# Discretionary Trading Method-----Outliers Discussion Thread



## tech/a (9 October 2006)

Can we keep discussion here so the commentary,chart sequence and logic doesnt get lost?

*Moderator's Note, this is the primary thread: https://www.aussiestockforums.com/forums/showthread.php?t=4650*


----------



## lesm (9 October 2006)

*Re: Discretionary Trading ---Outliers,discussion thread.*

tech/a,

If you could cover both (live) intraday and EOD that would be good.

Only have EOD on the ASX at the moment, but expect to have intraday in the next couple of weeks. Just need to get my finger out and finally organise it. Finding that I need to start using intraday charts on the ASX to gain a better perspective for my short term trading activities

Been having a similar issue and came to the same conclusion with respect to the discretionary component. The only guys that I am aware of that are doing this kind of trading really well from a discretionary perspective are in the US and are primarily futures traders. Technical setups, with a discretionary trading approach, not for the faint-hearted or undisciplined.

The Hint #1 format will be fine and your initial hints are practical.

Will be interesting to see how the thread progresses.

Cheers.


----------



## Duckman#72 (9 October 2006)

*Re: Discretionary trading method-----Trading outliers*



			
				tech/a said:
			
		

> Of the 2067 stocks under $3 today *at sometime * over the last 12 mths.
> 
> (1) 403 increased in price 50%
> (2) 283 increased in price 100%
> ...



Hi Tech

Very interesting thread thankyou. Can you please clarify something for me - are you saying that the stocks you select are ones you have identified as having gone up 50%,100% or 200% (or that this is what you are aiming for). I guess my question is "how you identify your 2-3 stocks?" to purchase

I can scan using Market Analyst and identify volume, % increases etc but it is all at end of days trade.

Also - for the uninitiated - what does a "2-3 tick stop" represent? 
Thanks 
Duckman


----------



## nizar (9 October 2006)

*Re: Discretionary Trading ---Outliers,discussion thread.*

hi tech/a

thanks for starting this thread

u mentioned u trade in 15k parcels, with 60k capital; and u are quick to exit once the stock hits your stop

what i want to know is; where do u put ur stop?

does it depend on the movement of the stock? ie. if its a massive breakout, its likely to be trading much above its 200dma so you wouldnt wanna put it just under that.
do u use ATRs?
or is it a % of your initial capital?

interesting how your universe for this strategy are stocks above $3; how did u come to the conclusion that this universe is the best for this strategy? through backtesting?

thanks, much appreciated


----------



## tech/a (9 October 2006)

*Re: Discretionary Trading ---Outliers,discussion thread.*

*Duck.*

The statistics are presented as a matter of information,interest value.
I doubt many know how many stocks rose by what over the last year that trade under $3.Point Im making is that there are plenty.
Tick is the unit value of the stock being traded.
A 1c stock trades in 1/2 cent ticks and higher value stocks trade in 1c ticks.
Tick I believe came from the old "Ticker tape" days.

As for which stock I trade and how I find it/them all will be revealed.

*Nisar.*

2-3 ticks under the purchase price initially.No more. If its not moving right now I'm out.This becomes wider as the trade progresses (In the sence that the profit supplies a buffer if I carry the trade over night.) But we are getting ahead of ourselves.

I use price action ONLY and one custom indicator which if you or anyone has metastock I will give you or the code which can be re coded by experts in their software for their use.

Stocks are UNDER $3.* Nizar * you will have to pay attention the answers I have given you are in the initial intro!!

*Michael*

And entry and in these short term trades is very important.
I want win rate up! and the potential to be as much in my favour as I can.
Seeing it happening NOW is a huge benifit.--both entry and exit.


----------



## MichaelD (9 October 2006)

*Re: Discretionary Trading ---Outliers,discussion thread.*

I'm definitely watching with great interest (I'm currently trading small parcels of a discretionary system which did well on prospective paper trading, so I'm now trialling it with real money) - mine's based on EOD data for the moment as a lifestyle choice, although it seems self-evident that you could run a better exit with intraday data.


----------



## nizar (9 October 2006)

*Re: Discretionary Trading ---Outliers,discussion thread.*



			
				tech/a said:
			
		

> As for which stock I trade and how I find it/them all will be revealed.




Im awaiting this eagerly.

So u keep pretty tight stops, do u re-adjust these once u are in profit and to where?

Just goes to show u can get stopped out heaps and still pick plenty of winners.

Would be interesting to find out what % of stocks hit your stop, and rebound and keep going up, and what % actually then go down and out... any analysis on this?
ie. there must be a good reason why your stops are so tight


----------



## Bobby (9 October 2006)

*Re: Discretionary Trading ---Outliers,discussion thread.*

Hello Tech,

Was there a problem with Marketcast recently ?

Cheers
Bob.


----------



## tech/a (10 October 2006)

*Re: Discretionary Trading ---Outliers,discussion thread.*



			
				nizar said:
			
		

> Im awaiting this eagerly.
> 
> So u keep pretty tight stops, do u re-adjust these once u are in profit and to where?




Generally no (purely because very few really run away with it IE +25% and more in a day) but when they do, this is where your bar analysis becomes very important and the stop is turned into a trailing stop.Exits they are different again.



> Just goes to show u can get stopped out heaps and still pick plenty of winners.




This is a good point to mention *this*. I struggled with short term trading for years.Super inconsistent or so I thought.
Being predominently a longterm position systems trader when I became involved in shorter time frames I moved with the speed of an Elephant on morphine. I needed to and have altered my mindset to double fast forward.
Thats why generally I only trade 2 stocks at a time and if I have 4 going then everything else stops (I close my office door).This is rare as I dont have an office door (Yes I do only kidding!!). 

What kept me at it was the constant observation of stocks practically daily that made huge gains (20% on your money in a day I call a huge gain!) Now I dont get all of that very often and even less do I get more than that in a week,but the times I do make it well worth the effort and at times frustration--you certainly find out about yourself and discipline trading this way



> Would be interesting to find out what % of stocks hit your stop, and rebound and keep going up, and what % actually then go down and out... any analysis on this?




*NIZAR * 
A very very good question and I really want everyone to think about the answer because it was one that haunted me in the early days.

*I dont know and I dont care*

What I do know is that I can turn a profit trading as I do.*I came to the conclusion * that as I could not test this way of trading and as such give myself a 'blueprint" of "Knowns" that the best chance I had at making it work was to trade by the tried and proven things I did know.
Profit comes from 3 scources.
(1) More wins than losses.
(2) Much bigger wins than losses.
(3) A combination of both.

No (3) is the one I strive for.

As for % that hit my stop at times it seems like a lot at other times it seems like very few,this is generally related to the volatility of the market in general.
As for the other 2 questions some do and some dont,every now and then I see one I was stopped out of or exited prematurely go flying into the stratas phere and others I never see pop up again.



> ie. there must be a good reason why your stops are so tight




Sure is see #(2)

*Bobby*
Marketcast was changing feed from the ASX. Caused all sorts of problems with live feed. Pricing was delayed upto 5 mins which cost me $450 in slippage as I exited a trade I was looking at .058c when in fact it was .056c
Bugga.
Depth was hopelessly out.
As of yesterday seems all fixed.


----------



## nizar (14 October 2006)

*Re: Discretionary Trading ---Outliers,discussion thread.*



			
				tech/a said:
			
		

> Generally no (purely because very few really run away with it IE +25% and more in a day) but when they do, this is where your bar analysis becomes very important and the stop is turned into a trailing stop.Exits they are different again.




tech/a thanks for your reply can u please elaborate on the above point and when do your (tight) initial stop turn into a trailing stop loss...

so i take it most of your profits are in fact from *exits* and not from the stock hitting your trailing stop loss ?

maybe this is because u have got to a stage where u have become so pro that u can exit without being "stopped out" but when u started initially, was every profit/loss due to the sp hitting some sort of stop ie. either initial or trailing ?


----------



## MichaelD (14 October 2006)

*Re: Discretionary Trading ---Outliers,discussion thread.*



			
				nizar said:
			
		

> Would be interesting to find out what % of stocks hit your stop, and rebound and keep going up, and what % actually then go down and out... any analysis on this?





			
				tech/a said:
			
		

> A very very good question and I really want everyone to think about the answer because it was one that haunted me in the early days.
> 
> *I dont know and I dont care*



This is actually a critically important psychological point that Tech/A is addressing here. The intrinsic nature of a stop is that no matter how you run a stop, there will always be the odd occasion when a stock which is stopped out will proceed to take off without you.

However, for every one that "gets away" like this because of your stop, two will fall like stones, taking your capital with them if you let them.

The point is to consistently apply a stop so that ON AVERAGE your wins outweigh your losses.

If you haven't actually gone through the process, an extremely enlightening exercise is to trade with a stop for 12 months and then go back and analyze what would have happened if you hadn't used a stop - yes, a few trades will have taken off without you, but more often than not, they will have tanked. It becomes very clear and very obvious that trading with a stop means there is more money in YOUR pocket at the end of the day.


