Tuesday, February 28, 2006

Proof: Truer Words Were Never ... Pt.3


As part of an occasional series of great approaches to trading, written by fellow traders/bloggers, here is a series we call "Truer Words".

Part 1 is posted here.
Part 2 is posted here.

The articles discuss topics of trading which include: emotional intelligence, trading journals (especially, but not limited to, the ones that document benefits of using Trade-Ideas), size management, P/L performance, and many other dimensions of the trading process - not just pre-trade analytics and idea generation.

Declan Sets the Table

Fallon D: This is the second time we mention Declan for using Trade-Ideas within his stock selection service. His blog offers daily proof of the opportunities Trade-Ideas provides according to his set-ups. Every few months he summarizes the calls and compares them to the broader market indices as well as Mad Money's Jim Cramer. It's all summed up in a great table and in the post below - we could not be happier for his results. http://blog.fallondpicks.com/2006/02/trade-ideas-vs-fallond-vs-jim-cramer.html

We just invited Declan to come and speak about his methods using Trade-Ideas at our upcoming Learning Curve Seminar, June 16-17th in San Diego, CA. We hope he can make it. Click on the link for more information and updates.

Note: Here is the first time we mentioned FallonD. The results are summarized in an informative graphical comparison: http://blog.fallondpicks.com/2006/01/trade-ideas-story-so-far.html#comments

Watch the First Hour by Dr. Brett Steenbarger

This is not the first time Brett investigated the timing of daily highs and lows. Back in October, 2005 he wrote an article called "All Times of Day Are Not Created Equal" (available on the articles page of his website) in which he reviewed the prior 36 days of trading. (Note: we designed a strategy around Brett's findings on this topic here, "Strategy Session: Predicting Strong Closes"). In this update Brett reaffirms the conclusion that about two-thirds of the time a stock reaches its daily high or low within the first hour of the day. If a stock hits the high or low after the first hour, there is a strong chance that it is a 'candidate' high or low and has not seen the end of its movement until the final hour. This update also contains a mention of Trade-Ideas as an ideal service to spot this pattern and to best profit from its existence. Thank you Brett!

The full article is at Trading Markets.com.

Footnote

More true words appear on our website under Testimonials.

Sunday, February 26, 2006

New Alert: Out-Hedge the Specialist


We are pushing hard to release functionality to make our software stand apart from others in the Idea Generation Technology (IGT) and Algorithmic Monitoring (AM) space. The recently concluded meetings this week with clients in NY and customers at the Traders Expo generated plenty of new ideas.

One of them we just released is called, "Large Spread". Click on the link and it will take you to the growing section of our alerts that deal with internal market dynamics.

Definition
"Large Spread" is a new alert that notifies traders when the spread of the NYSE Specialist becomes unusually large. (Note: NYSE only, not available for NASDAQ stocks). This alert helps those traders who are proficient with working orders and Specialist behavior to take advantage of unique and special circumstances. Like what?

Take the following scenario:

Imagine for a minute that you are a Specialist making markets in IBM. Some news breaks and - BANG! - IBM starts to run. You (as the Specialist) don't want to quote an offer to sell that is right by the bid - you will get filled selling stock that is moving up quickly - so you up your quote 50 cents or more to protect yourself. That way traders that are sending market orders to buy from the specialist all of a sudden are buying 50 cents higher. When people realize this they may start to panic sell thus turning what would have been a bad situation for you (the Specialist) into a windfall.

Conclusion
The point is when things are in order the Specialist keeps the spread more or less tight. But when something happens that is unusual the Specialist's spread becomes wide and acts as a hedge. It's simply an indication that something is happening - something you can be alerted to as a possible opportunity.


Strategy Example
Here's how the alert is used within a set-up called, "Beat the Specialist". It uses filters to find stocks trading at least their average current volume, with a volatility movement of at least 10 cents/15 minutes. Use the set-up as is or modify it to your own trading plan requirements.


June Seminar Footnote
To gain a full understanding of how this alert and others can help you in your trading plan, we suggest you attend our training seminar in June. There we will focus on all the advanced aspects of our software needed to give you an edge against larger, more capitalized participants.

