speaker's list and inviting them to come.

      Meetings organized by the Market Technicians Association (MTA) are great places to learn, ask questions, and listen to industry leaders in technical analysis. Here's the next meeting's agenda:

      The Atlanta Chapter of the MTA will meet next Thursday November 17, 2005 with special guest speaker, Toni Turner. Toni is the best-selling author of A Beginner's Guide to Day Trading Online and A Beginner's Guide to Short-Term Trading. An investor and trader with fourteen years of experience, Toni is a consultant to Townsend Analytics, Ltd., creator and developer of RealTick trading software. Her third book, entitled Short-Term Trading in the New Stock Market, is published by St. Martin's Press just this year.

      As usual, sandwiches and beverages will be served beginning at 5:30pm on the 10th floor, with the presentation to begin at 6:00pm. This event will be held at 3333 Peachtree Rd, South Tower, Suite 1000, Atlanta GA 30326.

      There is presently no scheduled meeting for December.

      Past speakers include: Ken Tower, William Eng, Robert Deel, and others

      Wednesday, November 09, 2005

      People at Work

      Minor but important upgrade work started today after the market and continues until tomorrow's pre-market session. FYI.
      11.09.05 0.5/6.5, 3/3, 12/24
      11.16.05 0.0/6.5, 0/3, 2/24
      11.18.05 0.33/6.5, 0/3, 0.33/24
      11.22.05 6.5/6.5, 3/3, 16/24
      11.30.05 0.06/6.5, 3/3, 0.06/24

      TradeStream Global Chooses Trade-Ideas

      Here is the press release describing the latest trading technology platform to integrate with Trade-Ideas.
      http://www.prweb.com/releases/2005/11/prweb306026.htm

      Our other press releases can be found here.

      Ask your broker or service provider what they have in terms of idea generation technology and suggest Trade-Ideas as something they should add to their service offering.

      Likewise you don't have to wait for your provider to integrate with Trade-Ideas. You can connect Trade-Ideas to anything you are currently using.
      Here's a video that shows you how in TI Pro: Linking Video
      Here's a video for linking if you use the browser: Browser Linking Video

      Monday, November 07, 2005

      Improved and New Alerts Added to Trade-Ideas

      Time to deliver on several suggestions requested by customers who took the time to give us valuable feedback.

      Announcing Improved Alerts and New Alerts
      Here is a quote from our Help section describing the improvements to Market Crossed Alerts:
      The market crossed alerts appears when the ask price for a stock is lower than the bid price. These conditions occur when the stock is unusually active and often signal a turning point.

      In some cases the alert server will describe the alert as "up" or "down". This distinction is based on the primary market. The assumption is that the primary market does not react as quickly as the ECNs. So if the bid on an ECN is higher than the specialist's offer on an NYSE stock, many traders assume the price will move up soon.
      Here is the Help section's description of the new Trading Above, Trading Below Alerts:
      Trading above occurs when someone buys a stock for more than the best offer price. Trading below occurs when someone sells a stock for less than the best bid.

      These alerts typically signify a temporary condition where a stock is suddenly more volatile than normal. Often this is caused by traders who know that the stock price is about to change quickly, so they choose the fastest execution venue rather than attempting to get the cheapest one. Highly experienced short term traders may choose to join the action, in anticipation of a fast change in the stock price. Longer term traders still take note of this condition because it is a leading indicator of which stocks will have interesting activity.

      How Feedback Feeds Improvement
      Ideas for improving Trade-Ideas go to a team that picks it apart, models it on paper, and develops it for testing with a beta group of traders. If it's still alive after these steps we put it into production.

      Notes
      Note that there's no need to re-download or do anything to start using the new alerts. The new items just appear. Why get in a subscriber's way to making better trades and managing risk?

      Also note the mention of the beta group of traders - if you would like to join a small group that tests the latest upgrades to Trade-Ideas, please leave a comment or email us at info@trade-ideas.com.