----------



## nizar (14 October 2006)

Thanks for your thoughts there Michael.

Just wanted to ask u (and every1) a couple of questions: 

1/ Do u have exit criteria apart from a trailing stop? How many % (roughly) of your (closed) trades that are in profit were exited due to it hitting a trailing stop?

2/ How do u decide whether to use a trailing stop after your initial position is already "in the money" ? Do u always use one?


----------



## tech/a (14 October 2006)

Nizar.

*Trailing stops are put in place to protect profit which has been made for moves which are extra ordinary * like those of late by MOX and PMH.

If you read the threads on these to those trading them have no idea of the use of trailing stops.
Basically a fundamental buy and hold methodology is being used on highly volatile stock.Nothing wrong with that if all goes well.


----------



## MichaelD (15 October 2006)

Tech/A,

MetaStock has a built-in scan which finds breakouts of this nature reasonably efficiently. It will return a list of anything from 0 to 10 candidates over the entire ASX on any given day. Of the ones returned by the searches, about 1/4 are breakouts which meet the breakout above trading range criterion.

The scan is called "Equis - Price and Volume Breakout". It doesn't take long to run or to flip through the candidates.

It certainly picked up PMH and MOX recently (a bit sad that I didn't have any available funds to allocate to either of these, but c'est la vie - the market will still be there tomorrow).

My only slight concern is whether there is a negative effect simply because it is a built-in scan and thus potentially over-used by traders.

I personally don't trade anything with a close under 0.20 due to some limited work I did on this a while back - this gels nicely with the step from 0.001 ticks to 0.005 ticks at 0.20.


----------



## nizar (15 October 2006)

tech/a

for the AUZ chart u posted; was your buy signal the first arrow or the second? 

CVN - i noticed it went up on big volumes the first day, but the 2nd day (entry day) it actually gapped down (obviously 6.2-6.1c is not significant but in general terms). Did this influence your decision whether to buy? (ie, as opposed to if it had gapped up). Or are all the entry decisions made before the next open after reviewing previous days data ?

ITE - wow that was really a beauty!

Also - when u buy a stock do u care if there is overhead resistance? ie. for CSM.

Thanks


----------



## nizar (15 October 2006)

MichaelD said:
			
		

> It certainly picked up PMH and MOX recently *(a bit sad that I didn't have any available funds to allocate to either of these*, but c'est la vie - the market will still be there tomorrow).




Michael D

Have u thought about how to deal with such circumstances?
ie. if u hold stocks that have "run out of puff" or are slow movers or are in no mans land.
And then another stock comes along which, if you werent holding any stock with that cash - u would favour the latter stock - why not chop and change?

Or are you satisfied that u have no cash because this means your system is running at maximum efficiency?


----------



## tech/a (15 October 2006)

Firstly the most important criteria is a break from consolidation.
I have found that the longer the consolidation the more "sever" the breakout normally is.Also the longer the consolidation there seems to be a correlation as to the sustainability of the breakout.

I'd like also to point out that not all goes entirely to plan as we will see in the coming weeks as we look at trading them.I have had many losses in a row.8 being the most.However often 1 trade makes up for the last string of losses.
4 in a row being the best string of wins.

*Michael*--You know Ive been so busy making my own indicators I have never looked at the generic.
As for what scans we use it doesnt matter as long as the "Eyeball" of the chart meets with what I believe to be the best candidates.
I dont care what the price is infact I like it under $2 as I get better "Bang for Buck" this (Bang for buck) Indicator can be used to further scan stocks to biggest poentials.
More later.

I have just added a liquidity filter to the equis exploration which cuts prospects right down.(Volume*close,>200000)

*Nizar*
My buy was the First arrow (But I have a live scan which Im not discussing in this section on EOD) trading.The 3rd arrow would have been the next EOD buy. Often you can see that trading these offers up opportunities to pyramid.

*Hint (3)*
 When trading Live I often buy 1/2 of my $15k parcel when I see it on the scan with a stop at old support on a tick chart,then if it is closing on or around its high for the day the rest on close. I find that the next days enthusiasm from the EOD buyers who are alerted overnight,can be a great boost to profit. So 2 things happen ---if it goes against me I further minimise losses. If its going for me I maximise opportunity. (Similar opportunity can arise for EOD traders but a day later).

What we do with the trade (Or more to the point how we trade it) is very dependant on price action next day.the 30-100% gains in a few weeks are what we are after. We wont always get it 100% right,but if we can trade the bulk of a move the we have success in my view.

Hint (4)
Be SELECTIVE 
Tight stops.
Very quick exits if stopped.
*The ability to walk away * when we take a loss only to see it fly (We arent in sync!!). There will always be other prospects.*Being wrong is simply making way for an opportunity to get it right!*

Will get down to chart specifics (Price action) next.


----------



## MichaelD (15 October 2006)

nizar said:
			
		

> Have u thought about how to deal with such circumstances?
> ie. if u hold stocks that have "run out of puff" or are slow movers or are in no mans land.
> And then another stock comes along which, if you werent holding any stock with that cash - u would favour the latter stock - why not chop and change?
> 
> Or are you satisfied that u have no cash because this means your system is running at maximum efficiency?



The bird in the hand is better than the birds in the bush. No matter how good the chart looks, there is no guarantee of a positive trade outcome - the entry does not make the money.

The critical point is that you have a plan and you STICK TO IT, particularly with dramatic movers as being discussed here. Trading them inconsistently leads to inconsistent profits, uncontrolled losses and no chance to look back at a series of trades and work out how you could have done things better.

Exiting consistently from these trades is extraordinarily difficult to do in a manner which delivers a positive expectancy, so I'm paying very close attention to see what I can learn.


----------



## MichaelD (15 October 2006)

tech/a said:
			
		

> When trading Live I often buy 1/2 of my $15k parcel when I see it on the scan with a stop at old support on a tick chart,then if it is closing on or around its high for the day the rest on close. I find that the next days enthusiasm from the EOD buyers who are alerted overnight,can be a great boost to profit. So 2 things happen ---if it goes against me I further minimise losses. If its going for me I maximise opportunity. (Similar opportunity can arise for EOD traders but a day later).



So you're saying here that you do a scan at (eg) 1530 and get in before the EODers? (and then pyramid).


----------



## tech/a (15 October 2006)

Michael.

The discussion at the moment doesnt cover this but as your interested I will elaborate here.

I have Marketcast.
It has a scan function which reports.
Highest Volumes
Most trades
% gains
% loss
Gap % both up and down.

I run my first scan 30 mins after open.I look for prospects with the following characteristics.
(1) % increase above average.
(2) % gap on open less than 10%
(3) High Volume
(4) Hign number of trades.

I might find say 4 I can immediately double click on the code and get both a tick and daily chart.If I like what I see then I'll go to ASF open Yahoo and see what announcements have been made AND OR if there has been any DIRECTOR BUYING in the past few months.
If I can find a support area on the tick chart not to far away and all is good from my analysis then I buy.
Its a personal decision wether I buy a full or part parcel.Normally its a full parcel as Im pretty picky.
The trade could last a few hrs or days rarely a week.
If it finishes strongly then I could add say 50% to the position at the close.If not then Ill leave it or close it out.

I will after this discussion show you a few live trade examples posting that which I see.

You'll find both my entry and exits are rarely perfect----it does happen---but you'll note my care in keeping the numbers in my favour.Every now and again it all falls into place.

Mind you I prefer now than to again!!

OH if nothing grabs me in the first scan I do them 15 mins apart until I find one. If nothing grabs me by 2 hrs into trading I will leave it for that day---no trading. Happens quite a bit,Ill often miss some great ones. Cant see them all Im afraid.


----------



## nizar (15 October 2006)

tech/a, thanks for sharing that strategy.

Now for the latest chart u have posted on MBP - im still struggling to work out why u didnt enter on the October 10th? U could have bought in the mid-50s with a stop "a few ticks" below as u have said previously? WHat do u mean ur stop would be too far away?

How is this different to, say, CVN or AUZ ?


----------



## Boggo (15 October 2006)

Giday Tech
I  have just encountered this thread.
I find it very interesting because I have been using a system that I trade short term intraday on stocks from 5c to $1.50 while I watch ZFX etc climb steadily.
If I get days off during the week I look for a few likely candidates, as you say, great % profits to be made in a short time.

No days off this week but a few that I would have been looking at on Monday are BLR, DNL, LOU, PHK, RRL and SBS.

Are these along the same as you are detecting ?

Cheers All
Boggo


----------



## tech/a (15 October 2006)

nizar said:
			
		

> tech/a, thanks for sharing that strategy.
> 
> Now for the latest chart u have posted on MBP - im still struggling to work out why u didnt enter on the October 10th? U could have bought in the mid-50s with a stop "a few ticks" below as u have said previously? WHat do u mean ur stop would be too far away?
> 
> How is this different to, say, CVN or AUZ ?




*Nizar*

Simply these are the results of *todays * scan.
If I could enter on the 10th tommorow I certainly would!!