We just opened the sign up page so that you can officially pay for and reserve your spot (conference limited to 100 existing subscribers). http://www.trade-ideas.com/Seminar/

Friday, February 24, 2006

Strategy Session: The News Watcher

UPDATE: In addition to the strategy set-up below, you can see another version based on this strategy, "Breaking News", in the "Samples" section of Trade-Ideas PRO (right click in a window to see this option) or visit it online under our "Browser Quick Start" section: http://www.trade-ideas.com/GettingStarted.html



In recent discussions with Evolution Trading (now known as 'TUCO Trading') we developed an alert called, "Unusual number of prints". The U#P alert looks for a stock that prints the tape more quickly than it normally does at any given moment of the day during the market. It only looks at the number of prints, not the size of the prints. The alert is focused on timeframes of 3 minutes or less.

Each stocks prints at its own rate. The alert knows the historical performance and only triggers itself if the current rate exceeds the historical rate by a ratio greater than 5. This alert is aimed at finding stocks which are just starting to print quickly; we report it as soon as possible. With the recent Winter Olympics in mind, imagine the longer speed skating races. There's a burst of energy at the sound of the bell, then there's a settling into positions as the racers plan their strategy for overtaking the competition. As each racer makes his/her move to overtake another or lead, we report that burst of energy.

Strategy: The News Watcher

The idea is to catch what's moving in terms of volume and price before news on a stock(s) gets out. Partner trading services like Need to Know News and Trade the News use Trade-Ideas strategies similar to this in their news services. They know we will report unusual price and volume movement before news breaks out. As a result they alert their customers of this followed by an update explaining the move.

Who Can Benefit
Anyone who likes reading the tape and certainly trading the news. This often means short term traders and scalpers.

Footnotes

  • Relevant scans: Unusual Number of Prints
  • 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

New Alert: Unusual Number of Prints

(Employee walks by a ‘Suggestions’ box, followed by a ‘Second Thoughts’ box.)
We've said it before: when subscribers talk, we listen and produce. Yesterday marked the release of another new alert to the Trade-Ideas inventory of technical indicators. The new addition is the result of our subscribers' feedback. The new alert, in fact, came to us from a specific request by Evolution Trading.

  • Help section definition here
  • Key Benefit: This alert helps traders looking for stocks which are just starting to print quickly
  • Example Strategy: "Beat the News"
In fact Mike Kestler from Evolution Trading will be one of our featured guests at the June Learning Curve Seminar for Trade-Ideas. He writes regularly for TradingMarkets.com on his style of market interaction. Here is Mike's bio:
Michael Kestler is a full-time professional trader and managing partner for Evolution Capital LLC., a proprietary trading firm. Mr. Kestler specializes in intraday trading of NYSE listed stocks. Before founding Evolution Capital LLC., Michael began his career on the floor of the CBOE. Mr. Kestler was previously a Mid-Cap and Nasdaq Market Maker. http://www.evotrading.com/
Footnote:
  • No matter which platform you use (e.g., browser, TI Pro), you can already access the new items - new alert and filter innovations like these are automatic to subscribers because both applications make a "call" to our servers for the latest list whenever someone interacts with our alert window settings via 'Configure'. When we add them, you receive them instantly.
  • Trade-Ideas pricing plans and subscription rates here
  • Users of Trade-Ideas Pro are encouraged to download the latest version of the application. This is unrelated to the new alerts or filters. Rather a download of the latest version of the application is necessary to benefit from other aspects of the service, like minor visual enhancements and background "plumbing" maintenance that keeps the service as fast as possible.

Thursday, February 23, 2006

Recap of the Traders Expo, New York City


Here are some insights from the recently concluded Traders Expo in New York City (Times Square) which took place February 18th through the 21st.

