Friday, May 29, 2009

Trade-Ideas Blog Gets Its Makeover

Here's the new blog redesign that comes just ahead of the entire website redesign which should launch by Monday, June 1st.

Your feedback is appreciated and very welcome.

Tuesday, May 12, 2009

Morning Prep and Trades Show How I Got Ready Today

I get ready for the day, trying to figure out a market theme that will bias my trading direction for the session and thanks to Twitter/StockTwits, I get an insightful nugget from Brian Shannon of Alphatrends:
"When 200 DMAs are DECLINING, rallies typically DO NOT hold, especially when they are advertised so strongly in media, keep guard up."
9:20 AM EST

Rummaging through my list of short strategies, I choose one I recently created for an upcoming Technical Analysis of Stocks & Commodities issue - we appear in the magazine's monthly Traders Tips section.

"Modified ATR Volatility Stop Part 2"

Click on the above link and goto 'Configure' to see how this strategy looks to short large spikes in price (of at least $0.75 in under a minute).

That’s the strategy, but what about the trading rules?  How should the opportunities that the strategy finds be traded?  

For the stop loss we used one of the more advanced options available in the OddsMaker.  Instead of using a traditional stop loss we selected ‘Another Alert’ as the exit condition called ‘Trailing stop, volatility down’.  This alert is triggered when a stock moves down an amount equal to the average 15 minute volatility multiplied by the number of 15 minute bars we decide – in this case 2.  For example if the average 15 minute volatility is 10 cents, this alert would not trigger until a stock moves down at least 20 cents.

Here is what The OddsMaker tested for given the following trade rules:
  • On each alert, sell short the symbol (price moves down to be a successful trade)
  • Schedule an exit for the stocks 30 minutes after entry
  • Start trading from the open and stop trading 30 minutes later
  • Set a stop using the alert, ‘Trailing stop, volatility down’, with a setting of 2 bars
I have a few other strategies also up and ready to trade, but I'll watch what comes through here and short the large spikes in price I see from this set-up.

9:30 AM EST

Here we go.

Taking THG at $33.74 at 9:34AM EST.  Out at $33.45 at 10:11AM EST +0.29
Taking TRH at $$40.41 at 9:42AM EST. Out at $40.46 at 10:12 AM EST -.05

Not thrilling, but living to see another day.

Sunday, May 03, 2009

These Stocks Trade Straight Up from the Open

Big HT (Hat Tip) to SMB Capital.

Our friends over at SMB Capital write an incredibly informative blog about the art of trading, the training regiment required for success, and what tools (both in your head and at your fingertips) are need to be successful consistently.

Below is the pattern they described in the article they wrote on Thursday, April 30th describing VISA (V):
"I was aggressive right on the Open with V today because…..
  1. it was very strong into the Close yesterday.  It never traded below 61.80 after the Fed and held nicely near 63.50 into the Close.
  2. The first ticks were up above 64.
  3. The first tested bid held.
  4. The next resistance was not for miles, 67.
  5. V has a history of being explosive.
  6. V is a Tier 1 stock that Hedge Funds and Institutions buy.  Think best of breed.
  7. The SPY’s are above 87.
  8. Strong stocks have made strong moves after solid earnings.
  9. The bids kept stepping up and holding.  This is the key.  When I see this I think “game on.”  Now I am aggressive.
  10. The bids never dropped from 64 to most of 67.50.
I do not care where V closes.  This is a momentum trade to be made on the Open.  Later, the market rolled over so V plummeted.  I care about a pattern that I see time after time which most developing traders miss.  This is easy money."

Based on the article I developed this strategy that caught 'V' and several others just like it on Thursday as well as Friday and will ongoingly.  

The strategy contains 2 alerts and 11 filters:

 New high (filtered) Running up; Filter=2 (1.0 shows the most alerts, 10.0 shows only the fastest moving stocks.) Min Price=5 (Dollars) Max Distance from Inside Market=.15 (%) Min Daily Volume=1,000,000 (Shares / Day) Min Current Volume=1 (Ratio) Min Volume Yesterday=95 (%) Min Position of Open=99 (%) Min Up Days=1 (Days) Min S&P Up 5=.05 (%) Min Up from the Close=1 (Bars) Min Position in Previous Day's Range=99 (%) Min Market Cap=1,000 ($1,000,000)

Note: If you want to add more conservative risk to this strategy, one suggestion would be to increase the market directional filters in Trade-Ideas PRO and choose, for example, the S&P 5 Min Up filter with a higher setting than 0.05% or make choose additional markets that must also be up.  This will only show you opportunities when the S&P or another market you choose is even  more positive.

Related Articles

This is my favorite type of post: we find an article from someone reputable and model the pattern they've shared in the article inside Trade-Ideas PRO.  We not only find the stock that they mention in the article, but many others in the same pattern.

I need to do more of these - on top of all the ones we tag with the words, "Strategy-Session".