*Boggo*

Had a look at all charts you have suggested.
I wouldnt trade any of them I'm afraid.

They dont fit my criteria.


----------



## Boggo (15 October 2006)

Thanks Tech
Will follow this thread with interest.

Boggo


----------



## ezyTrader (16 October 2006)

Hi tech/a,

I've got commSec ProTrader with realtime data and also provides %gain and %loss in MarketWatch. And I'm interested in your intra-day price action assessments.

I had successfully day-traded CVN (28/9) with around 15-17% profit using the 30%/70% retracement method.   
PS: Wish I had held onto it for a bit longer tho...everything in hindsight.  

To be honest, I'm still testing the waters and learning the trade, and some trades just don't go the way I want (retracement go all the way back to high of yesterday, or more, eg. BON re: the SHARK-OOP Bar)...hence...

I would be interested to hear any advice or suggestions about:-
a) if there's any folly following this retracement method, 
b) any addition steps to improve R/R ratios, 
c) nature of the Shark / oops bar formation, which caught me out on the BON trade. Question I'm asking I guess is, is there any way to detect the formation, especially if the price retracement may happen a few times during the day for some stocks...
in other words, if you find any indicators or signals effective for intra-day /EOD trading to ascertain your next actions...

Another PS: In hindsight, I probably shouldn't have traded BON, fell for the BUY ON RUMOUR, SELL ON FACT trap...


----------



## tech/a (16 October 2006)

EZY.

*I dont buy retracements in this form of trading*. But thats me. I want momentum to be in my direction NOW. 
With a retracement it has to pull up before we can take a buy.
*OLD retracements work better * than newly formed price action.Look for Elliot A,B,C or 1,2,3,4,5 price action to help confirm a possible retracement trade.

*Importantly* when there are prices higher than those now being traded at----the psychology of traders becomes a greater issue.

If you get on a strong momentum buying frenzy there is one dominant psychology and thats greed. It then becomes the challenge of how long or how much you can get out of the trade than whether the trade is going to outperform past performance---take a look at PHM which has been struggling to make old highs---difficult to trade.

I'll posts live info as I get it.
I have meetings all day today so could be hard to do today but you never know.

You'll find I make lots of little losses.
Lots of little wins.
And the odd---lets go celebrate.

The interest I find is as we hold overnight or when we ride a 30-50% winner in a day---what to do.
OR we find a momentum trade which is slow and consistent.
Lots to discuss.


----------



## lesm (16 October 2006)

*Re: Discretionary Trading ---Outliers,discussion thread.*



			
				lesm said:
			
		

> tech/a,
> If you could cover both (live) intraday and EOD that would be good.
> .... but expect to have intraday in the next couple of weeks. Just need to get my finger out and finally organise it.
> Cheers.



Well, all organised and fully operational.

Will be interested to see how the thread moves forward.

Cheers.


----------



## ezyTrader (18 October 2006)

> NLX best from scans this morning in at .071 on the 2nd retracement test of the early morning flush out.



Just curious tech/a, was that at market open?
How do you decide the time of entry?


----------



## tech/a (18 October 2006)

Open was .068c.
Came up on scan I look for movers particularly those that dont gap.
From the chart i posted you'l not that it traded as high as .073 and retraced to .071 initially.
I placed an order at .071 which in itself is a risk with a runner,i would go at market abouve .073.
But got on and now off which may or may not be wise---just a call looking at selling pressure.I like to hold these over night as the EOD traders usually give it a gap kick in the morning where I will be selling.

If .081 is sold off then .078 is where I have placed a buy,if Im taken Im taken if not I may have egg on my face and a few $$s in my pocket.


----------



## stink (18 October 2006)

HI Tech,

I hope this isnt a red herring in the context of this discussion and my apologies if it is.

Since you started this thread i have been doing my own EOD scans within the 1$ to 3$ universe and there is plenty of potential there. However with this potential comes volatility of price action. 

For the new trader to approach this area, my opinion is that if my money management principles are sound then there is no reason why not to take these opportunities.

I will be following this thread closely as the more i look into this area the more potential i see for fast higher percentage gains then with stocks that are say above 3$.

I am staying out of the speculative under 1$ area, as from the small amount of homework i have done they really jump around alot, to much for the EOD trader IMO. However over 1$ seems to be still volatile but not as gappy as the spec stocks.

Is my logic here sound?

Regards Stink


----------



## nizar (18 October 2006)

tech/a said:
			
		

> Open was .068c.
> Came up on scan I look for movers particularly those that dont gap.
> From the chart i posted you'l not that it traded as high as .073 and retraced to .071 initially.
> I placed an order at .071 which in itself is a risk with a runner,i would go at market abouve .073.
> ...




I reckon EOD traders will eat this up 2mrw.

A good chance of it to gap up 2mrw dont u think? What does your experience say?

tech/a - u reckon its a good idea to do a scan right before the market closes to see if there are big movers? If they close on the high then its a buy (?) but if its slightly off the high or in any case a break up on volume should see it gap up the next morning due to EOD traders buying and then u can off load it?

obviously this wouldve helped in cases like PMH. Up >100% on the initial spike to close at 41.5 and then it opens the next day at 54c.

but i guess such cases its no longer EOD trading is it LOL

but i guess thats the obvious advantage of real time.


----------



## nizar (18 October 2006)

tech/a said:
			
		

> Open was .068c.
> Came up on scan I look for movers particularly those that dont gap.




It closed at 6.5c yesterday a 5% gap i guess thats not significant?

Do u mainly look for movers that dont gap up because if theyve gapped up then that means ull have missed the bulk of the move that wouldve happened the previous selling day and the AM gap up is due to EOD traders?


----------



## tech/a (18 October 2006)

logic---yes pretty sound.

I certainly wouldnt do the very short term stuff I do without live data.
The scan I mentioned this morning is a live data scan not EOD.

However I strongly advise that you are very careful to find in EOD scans EARLY momentum and not over extended momentum which could lead  to an inside day.
No amount of money management will help you if your win rate is down and your reward to risk is also low. OK in some cases to have one working for you preferably both but not both against you.
Selective entry!

Dont fall into the trap of seeing every breakout as a must buy.Develope an attitute that if you miss it or it hits your stop you conduct your business---IE let it go (There are ways to get on and I can add to the topic with this as well) or take your stop FAST!

Perhaps I should present some work in these areas.
*
Nizar* gotta do some real work but will spend time answering tonight.


----------



## ezyTrader (18 October 2006)

At time of post, JAK is having a berserk moment - up 52% with 288 trades.
tech, would you mind posting your opinion about it, when you have a moment?


----------



## tech/a (18 October 2006)

Went back in at .088


----------



## dubiousinfo (18 October 2006)

ezyTrader said:
			
		

> At time of post, JAK is having a berserk moment - up 52% with 288 trades.
> tech, would you mind posting your opinion about it, when you have a moment?




JAK has had turnover of 20mil today, that is 25% of the total shares on issue.


----------



## MichaelD (18 October 2006)

tech/a said:
			
		

> Dont fall into the trap of seeing every breakout as a must buy.Develope an attitute that if you miss it or it hits your stop you conduct your business---IE let it go (There are ways to get on and I can add to the topic with this as well) or take your stop FAST!
> 
> Perhaps I should present some work in these areas.



Tech,

I'm interested in your expected drawdown and runs of losses numbers with this style of trading. I know you've mentioned you've had 8 losses in a row in the past with it, but in more "typical" operation?

Also - is your stop in the market or on your chart (or both)?


----------



## tech/a (19 October 2006)

Michael.

I dont have specific figures unfortunately.
I could sit down and go through all the contracts and work it out.But while its profitable I'm not going to do that.

Normally I see 1-3 losses sprinkled with wins.NORMAL R/R is 5:1 with approx 1:10-15 hitting an R/R of 20:1 or much more.
Last biggie was HDR 40:1 in a day. (More luck that good trading---hey but it was a buy).
Yesterdays NLX was 4:1
However it would be interesting to find the average drawdown and R/R.
At  guess max 10% D/D average R/R 4-6:1
Win rate is much higher on live trade choices.
However if I was trading EOD I would be longer timeframe.Looking at days or weeks rather than intraday--days.

While I make good money very short term frankly its draining and I really dont want to be glued to the screen.Running this exercise has had me doing more of it ---it reminds me how much I hate it!

My return on capital since I have returned from the UK (23/8) is 46%
 $48k to $70k.


----------



## MichaelD (19 October 2006)

tech/a said:
			
		

> While I make good money very short term frankly its draining and I really dont want to be glued to the screen.Running this exercise has had me doing more of it ---it reminds me how much I hate it!



A very interesting and important point (and why I'm personally trying very hard to produce a robust system trading the same way on EOD data - although I often feel the horse has already bolted   ).

One other query - how long between outlier wins? The mechanics of the system are that there are lots of small losses and lots of small wins, but how often do the R-multiple winners come along?


----------



## tech/a (19 October 2006)

> One other query - how long between outlier wins?