Sunday's panel discussion, "Software Round-Up", promoted itself as follows:


Getting the right data at the right time so that you can make intelligent and profitable trading decisions is critically important to any trader. You may have access to tons of charts and data, but if you can't get your software to display it in the way you need, what good is the data? In this panel session, we'll talk to representatives from various trading software companies and find out what features are available and how you can utilize their full capabilities. Often, traders are only using a fraction of the features the software offers. Here you'll learn the tricks and hidden features available in several of the more popular software and charting packages and how you can maximize the software to do one thing--make better trading decisions.

Thankfully the conversation steered itself away from self-promotion and "tricks ... hidden features" of the software platforms due to the moderator, Tim Bourquin, from The Traders Expo and The Forex Trading Expo (otherwise there would have been alot of empty seats).

The other speakers joining us on the panel included Glen Larson from Genesis Financial Technologies (the guy really is a rocket scientist!) and Raymond Deux from Ninja Trader (a slick and powerful order and strategy management trading platform). I assisted by making the following points that I often make when discussing what tools to trade with:
  1. The Right Technology Tools Are As Essential As A Trading Plan to Keep A Trader ‘On the Path’ and Maintain Discipline
  2. Technology Represents One of the Biggest Arrows in a Trader’s Quiver Against Larger, More Capitalized Market Participants
    — Statistical Analysis of Real Time Information
    — Optimizing Resources and Reducing Time Spent Preparing for the Trading Process
  3. Good Technology is Defined by its Ability to:
    — Make You Better at Trading and Managing Risk
    — Ability to Define Your own Universe and Model Your Trading Plan
    Create Leverage in order to Level the Playing Field

Note: If you want a justification for why a trader should consider Trade-Ideas according to this premise, please read the first comment to this post)

We then discussed what questions to ask all the vendors at the show and how to arm one's self with the right knowledge required to make good comparisons. This is much more helpful in my mind then discussing specific features which may or may not be as important from one trader to the next. Here is the list we came up with:

  • Does the product provide backtesting or historical data?
  • Can the product be simulated for a period of time?
  • How does your product reduce the time I spend researching ideas, stocks, charts?
  • How often do you improve the product? Is it a disruptive event to your clients?
  • Describe the customer support you offer and how it might be improved. (If they offer no suggestions on improving their customer support they either are too insignificant to the company to help you or are simply lying)
  • Are you the best at every single feature and capability or do you reach out to partners to augment what you have?

This last question is really important. Is a vendor so arrogant to think that the best thinking on every possible feature of a platform is inside their four walls? The enlightened companies tend to recognize what they're great at (i.e., what their brand's reputation is known for) as well as equally recognize where they aren't and who they need to partner with in order to provide the best for their clients. We love companies like this and actively seek them out.

Our booth with Scottrade was constantly overrun with people giving us the impression that the Expo was well attended. Others apparently disagreed. Scottrade's Manager of Online Trading Tools, Kevin Dodson and I gave a presentation of how Trade-Ideas works inside Scottrade ELITE to an audience of about 60 people. Many of them expressed their gratitude and mild surprise at how good the new version of ELITE really is.

Our meetings throughout the city during the Expo were also successful at enriching many NYC cab drivers and clearing a path for more Trade-Ideas opportunities. More details to follow. Thanks NY!

Tuesday, February 14, 2006

Service Difficulties and Update

Early this morning (overnight) data delivered from the exchanges contained significant errors that affect our service today, February 14, 2006.

The service works in most aspects EXCEPT for the Minimum Current Volume Filter (Relative Volume) and volume based filters. For today only these filters will not work as a result of what's happened. As a possible workaround, try removing the values in these filters from your set-ups.

This unusual event will be investigated with the exchanges and our consolidation vendor. It will be resolved by tomorrow. We apologize nevertheless for the inconvience this causes our subscribers in today's market session.

A fuller explanation of the event and our response will be posted here as an update.

UPDATE

2-14-06, 10:43 AM EST - Resourceful and furious work on repairing data sets caused by the overnight data errors by the exchanges means the service will be progressively repaired and fully restored before today's close. The repairs are automated and proceeding stock-by-stock in alphabetical order.