I would firstly quantify an outlier win as 10:1 R/R in a day or up
to 3 days.
How often varies.
Lately Ive had a couple.
On average 1 or 2 a month.


----------



## MichaelD (20 October 2006)

WSA - I don't recall this coming up in my scans over the last few days so I won't comment on this one except to say that volume is very ordinary on the last bar so I have no interest in it.

BKP - This DID come up on my scans on breakout day, AND I had funds available to trade it, however, I chose something else to trade. I didn't like the short Stage 1 consolidation time and didn't like the look of the potential overhead resistance points it would encounter on the way up.

Thus, the best I can do is show how my EOD system would have traded BKP if I had entered it. The trade would have entered the day after breakout and would still be open and in sub 1R profit based on where the current stop would be. NOTE: I should make it very clear that this system is still very much a work in progress. I believe it is robust enough to be trial trading it at present, but am certainly interested in comments on ways to improve the exit.


----------



## tech/a (20 October 2006)

Michael.

I was thinking more of from today forward.
WSA came up on a T/T scan.
Volume is thin but personally looking longer timeframe.
Thin volume up could mean few sellers.
Just as thin volume down (more common) shows no buyers.
Both are in the Buy high sell higher thought train.

Just a point on close by consolidation (something from steidlmayer)
Price tends to fall back to ares of "Value" or consolidation.You see this very often in tick charts or futures charts which are 5 min or so bars.
Ill post some chart examples when I find some.
Something to watch for.


----------



## MichaelD (20 October 2006)

tech/a said:
			
		

> I was thinking more of from today forward.



BKP triggered again in my EOD breakout scan overnight. As an initial entry, I'd reject it since I see lots and lots of close overhead resistance from people who will be wanting to get out at breakeven for them. *If* I had entered on the first breakout, I would be happy with what's showing now - a second breakout trigger is generally a very positive sign for my system, and I'd be waiting to see from here whether it will push through the resistance (very good) or the move exhaust itself. For my system, this says HOLD, but not BUY.



			
				tech/a said:
			
		

> WSA came up on a T/T scan.



WSA would trigger a buy in my long term trend following system as well based on the current chart. Coincidentally, I'm actually closing a position today so will have money to spend (but am putting it all towards further pyramiding of existing positions, not opening new positions).


----------



## ezyTrader (23 October 2006)

Really appreciate your candid sharing of your discretionary method.
Using your technique, AUZ looked as though it is ready for another rally after from last Friday's activity. 

Applying your techniques, I would have bought either EOD Friday before close, or, at opening today, and trail a stop just below close Friday.

Will post later on my exercise.


----------



## tech/a (23 October 2006)

Watching myself (not in) nothing wrong with that ezy will watch with interst your trading on this one.
My feelings at this time 9.46 adelaide time.
Is that having missed the open a buy would be at .9c with a stop at .86 half a position.
Would add (If filled) to a full position over .096 which is current resistance.

Dont like chasing can be costly in these runners.


----------



## tech/a (23 October 2006)

AUZ strong will let you know what I do. If anything.


----------



## ezyTrader (23 October 2006)

Am not in this rally myself. Just applying your technique though... :


----------



## ezyTrader (23 October 2006)

Forgot to add, trail stop now at 0.094, just below last resistance/support line on 1-min tick chart.


----------



## tech/a (23 October 2006)

When these reach 10c and if they break through can be very profitable as support comes in a .05c levels instead of .01c levels.

Something to watch.
Ah just done on 1/2 parcel at .096 this was the original 2nd buy level.
As it was so strong I placed an order at breakout of .096 and it came back to it. Stop is at .094c top up at .099c

Ill shut up now and let you eze take it from here I'll tell my story AFTER yours sorry to butt in.


----------



## ezyTrader (23 October 2006)

Any sage words regarding CVN languishing in the 10s threshold?
Buy before/on 10cents, hold, or, after? Looks like it may be breaking resistance...only time will tell...
NB: Not in CVN at this stage.


----------



## ezyTrader (23 October 2006)

I'd appreciate your running commentary, tech/a, actually...

Would appreciate following your 'half-parcel' approach, which of course, the rationale of 'averaging' the risks, right, am I not?


----------



## tech/a (23 October 2006)

Yes (re averaging risk),Im very edgy until it settles and i have some lea way.

 Im all in at .097 average.
Ill place stop at .094 This could well end up one of those we look for.
Nicely sighted ezy.


----------



## ezyTrader (23 October 2006)

Ah ha! touched 0.10...
Trail stop raised to 0.096 - just below a soft support/resistance line of 0.097.


----------



## ezyTrader (23 October 2006)

The excruciating waiting time... Leading up to general lunch time....
What's in store for after lunch?


----------



## tech/a (23 October 2006)

Here is realtime tick chart and current depth.

As you can see 10c was a strong resistance and now becomes strong support
next support if broken and this is weaker is .98.
You can now see where Im coming from buy having traded in the prices to 10c being in incements of .01 and as such closer supprt and less risk to now .05c with wider support and resistance an no firm base yet found (other than 10c).
However my 250,000 units now fall and rise $1250 a tick not $250.
If one of these runs then this is what finding these is all about.
Time will tell. Feast or Famine.

Cheers.


----------



## ezyTrader (23 October 2006)

That's what I thought too - .098 is a much weaker S/R line. For the time that it is, 1pm Brizzie time, I'll stay with the loose .097 trail stop for the moment, to give it some room to move...


----------



## Bobby (23 October 2006)

Auz now at .11 , Nice $2500 plus for you Tech so-far today


----------



## tech/a (23 October 2006)

Yes Bobby nice to see it running well.

Support now 10.5 and resistance at 11c will get an idea how strong this is towards close.
If 10.5 holds at close this will be prime for the EOD traders to jump on in the morning---and a strong overnight close in the US would make it all the more plum.


----------



## tech/a (23 October 2006)

One of the members Alan asked me to run through the Shark bar I think its similar to Larry Williams Oops bar.As it may play a part in AUZ here is some info.

From experience highest probability is an oops on a positive day or an inside day if a negative DJIA. Continued and sustainable rising is unlikely.(Hope Im wrong!). A slow tight counter trend is also a good sign for longer term holders like the small correction just passed.


----------



## ezyTrader (23 October 2006)

Gotcha, tech/a. Thanks for that warning.
If I have faith in the stock, I would probably depart the trade with enough free-carry plus profits, for future stakes. What would your opinion be on that?

As I mentioned before, still a novice at this sort of thing.


----------



## BSD (23 October 2006)

Is this 'analysis' only valid for daily or hourly drawings?

Or does it apply to yearly charts as well?


----------



## tech/a (23 October 2006)

Trade it as it comes.


----------



## Bobby (23 October 2006)

Greetings Tech,

As you said if the close is  .10'5 cents , the  EOD traders should push the opening tuesday, so guess you will be watching the opening with live tick, ready to sell at market at the first sign of weakness ?

Just another question, why 250000 ,    thats a lot of $bucks at average .097cents.

Bob.


----------



## tech/a (23 October 2006)

I liked it.
Tommorow maybe different though.
Stocks are like old girlfriends.

Ill be looking for a big gap.
An open of say 12-12.5 would see me sell at open.
Ill hold if 11-11.5 but sell if trading in 10.5.

Will see.


----------



## Bobby (23 October 2006)

tech/a said:
			
		

> I liked it.
> Tommorow maybe different though.
> Stocks are like old girlfriends.
> 
> ...



This may be just a one night stand then   : 
Tomorrow will tell.

Take care.
Bob.


----------



## ezyTrader (24 October 2006)

Looks like your assessment of a shark/oops bar is coming to fruition, tech/a.


----------



## tech/a (24 October 2006)

ezyTrader said:
			
		

> Looks like your assessment of a shark/oops bar is coming to fruition, tech/a.




Yep.
Out at 10.5 Think there will be some buying opportunity later.

If your trading these you just have to know it.
Regularly rips the wallet from your pocket.


----------



## CanOz (24 October 2006)

Gave your method a try on paper this morning. Picked up 500,000 IMP at .022 after they came up on the most actives list. I got to work late but i think i could have got onto them @ .021 if i was earlier. Put a stop at .020. Will see how they trade today and tomorrow. No announcement yet either so if they close at this rate there might be a speeding ticket.

Would you have picked this one up T/A?


Cheers,


----------



## tech/a (24 October 2006)

No I didnt.

Many I let go as I cant be on them all.
Often I will see A couple and take the one I consider to be the faster mover OR that which has less upside resistance.
Sometimes I get it right sometimes wrong


----------



## CanOz (24 October 2006)

Actually picked up some ACB doing the same thing. Theres no depth either, not that it means much.

I just use the market activity on Power Etrade to pick them up.


----------



## CanOz (24 October 2006)

So much for that, got stopped out!

Try another one tomorrow.


----------



## nizar (24 October 2006)

CanOz said:
			
		

> I just use the market activity on Power Etrade to pick them up.




seems like a handy tool to see wats running. will have to set up an account soon.


----------



## CanOz (24 October 2006)

Because its live, you can see straight away when volume or price takes off. Also you can list by sector too, the resource sector is the most active today but theres opportunity else where. This is addicting.