Monday, February 13, 2006

Trade-Ideas In Your Town: New York City



Trade-Ideas heads to New York City for the annual Traders Expo event held this year at the Marriott Marquis in Times Square. The event begins Saturday, February 18th and ends Tuesday, February 21st. For a list of other events we are attending this year, click here.

Here is a rough schedule of Trade-Ideas appearances at the conference:
Outside of the Traders Expo there will be meetings with our institutional clients but I plan to stay close to our booth hosts, Scottrade.

If you'd like a little one-on-one assistance with Trade-Ideas or learn how we keep the ship afloat, please let us know via the comments section or at info@trade-ideas.com Subject: RoadTrip. If there is a good response we'll set up a convenient time for everyone to meet. If it's just one or two that are interested we'll still meet or at the least schedule a phone call during my visit. Come to the Traders Expo if you are in the area regardless of your trading level or affiliation. I welcome the chance to meet.

Thursday, February 09, 2006

Invitation: The 1st Annual Trade-Ideas Learning Curve Seminar



UPDATE 6.19: Read our recap of the LCS - a great event! We'll be doing it again!
UPDATE 5.19: Additional speaker added, Julia Bussie, CMT
UPDATE 3.28: New banners to announce the seminar
UPDATE 3.14: 2 additional payment options added (Paypal, 2CO)

UPDATE 2.13: Expanded DAY TWO Program

Trade-Ideas is excited to announce the 1st Annual Trade-Ideas Learning Curve Seminar on June 16-17th 2006 in San Diego, CA. This learning experience allows attendees (i.e., current and potential subscribers) to achieve 2 objectives:


  1. Flatten the learning curve associated with using Trade-Ideas and quickly master the ability to model trading plans and preferences
  2. Maximize trading and risk management results

What do you want to see in a seminar from Trade-Ideas? Take a look at the proposed agenda below. It is not written in stone. As blog readers and subscribers to Trade-Ideas your comments will shape the event. Please comment. More details on how to register are forthcoming. The dates are set. Be sure to make room on your calendars and make the seminar a good excuse for a vacation in sunny, Southern California.

Overview:
During the last three years we coached thousands of customers to create optimal strategies and gain a trading edge in today's competitive markets. The experience helped us see what works and what doesn't when it comes to modeling a trading plan. The two day seminar will be focused on teaching this expertise to our customers.

Location:
The seminar will be held at the Del Mar Hilton located across from the famous Del Mar Racetrack. This location provides all the amenities and is close to the Del Mar beach, local restaurants and great shopping.

Schedule:

DAY ONE
8:00am -9:00am Check-in; Meet and Greet

The seminar will start at 8:00 am with a catered breakfast. Participants will have a chance to meet, socialize, and discuss trading styles.

9:00am-10:00am Overview

Meet the executives:

  • Dan Mirkin- Senior Managing Partner
  • Philip Smolen- Senior Managing Partner Technology
  • David Aferiat- Managing Partner Business Development

Topics of discussion will include: Reasons for Trade Ideas, Trade-Ideas within the context of a trader's keys to success, points of differentiation from other products, different ways to access the software and when, if ever to switch among them.

10:00am-12:00pm Alerts

Everything we've ever been asked about the alerts, their specific filters, the formulas, the code, and what's in development. How new alerts go from suggestion to implementation. Q & A.

12:00pm-1:00pm Lunch (catered)

1:15pm-3:15pm Filters

The difference between alerts and filters. Steps on how to get from a chart of your best trade to a consistent, reliable Trade-Ideas strategy. Q & A.