Tech/A - i think i better re read the thread to see how you manage the trades better.

I think my stop was too tight.

Cheers,


----------



## tech/a (24 October 2006)

*BSD.*
Sorry just saw your post.
The analysis is purely daily,its a capitulation of buyers.

The resultant bar is generally a pivot point reversal and in ALL timeframes is again genrally seen as a temporary (And immediate) change in trend.
So the analysis as you can see is prior to the event and pretty accurate while the resultant price action displayed by the bar is after the event and a pointer toward future price action.
I expect the old high of this stock AUZ to be tested soon.Ill be trading something else.

*Canaussieuck.*
You really have to be very quick.On and off.
Have a look at my comments on Stockmans Thread in this section.

I used to think trading this way was impossible but discovered that it can be quite profitable.There are many small wins many small losses enough great wins to make good $$$s and heaps of frustration.Your discipline MUST be 110% or youll die quickly--- one slip up and 5 trades profit can be gobbled up, or a good profit can reverse while your wishing it would hold or reverse positive again.


Not for the majority and Im in the Majority!
A Bugger of a way to trade if you ask me.
Why do/did I do it? +75% in 2 mths.
Ive had enough for this stint.


----------



## CanOz (24 October 2006)

I think i set the stop too tight, it came back by the end of the day. Can't wait to see how it opens. Took a very small loss, plus brkg. Still have my paper trade to watch too. I think i'll paper trade for a while and bed down a system.

I really don't have the time or the timing to be in a position to do this every day....but its opened up a world of day trading i've never tried before. Looking at several daily charts today, there were many entry points available.....i think i'll save some capital for these opportunities. 

In the meantime i think i might put some money in Nick's system portfolio. Something different, some more lessons to be learned.

Good luck, and great thread T/A.

Cheers,


----------



## MichaelD (25 October 2006)

tech/a said:
			
		

> A Bugger of a way to trade if you ask me.



I can understand this very well, having spent a fair chunk of last week tape-watching and turning into a very grumpy person. It's definitely the thin edge of the wedge psychologically trading this way. (And it's reminded me why I made a rule to only design EOD systems.)

I must say, however, that I have managed to come up with a major improvement to my short term EOD system exit courtesy of this thread, for which I am very grateful - 50% win/loss and a very nice smooth equity curve if it keeps trading for real the way it backtested/is trading so far, so actually quite pleasant to trade.


----------



## ezyTrader (25 October 2006)

> I must say, however, that I have managed to come up with a major improvement to my short term EOD system exit courtesy of this thread, for which I am very grateful - 50% win/loss and a very nice smooth equity curve if it keeps trading for real the way it backtested/is trading so far, so actually quite pleasant to trade.




Michael, would you mind sharing some of your enlightenments? I do find this way of trading fairly taxing as well - being glued to the screen.

tech/a, 
at the moment, AUZ background market action seems to be brewing again. Any thoughts? 
PS: Wished I had gotten into that sensational rally, now. Would have had 16-20% for two days' work. Which is decent for me with me small capital - not asking for much.


----------



## ezyTrader (25 October 2006)

Another to watch - GDN, which had a sensational run yesterday. More activity brewing.


----------



## tech/a (25 October 2006)

AUZ I have no interest its going to do little for a while may test the last high.

GDN not on the radar.

RPT interesting.
Busy today so wont be around much.


----------



## tech/a (25 October 2006)

DYL.


----------



## CanOz (25 October 2006)

RPT - under offer of takeover? Can't find the notice though.


----------



## MichaelD (25 October 2006)

ezyTrader said:
			
		

> Michael, would you mind sharing some of your enlightenments? I do find this way of trading fairly taxing as well - being glued to the screen.



The major issue I had with my system was that it relied on outliers to make its money. There's nothing wrong with that per se - that's how long term trend following makes money.

The trailing stop method I had come up with was excellent at controlling losses to less than 1R, other than the odd >1R loss due to slippage, however the Achilles heel of the system was in profit giveback.

The nature of a trailing stop is that it relies on a share going up, peaking and then coming back down before exiting - you only know when the stock has stopped going up when it starts going down. The problem with this sort of short term trading is that these movements are too quick for an EOD stop to be totally satisfactory in capturing profitable moves.

For me, the solution was in an in-market profit stop as well as the trailing stop. This turns many small R losses into small R profits and increases the win %. The key to the system is keeping losses at substantially less than 1R on average whilst capturing lots of 1R profits.

This would appear to break the cardinal rule of trading, viz "let your profits run", but the goal of taking a bigger bite out of the average breakout move before it regresses to the mean is certainly met. So far, the numbers are very good in backtesting - 50% return on capital per annnum or so with 10% drawdown - but I don't have enough real test trades in the system yet to see if it performs in real life as well as it does on paper. I'm also comparing the old exit and the newer exit to see what the overall results at the end of the day will be. So far the new looks very good indeed, and certainly seems to be a new point at which to keep improving from.

Once this system is proven to work satisfactorily, I'll next work on capturing the outlier multi-R trades better.


----------



## nizar (25 October 2006)

tech/a said:
			
		

> Not for the majority and Im in the Majority!
> A Bugger of a way to trade if you ask me.
> Why do/did I do it? +75% in 2 mths.
> Ive had enough for this stint.




tech/a,

dont the figures alone make it worth it?
75% in 2 months is unreal.
Why dont u like, trade this system for 2 months a year or something?


----------



## tech/a (25 October 2006)

nizar said:
			
		

> tech/a,
> 
> dont the figures alone make it worth it?
> 75% in 2 months is unreal.
> Why dont u like, trade this system for 2 months a year or something?





Well yes thats why I do it.
Having a ticker on my desk doesnt help either.
Often I'm to busy to trade,and almost everyday see opportunities fly past on the scan screens.
Pretty soon you see ones that keep re occuring.

I actually trade it when it screams at me---"Idiot buy me!!!"

One thing I will say is my developement in self discipline has over the years been immense. I can honestly say that I'm very mechanical,buy sell no hesitation.If Im too late Ill let it go.If I sell to early and miss a run I let that go as well with little thought other than Bugger.

*There is ALWAYS another trade*

On DYL bought it yesterday from an EOD search at 18.5c
Wish to run this a bit longer.Applying some Elliot to the analysis--thats interesting.


----------



## nizar (25 October 2006)

tech/a,

i saw some interesting stocks today, namely FNT and BUY

For FNT:
Im liking wat i see with this.
Opened modestly 10-11am pretty quiet. But at 12:05pm, boom 1mil volume, and the price 15c, this would be confirmed as a breakout. Usual volume is 100-200k. This wouldve been my entry.

%move scan on etrade would've picked this up (+15%)

At 12:12pm the price hit 22c. Thats the quickest money youll ever make in your life. ANd even if you didnt have the quickest finger on the trigger, up until 12:30pm you could still have got your shares sold for 19c. Thats 26% from a 15c entry, which i think is reasonable (eg. not like if i said i would buy at 13c, sell at 22c)

The potential is massive. I reckon with this kind of system a really tight stop even 1-2 ticks and you'll be set. Heaps of small losses but the occasional winner would do it for you.

25k parcel @ 15c = 166k shares
Sell at 19c = $31,600
Stop loss @ 14.5c (1 tick): total risk = $830

This wouldve been a ripper.

But really you have to be there at the PC the whole day to get these trades. It peaked 12 mins after it started running!!!

But from that half mil trade at 14c at about 12noon it didnt go down even by half a cent until it hit 22c then slow decline.

For BUY:
Im liking the potential for this one as well for a quick trade.

%change wouldve picked it up at 1pm at 3.6c (20%) and volume about 1mil (not massive), so i probably wouldve waited.

At 3pm another 1mil volume and the price now 3.9c. Both price and volume, breakout confirmed. I wouldve jumped on probably and it never ticked down at all until it hit 4.5c an hour and another 1mil volume later.

Though obviously picking up a 25k parcel of these wouldve made me the biggest trade for the whole day, and i wouldve had to chase. I probably would have got less (about 10k) after looking at the depth and the parcels that were going through.

But i mean even a stop at 1-tick NEVER would have got hit at the right place (3.9 or 4c entry as stated above). But at other times you wouldve, but i mean if your gonna be at the PC all day watching realtime movement then u could control your risk much better.

What do u reckon tech, this could actually work? I mean, as in if im gonna be watching it all day.

Its probably my psychology i gotta be careful of more than anything, gotta learn to buy and sell LIKE A MACHINE.


----------



## tech/a (25 October 2006)

Yes it can work but trust me you'll be frazzzled.

Hint.
Learn to use support and resistance on 1 min or Tick charts.
I often set buys at the closest support.
I set stops 1 tick below support.If you get stopped and it runs LEAVE IT ALONE.Find another.
Learn with small parcels even $5k lots.
Dont be greedy getting the meat in the sandwich wont give you indigestion.

1 tick is to close 2-3 and set your risk based upon that IE Fixed Fractional position sizing.

Be decisive buy or sell. If your right its some profit if your wrong its a cost of doing business.
Be very aware of your NETT profit if your not nett the majority of weeks your stuffing something up.
99% of the time it will be YOU stuffing up.

Have days off dont be greedy.

Have fun.


----------



## nizar (25 October 2006)

tech/a said:
			
		

> Yes it can work but trust me you'll be frazzzled.
> 
> Hint.
> Learn to use support and resistance on 1 min or Tick charts.
> ...




Thanks tech/a for all the advice and the thread.

I reckon overtrading is a a trap most traders fall into. I see nothing wrong in trading once or twice a week. If i make a loss, i wont go into revenge mode, rather take a few days off. I reckon the more pro u become, the less u trade, and the more profitable u become. 

*MichaelD* if you are around id be keen to hear your take on my above strategy and if u think it could work, same with anybody else.


----------



## Bobby (25 October 2006)

tech/a said:
			
		

> I actually trade it when it screams at me---"Idiot buy me!!!"
> 
> .



Hello Tech,
Can you answer a few questions please :

Loved the above analogy ! but can you translate it into words I can understand better .

What P.C. requirements do you recommend to run Marketcast.

If you buy a stock that rockets up , only to be suspended, and you still hold, whats the plan .

An evolution of trading is now happening, past T/A techniques seem to be   superfluous, do you agree.

Regards
Bob.


----------



## nizar (25 October 2006)

tech/a said:
			
		

> Learn with small parcels even $5k lots.
> Dont be greedy getting the meat in the sandwich wont give you indigestion.
> 
> 1 tick is to close 2-3 and set your risk based upon that IE Fixed Fractional position sizing.




yeh i reckon 5-10k parcels and 2-3 tick stops gives me a better chance. we'll see how it goes.


----------



## MichaelD (25 October 2006)

nizar said:
			
		

> *MichaelD* if you are around id be keen to hear your take on my above strategy and if u think it could work, same with anybody else.



I think you'll blow most of your capital.

Why? Your psychology will kill you, along with your lack of a complete trading plan. Entries and exits are not enough. Thinking about what you would have done trading the left side of the chart is not enough.

Your plan looks at the problem from the wrong viewpoint. Your plan says "find a stock going ballistic by doing X and hop on with a tight stop. Make much money. Easy."

TOTALLY WRONG.

What you SHOULD be asking is more along the lines of - if I find 30-50 entries by doing X and I trade them according to my plan, what ACTUALLY is the outcome - how much do I make/lose. How many will instantly reverse when you enter? How much slippage will you incur getting in and out? How often will a black swan event occur? How many winners will I have? How many losers will I have? What's my win/loss ratio? How will I prepare for trading psychologically in this way? What psychological blocks will I encounter which will prevent me from carrying out my plan? What happens if I have 2 losers in a row? 4 losers in a row? 8 losers in a row?

Until you've done it with real money, you have not the slightest idea of how psychologically taxing this sort of trading can be. The market will caress you and whisper sweet nothings into your ears - it'll be the greatest high you've ever experienced as you see your profits increase by the tick...and then the market will take your head and smash it against the floor until you're knocked unconscious and bleeding from the mouth and ears. Then it will kick you while you're down, all the while laughing at you as it goes along its merry, omnipotent way to do the same to the next trader.

Eventually you realize that the market has no emotions, and that your real enemy is within. But I digress.

90% of traders lose. Pretty much 100% of day traders blow up their accounts within a few months.

Find out the answers to these questions by thorough and proper backtesting. Then find out the answers by paper trading. Then try one or two tiny positions with money you REALLY can afford to completely lose. Then slowly scale up if you can show that the method is profitable and you can handle the psychology of trading this way. Take care of your losses and your profits will come.

Tech/A may make it look easy, but read into his posts - the battle to get to where his method is today is all laid out for us to learn from. It did not come easily. The lessons to be learned here are not in the successful trades, but in the failures and the journey.

Whilst every trader needs to find his or her niche, limited capital, inexperience and day trading are pretty much invariably a fatal combination. It is in every trader's best interest to learn to make money over a longer time frame first before looking at shorter timeframes. There's less adrenaline involved, but good trading is by its very nature boring. If it's exciting, you're doing something wrong.


----------



## tech/a (26 October 2006)

Nizar.
*I actually agree with Michael*. Without pumping my own tyres its a long journey and I doubt that many would make it.
*This isnt trading for beginners but it is where the majority of beginners begin*
There are 3 trades running at the moment that I think would be more the style Id be looking for as a beginner.
WSA BKP and DYL. I havent updated WSA or BKR for a while so I'll do them on the other thread.


----------



## CanOz (26 October 2006)

Isn't the general idea of Techs strategy more risk management than anything? If you can jump on the coat tails of a rising stock, who cares how you identify it, as long as it gets you in early, with a low risk entry and you protect your capital quickly. 

If you could pick a couple odd days a week, where say a particular sector was looking good to fly, you would limit this kind of trading to days where there was more choice and liquidity in the market, giving you sharper rises and easier exits.

I will look to play with this as i find time using small parcels as well. I'll post a score card after a couple of weeks.


----------



## nizar (26 October 2006)

MichaelD said:
			
		

> I think you'll blow most of your capital.
> 
> Why? Your psychology will kill you, along with your lack of a complete trading plan. Entries and exits are not enough. Thinking about what you would have done trading the left side of the chart is not enough.
> 
> ...





Great advice champ. Thanks


----------



## nizar (26 October 2006)

Just adding to my last post.

But see the problem with having limited capital is that u cannot set a stop loose enough that will keep you in the majority of trades. Having 1% stop if your capital is 15k, will have u stopped out about 95% of times. Thats why i was thinking of taking on more risk, but like u said that would probably wipe me out. But really - wats the probability of having 20 losses in a row?

Probably not high, but i guess it differs with every individual plan. Ill just have to papertrade for a while i think. Then i can quantify all the parameters u said, that wont do much to increase my capital, but i guess SURVIVAL is more important.


----------



## tech/a (26 October 2006)

nizar said:
			
		

> Just adding to my last post.
> 
> But see the problem with having limited capital is that u cannot set a stop loose enough that will keep you in the majority of trades. Having 1% stop if your capital is 15k, will have u stopped out about 95% of times.




No I think if you have a look at the examples used here of about 6 or so have been stopped out once. So a 2-3 tick risk is workable--I do it all the time.



> Thats why i was thinking of taking on more risk, but like u said that would probably wipe me out. But really - wats the probability of having 20 losses in a row?




You dont need 20 in a row to have a significant dent in your capital and there comes a point where you need to double your expectancy to break even or have just as amazing run of wins as you had losses.
Do you understand fixed fractional position sizing---how to caculate position sizing using this method.I can explain it if need be and this may help you get a grip on how many of what to buy.


----------



## ezyTrader (26 October 2006)

Hey tech/a,

Are you watching AUZ?


----------



## MichaelD (26 October 2006)

nizar said:
			
		

> But see the problem with having limited capital is that u cannot set a stop loose enough that will keep you in the majority of trades. Having 1% stop if your capital is 15k, will have u stopped out about 95% of times. Thats why i was thinking of taking on more risk, but like u said that would probably wipe me out.



You've answered your own question.

1. Limited capital
2. Can't use a loose enough stop

You can't change 2, so you must change 1 or find a methodology where you CAN use a loose enough stop and trade safely.



			
				nizar said:
			
		

> But really - wats the probability of having 20 losses in a row?



If you don't know the answer before you trade a wild short term ride method like the one proposed then you shouldn't be trading it with real money until you find out. You can get a good idea of this once you know your win %. Indeed, your question implies that "20 losses in a row couldn't possibly happen to me". Think again.

Really, you shouldn't be trading any method without knowing the answer to this question.



			
				nizar said:
			
		

> i guess SURVIVAL is more important.



YES!! You can't play if you lose all your money.

Better to play in the toddler's pool before swimming with the sharks.


----------



## MichaelD (26 October 2006)

tech/a said:
			
		

> *This isnt trading for beginners but it is where the majority of beginners begin*



A very salient point. Beginners look for the quick profit, the gravy train they "deserve" from the stock market. If they start in a bull market, they may well get the high of a couple of wins in a row...but then come the uncontrolled losses and the pain. Mountains of pain, and there's nowhere to hide, no one else to blame.


----------



## nizar (26 October 2006)

tech/a said:
			
		

> Do you understand fixed fractional position sizing---how to caculate position sizing using this method.I can explain it if need be and this may help you get a grip on how many of what to buy.




Can u please elaborate on this if u have some time tech.
I dont quite understand, though Michael did give an example the other day, i could do with a few more.

Thanks


----------



## tech/a (26 October 2006)

*Nizar*

*Fixed Fractional position sizing*

Lets say for the example you have a capital base of $10,000
and you wish to trade a $1 stock with the lot.
You dont wish to risk more than 5% of your capital on the trade.
So maximum risk is $500.