3:30pm-4:30pm Guest Speaker Panel (current list, subject to change/grow)

  • Mike Kestler - Evolution Trading
    Mike is one of the owners of Evolution Trading, a proprietary trading firm with offices in San Diego California and Scottsdale Arizona. Mike focuses on trading NYSE listed stocks and will discuss how his firm uses Trade-Ideas as their premier idea generation tool to help traders beat the specialist.
  • Kevin Dodson - Scottrade
    Kevin is the Manager of Product Development for Scottrade responsible for making Scottrade and its active trader platform Scottrade ELITE a premier trading tool. Kevin will discuss why Scottrade chose Trade-Ideas as one of the first tools to partner with and integrate into its advanced platform.
  • "DiamondTrim" - Professional Trader
    DiamondTrim is an alias for a trader well known to readers of EliteTrader and a few other trading forums on the internet. DiamondTrim was one of the first 'power-users' to understand the value of Trade-Ideas and apply its idea generation capabilities to his trading plan. The result generated multiple successes. DiamondTrim, in addition to revealing his true identity, will also discuss his trading set-up, how he develops and tests new strategies, and what makes himself an 'efficient predator' in the market.

4:30pm-5:30pm Guest Speaker: Julia Bussie, CMT

6:30pm-8:00pm Happy Hour and a Half

Sponsored by Trade Ideas

DAY TWO
9:00am-12:00pm Strategy Development Examples and Q & A

Morning session will consist of breakouts of attendees into groups by trading style. Each group will design a collective strategy for overall discussion in the forum. Individuals may meet separately with executives to design their own strategies or discuss them openly in the forum.

11:00am-12:00pm Advanced Filtering

How to take your alert set up to the next level by layering elements. Implement things learned on Friday and combine with Advanced Filtering techniques. Topics discussed will include: Volatility, Position in Ranges, Standard Deviations, Min and Max Decimal, and many more.

12:00pm-1:00pm Lunch (catered)

1:30pm-2:30pm Strategy Optimization

We will show how to work with your results on the fly using History and Linking see if the results you are seeing are the results that you want. Further optimization of a trading strategy with Alert Specific Filters, to make the most of our statistical analysis technology. How bad prints affect alerts and filters

2:30pm-4:30pm TI PRO Tips and Requests for Features

Overview. TI PRO Tips and Tricks (e.g., Duplicate Window, What's collaborate?, History, Splitting up windows, etc.) How TI PRO is used to train new traders. Plus we will call on our customers to let us know what they want to see in the future. We will discuss requests and comment on what is feasible.

5:00pm-6:00pm Closing Statements and Conclusion

Additional Topics
Support: Methods of support, How to reach us, available resources

Price

The cost of the 2-day seminar is $999.00.

Reservations

To make sure we give everyone the attention that is needed to make this event a success we are limiting attendance to the first 100 people who RSVP. If you are interested in attending and want to influence the current agenda with your own suggestions, please leave us a comment. To reserve your spot at this event please reply to events@trade-ideas.com.

Sunday, February 05, 2006

Strategy Session: Oversold, Phoenix

"When a stock's price gets higher than 1 standard deviation above its 50-day moving average, we consider it overbought. Stocks lower than 1 standard deviation below its 50-day are considered oversold."

This is how Birinyi Associates, Inc. defines Overbought and Oversold in a recent article on its blog, TickerSense. Along with this description and this helpful table from 3StocksonFire.com, here is another interpretation of how we model Overbought/Oversold in a Strategy Session. Note: our first, alternate version of modeling Overbought/Oversold conditions appears here.

UPDATE Note: As oversold as these opportunities may be, they could still fall farther. We've seen many opportunities where rallies exhausted themselves and fell further. This makes the strategy a good method for finding entries for possible short sales. See the strategies listed in the links to this post (below) for an alternate way of finding exhausted rallies.

The Strategy:
We are looking for ripe oversold candidates using a combination of standard deviations and RSI indicators. Additionally this strategy serves its users well by avoiding most of the first 30 minutes of trading which can often behave differently than the rest of day. It takes into account the "10:00 AM (EST) reversal" effect that often occurs in the market in order to minimize false signals.

How Its Modeled:
The set-up includes these filtering conditions:

The Bollinger band filter is our proxy for standard deviations. Stocks that are a standard deviation in price to the downside are at the bottom percentiles of their Bollinger Band ranges. All stocks meet the other observation that they be below the 50-day MA with our filter that does just that.

The alerts we select as triggers within this filtered universe are stocks that: bouncing back at least 25% from lows and stocks that are breaking out of short term channels.