You like the stock and think that a 5c stop would be best.
So $500/. 05c = 10000 so you CAN buy 10000 with a 5c stop no problem.

Lets say you think its going to fly so you only have a 2c stop.
so $500/.02c = 25000 so you could maintain the same $500 risk and invest in $25000 of shares had you the capital.

OK lets say you wish to use a wider stop can you still buy 10000 shares?
So $500/.20 = 2500  obviously no you cant you must buy 2500 ONLY to maintain the same 5% risk with a 20c stop.

So same maths applies to any position you take.

$15300 5% risk how many shares can I buy of a stock trading at $1.92c with an 18c stop?

S 15300 x .05% = $765.
765/.18c = 4250 shares 4250 x $1.92 = $8160 so you can ONLY buy 4250 shares at an 18 cent risk to maintain the same 5% risk to capital.

Ill go further and talk about Reward to Risk or the R/R ratio.
If you buy and then sell the $1.92 stock for a 54 cent profit you have returned on that trade a 3:1 R/R ratio.
This is calculated by 54c (the profit)/18c (The risk) = 3 so 3 times the risk has been returned.
So if you win 2 out of 3 trades with this sort of R/R ratio then your doing well.

*Lets see if you have caught on?*

*1)* I have 25000 and wish to buy a stock trading at $1.65. I wish to risk only 2% and my stop is 6 cents.How many can I buy?

*2)* How would you be doing if you won 4 out of 10 trades with that average ratio of R/R?

Ill check back tommorow and see how you and or anyone else went.


----------



## nizar (26 October 2006)

tech/a said:
			
		

> .
> 
> *Lets see if you have caught on?*
> 
> ...




1) risk at 2% is $500.
500/0.06 = 8333. You can buy 8,333 shares ($13,749) to maintain 2% risk with a 6c stop.

2) with which average R/R?? I havent sold the stock yet! (?)
But say i sold it the next day for $1.89. Thats 1.89-1.65=0.24*8,333 = $1,999 profit. Profit is 24cps, stop was 6cps. So R/R = 4:1
If i won 4 out of 10 trades then win/loss is 40%, return/risk = 4:1.

Does that at least get me a pass ?


----------



## BSD (26 October 2006)

3/ What sort of hole gets blown in your 'portfolio' when:

   a. The Dow drops 2% overnight, the SPI is down 200 points on the open and the first bidder in your hot stock is 8% lower than your planned stop. 

   b. Your hot stock goes into a trading halt due to a placement and re-opens at a 10% discount with profitable placement stock getting slammed into the market. 

  c. Your company is being towelled and there is insufficient volume on the bid to knock out $30,000 worth let alone a decent line - you have a decent sized line and cannot unload without slamming the price to silly levels. 

In these situations, do you slam the bid with your stop or 'hang in there'?


I am not saying money management isnt important, it is very important - my point is that this sort of precision is a bit too 'perfect world'. 

This type of position sizing (and anything to do with using historical vol in position sizing) opens punters up to the risk of excessive confidence and ugly gaps. 

This is particulary the case in stocks that are not liquid, trade OS with big gaps and/or involve leverage (derivative or funded).

Imagine the feeling of 9 months of regular small gains getting whipped in a day


----------



## nizar (26 October 2006)

correct BSD, u remind me of a mate of mine. he likes property very much, i ask him why doesnt he get into share. he says too risky. i say really, he says yeh, if i buy a stock and the company goes bankcrupt it could go to zero, and i lose everything, if u buy a house, and the house burns down, at least i still have the land   

as for a) i plan never to hold stocks that i trade intraday overnite - ever. For exactly that reason.  i leave myself open and vunerable to too much overnight risk.


----------



## tech/a (26 October 2006)

BSD said:
			
		

> 3/ What sort of hole gets blown in your 'portfolio' when:
> 
> a. The Dow drops 2% overnight, the SPI is down 200 points on the open and the first bidder in your hot stock is 8% lower than your planned stop.




A sizable one,has happened and will happen again. 



> b. Your hot stock goes into a trading halt due to a placement and re-opens at a 10% discount with profitable placement stock getting slammed into the market.




Same again. 



> c. Your company is being towelled and there is insufficient volume on the bid to knock out $30,000 worth let alone a decent line - you have a decent sized line and cannot unload without slamming the price to silly levels.




That never happens --well to me atleast Ive never traded thin stocks In 12 yrs never had a problem. 



> In these situations, do you slam the bid with your stop or 'hang in there'?




A,B Im out.
C Im stupid.




> I am not saying money management isnt important, it is very important - my point is that this sort of precision is a bit too 'perfect world'.



Fortunately the "Perfect" world tends to dawn over 98% of the time. While the events do occure and worse (delisting) they arent a norm.I would rather have them in place that not at all.



> This type of position sizing (and anything to do with using historical vol in position sizing) opens punters up to the risk of excessive confidence and ugly gaps.




Where did or are you getting that I/we are using historical volume? Volume one can purchase is being calculated from risk Ive not mentioned the volume of the stock being traded.Its not required for the calculation.
trading anything with less than $500K traded in a day in smalls is crazy. 



> This is particulary the case in stocks that are not liquid, trade OS with big gaps and/or involve leverage (derivative or funded).




the style introduced here is based around hopping on momentum.
I doubt that any of those in the examples could e classified as illiquid.



> Imagine the feeling of 9 months of regular small gains getting whipped in a day




Man that would be ugly I would have to lose in one day my entire initial capital base all stocks would have to drop at least 50%.

I wouldnt be the only one having a bad day if that were the case.
Id have plenty of drinking buddies.

*NIZAR*

*(1) Listen carefully.*

(2) Learn to trade LONGTERM before you even attempt SHORT TERM you are on the road to ruin---*short term is NOT for you.*
Im being VERY serious.

(3) If you do not understand (3) please re read (2).

Your calcs are fine.


----------



## wayneL (26 October 2006)

BSD said:
			
		

> 3/ What sort of hole gets blown in your 'portfolio' when:
> 
> a. The Dow drops 2% overnight, the SPI is down 200 points on the open and the first bidder in your hot stock is 8% lower than your planned stop.
> 
> ...




None of these issues are exempted by other investing/trading techniques. Therefore, this is a moot point.


----------



## barney (26 October 2006)

Good thread here guys (Good advice as always Tech) Keep those questions firing Nizar ............... Cheers Barney.


----------



## MichaelD (26 October 2006)

BSD said:
			
		

> c. Your company is being towelled and there is insufficient volume on the bid to knock out $30,000 worth let alone a decent line - you have a decent sized line and cannot unload without slamming the price to silly levels.



Funnily enough, I had this exact situation very recently with one of my long term positions which had punched through its stop loss (it's in the ASX300). Clearly everyone was in this for the very substantial dividend, and come EX dividend time, it was "last one out shut the door and turn out the lights".

Since I use a very wide stop, *I* was probably the last one out, and with 8,000 to unload I had an interesting dilemma.

With the Buy/Sell spread at 4.50 / 4.65 or so and basically no trading going on, dumping at market would have taken out buyers all the way down to 4.41, so I parked a limit order at 4.64 and watched to see what would happen.

I was lucky enough to have a few nibbles at 4.64 before a small seller hopped in underneath my bid, so I popped underneath this to 4.62. They then dropped to 4.61 and I decided to wait - 'twas only one person with a very small parcel and there was clearly no wild rush out the door going on.

Anyhow, the plan was to leave the offer at 4.62 unless more sellers appeared under my offer, or dump at market if no one else nibbled by about 3pm. Fortunately, the rest got bought up at 4.62 by about midday. Come 3pm the stock tanked again.

'twas nice to be on the right side of the slippage bogeyman for once. (But of course this anecdote has no statistical significance whatsoever, even though it was a fun psychological game.)


----------



## nizar (27 October 2006)

tech/a said:
			
		

> (2) Learn to trade LONGTERM before you even attempt SHORT TERM you are on the road to ruin---*short term is NOT for you.*
> Im being VERY serious.




remind me, why am i all of a sudden on the road to ruin??

uv cut me deep tech, uv cut me deep, LOL

what made u come (jump?) to this conclusion all of a sudden??

i think im gonna paper trade for a while. My stats will let me know in what sort of "ruin" i will be on the road to.

cheers for your help though tech


----------



## MichaelD (27 October 2006)

nizar said:
			
		

> remind me, why am i all of a sudden on the road to ruin??
> 
> i think im gonna paper trade for a while. My stats will let me know in what sort of "ruin" i will be on the road to.



Oh, dear. Just promise Tech/A and I ONE thing; DO NOT TRADE WITH MONEY YOU CANNOT AFFORD TO LOSE.

You're about to learn market psychology the hard way. Good luck (sincerely).


----------



## nizar (27 October 2006)

MichaelD said:
			
		

> Oh, dear. Just promise Tech/A and I ONE thing; DO NOT TRADE WITH MONEY YOU CANNOT AFFORD TO LOSE.
> 
> You're about to learn market psychology the hard way. Good luck (sincerely).




Sorry if i hit the wrong buttons somewhere peoples, a minute ago u were very helpful but now all of a sudden not...