Who Could Benefit
This strategy can be used by scalper traders and other short term traders who use this strategy after the volatility and mixed signals that can often characterize the opening 30 minutes. Another caveat with this strategy is that it tries to catch phoenixes on the rise - some may soar but some may simply rollover ... and out.

Footnotes:

  • Birinyi Associates article mentioned in this post, "Overbought/Oversold", TickerSense.
  • See the History of "Oversold, Phoenix".
  • 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.

Friday, February 03, 2006

Truer Words Were Never ... Pt.2


As part of an occasional series of great approaches to trading, written by fellow traders/bloggers, here is a series we call "Truer Words". Part 1 is posted here.

The articles in this series discuss the fundamentals of trading which include emotional intelligence, trading journals, size management, P/L performance, and many other dimensions - not just pre-trade analytics and idea generation.

Fallon D: This is an example of someone who outperformed the market over 3 months using Trade-Ideas AND most importantly provides the data to back it up in the form of many blog posts. It's all summed up in a great chart and in the post below - we could not be happier for his results. It just might be the best testimonial of the year: http://blog.fallondpicks.com/2006/01/trade-ideas-story-so-far.html#comments

Alan Farley:
His point in a nutshell? Markets cycle continuously through bursts of intense activity, followed by periods of relative calm. Smart traders can identify the signature for this Coiled Spring move and make their play well ahead of the crowd. Note: We created a Strategy Session based in part on Alan's article. Here is the post: http://marketmovers.blogspot.com/2006/02/strategy-session-i-saw-it-on-discovery.html

StockBandit.net: Two articles
His point in a nutshell? Come fully prepared for the trading day or stay at home. There's no in between. "Don't Forget Your Game Face".
The second article is appropriately enough about how to best prepare yourself for trading. The article specifically addresses what kind of layout is optimal to avoid information overload or analysis paralysis. "Simplify Your Trading Layout".

Wednesday, February 01, 2006

Strategy Session: I saw it on the Discovery Channel


It does not hurt to learn from a few million years of evolution by watching some successful hunters at their craft. Take the leopard as an example, a classic ambush predator. A leopard will wait in a tree for the antelope to walk by and then just pounce on it unleashing the surprise attack. This strategy has allowed the leopard to be one of the more successful hunters on a percentage basis. (Source: I saw it on the Discovery Channel, Animal Planet)

In recent discussions with TraderMike we developed an alert called the NR7. The NR7 alert looks for a type of behavior that is analogous to the antelope walking under a tree where the leopard awaits. Like the leopard waiting to spring into action, the alert tracks a stock's footprint or candlestick movement and reports the coiling moment where the predator tenses up before striking (i.e., when the stock's trading range suddenly compresses or narrows after 7 candlestick periods - in this case 15 minute candlesticks). This alert often signals the moments before an explosive move in one direction or another. Here is a completely preconfigured intra-day strategy that is designed to take advantage of this behavior (See the footnotes for choosing a longer term approach). (Note: this strategy is similar to one we mentioned in a previous post. The difference is only in the amounts of volatilty required and therefore, the amount of alerts each strategy generates.)

Waiting to Pounce!

The idea is that every 15 minutes you will see stocks that meet this criteria. Pull them up in your charting tool and decide in which direction the explosive move is most likely to take place. Then watch. This is a fun one that puts you on safari.

Who Can Benefit
Anyone looking for and anticipating large price movements. Most likely these are traders who search for good scalping opportunities. Others can benefit as well.

Footnotes
  • You can use NR7 to represent days instead of 15 minutes. Apply NR7 to days by selecting the Min Range Contraction filter and set it to 7. Then choose alerts like New Highs of 7 days or Crossing Resistance. Maybe that will be a future Strategy Session.
  • A primer on the basics of NR7: "Coiled Spring" and "Bollinger Band Tactics" by Alan Farley.
  • Relevant scans: 7 Day Consolidation, Recent NR7 Alerts.
  • Link to other Strategy Sessions here.
  • Trader Mike uses the strategy and responds! New
  • 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.