But thats cool....

Good luck to you as well, though i can see you wont need it, your a champion and will destroy the markets Michael, tech u already have, and i sincerely mean that. Id rather not talk down people, especially when i do not know their potential.

Let me tell u both something, i will not just go out there and throw everything on a trade, risking more than i can afford to lose. NO

And EVEN IF I DO, it would not matter. Everything i have amassed now in money, if i lose it, who cares, it will only be about a half a years salary in a few years time. My best earning years are ahead of me and this is the time when i can take on the most risk. But of course i dont plan to. So i will paper trade, bit by bit, review every month, maybe for at least 3-6 months minimum, and tweak my strategy until i think iv got it about right. And then tip my foot in the water. If it takes a year than so be it, 2 years who cares, but i'll find a strategy that suits me and i will make it to the very top.

Let me tell u a thing or 2 about statistics, i THRIVE on them. 95% of traders fail?? Even if its 99.99% i believe i can make it into that 0.01%. Damn it wasnt easy for me to get into my course, its about the top 3% of applicants who get in. Did i think oh my god 97% miss out? NO, rather i said EVEN IF THERE IS ONE PLACE AVAILABLE, it will be for me. Will i need to invest time to succeed in trading? YES. But guess what - im 22 years old - I'VE GOT NOTHING BUT TIME.

And therein lies the edge.

Doubt me at your peril, good luck on your endeavours and we just mite meet again someday.


----------



## tech/a (27 October 2006)

> Sorry if i hit the wrong buttons somewhere peoples, a minute ago u were very helpful but now all of a sudden not...




Strange I still see the tone EXTREMELY helpful.
To why.
You simply dont have the experience to trade short term.This is evident in your answers to BSD.Nor do you have at this point the mindset.

I initially lost around $30-40k trading short term,at 22 you are Time Rich asset poor.
So use it to your advantage its hard enough to get and easy to lose.

Still helpful we are ---like a good trade you just have to be able to recognise it!


----------



## Porper (27 October 2006)

nizar said:
			
		

> Sorry if i hit the wrong buttons somewhere peoples, a minute ago u were very helpful but now all of a sudden not...
> 
> 
> Doubt me at your peril, good luck on your endeavours and we just mite meet again someday.




Nizar, I don't think Michael D or Tech A are suddenly not being helpful, they are telling you in strong terms to be careful, and not to short term trade before getting your feet wet.

I have been through the cycle of being fairly successful trading a weekly, monthly time frame and thought I would make more by using similar techniques in a shorter time frame.After all with the same money management skills, risk/reward, tight stops etc it must be easy, right ?

WRONG.It is a quick way to lose a lot of money.The most difficult thing is the psychological effect day trading can have on you.If this gets the better of you, and it will to some degree, then it is goodnight Vienna.

Maybe we all need to go through the big lows to really understand, you certainly learn best when losing money.So if you are determined to give it a go, start with a very small capital base because I can guarantee at first it will not go to plan.


----------



## BSD (27 October 2006)

tech/a said:
			
		

> A,B Im out.
> C Im stupid.
> 
> *Fortunately the "Perfect" world tends to dawn over 98% of the time. While the events do occure and worse (delisting) they arent a norm.I would rather have them in place that not at all.*
> ...




Wayne, I don't think my examples create moot points, they should identify to people the possibilities of massive losses if you get too aggressive in staking size. My belief is that these methods have people getting too big in their trades and getting terrible prices on exit from having no discretion. 

Someone willing to lose $2,000 of their $100,000 bank on a trade using a 4% stop they could feasibily put 50% of their capital into the one trade. 

They may gear up and have $300,000 to play with across 6 similar situations - but only $100,000 is actually theirs. 

I was interested to see that the discipline requires the seller to hit the bid and trundle the stock lower to 'protect' capital. 

In my ungeared example above, an 10% break down loses the punter 5% of his entire stake and a 15% slip loses 7.5%.

Leverage could make it a lot worse. Losing 5% of the bank's stake means losing 10% of yours.

*
If these events happen only 2% on the time (50-1), assuming 250 trading days, one of these events happen five times a year. * 

The situations I highlight are real and not doomsday stuff.

My point is that they are rare occurances, but the magnitude of the potential losses are significant enough to be very wary and maybe even, to apply some discretion from time-to-time in exiting under these scenarios. 

I mentioned historical vol because some use this in calculating their stake size based on the potential for the daily vol to lose them their accepted loss. 


Much comment on this thread surrounds highly volatile stocks or at least stocks going through an extreme event on the upside. I am commenting on the potential effects of being excessively aggressive in position sizing with extreme downwards breaks in mind. 

From page one - AUZ, ITE, CSM, MBP...

Finally, liquidity can be very fleeting. $1bn stocks can often dry up and on days like those 2% days, trying sell a decent line of stock can take a very long time. $500m traded can turn quickly to $50K traded on a bad day. 

I remember having an order to work in MBP that took 2 weeks to unload. If we were pulling the trigger on that one 'at market' on a bad day - there wouldnt have been sufficient bids to fill half the line at any price. 


I havent mentioned losing your entire bank in any of these scenarios - just wiping out your 15% profit from the last 6 months on one bad day because a trader:

a. Is too aggressive - basing their staking on the 98% scenario and not the 2%
b. Exercising no discretion
c. Is using an assumption of liquidity
d. May be using a strategy not suited to their actual parcel size
e. Investing in stocks that are sub-quality and full of day traders with the same idea
f. Are not diversified anywhere near enough

Not being critical; hopefully adding another perspective and helping people protect their capital


----------



## wayneL (27 October 2006)

BSD said:
			
		

> Wayne, I don't think my examples create moot points, they should identify to people the possibilities of massive losses if you get too aggressive in staking size. My belief is that these methods have people getting too big in their trades and getting terrible prices on exit from having no discretion.
> 
> Someone willing to lose $2,000 of their $100,000 bank on a trade using a 4% stop they could feasibily put 50% of their capital into the one trade.
> 
> ...



Gotcha'

Agree


----------



## MichaelD (27 October 2006)

BSD said:
			
		

> Someone willing to lose $2,000 of their $100,000 bank on a trade using a 4% stop they could feasibily put 50% of their capital into the one trade.



Any trader who puts 50% of their capital into one trade is assured of blowing up eventually courtesy of the rare but inevitable outlier black swan event. For this reason, an essential part of robust position sizing is setting a limit for any one given position, so that even if your basic money management calculation says put 50% of your capital on one trade, you downsize this to less. Personally, I won't put more than 15% of my capital into any one trade. Some would go as high as 25%.

A corollary of this is that using wide stops pretty much mandates small risk % position sizes.


----------



## Porper (27 October 2006)

MichaelD said:
			
		

> Any trader who puts 50% of their capital into one trade is assured of blowing up eventually courtesy of the rare but inevitable outlier black swan event. For this reason, an essential part of robust position sizing is setting a limit for any one given position, so that even if your basic money management calculation says put 50% of your capital on one trade, you downsize this to less. Personally, I won't put more than 15% of my capital into any one trade. Some would go as high as 25%.
> 
> A corollary of this is that using wide stops pretty much mandates small risk % position sizes.




Trading with a normal share trading account, I agree, eventually you will get caught out.Especially if you are having a good winning run, it is tempting to put up your normal 2%  to say 5% risk, and as we all know your biggest loser is sure to follow your biggest winner.

However now with guaranteed stops with CFD'S, you can have a big play with a volatile stock.Some of the stocks IG offer have pitiful volume at times and have wild swings.


----------



## MichaelD (27 October 2006)

nizar said:
			
		

> Good luck to you as well, though i can see you wont need it, your a champion and will destroy the markets Michael, tech u already have, and i sincerely mean that.



"Everyone gets what they want from the markets" - Ed Seykota.

I do not want to "destroy the markets", and nor can I. Neither does Tech/A. The market is bigger than all of us and does not care a whit for us. Also, the psychology implicit in your statement is wrong - the market to be "destroyed" is within ourselves.

The road you have chosen is the hardest to traverse of all in learning to trade the markets. The market will continually surprise you and continually do things you never anticipated and it will do them for longer than you ever thought possible. You have more chance of survival if you learn these things over a period of weeks/months rather than minutes.


----------



## tech/a (27 October 2006)

Its all part of the Money Management equation.

The example given was/is on a singular trade basis.
I and Im sure all reading see where BSD is coming from and as such would agree that placing everything in a single trade particularly on small caps carries inherent risk.

However the 2% I refer to is general market no individual trades.
Youd be amazingly unlucky to have 5 go belly up in a year that your trading.

Having said that those with small capital bases have the dilema of under capitalisation and at times will need to place themselves at more risk (in general terms) than those who can spread the risk.

Would I take that risk.
If in their position AT TIMES yes I would.
The risk is in my veiw that small that the potential reward out weighs that risk. However the trade and its risk would be quantified and if trading short term you maybe exposed to it in any singular trade for a day or matter of days.
As your base became larger then you should then mitigate risk even further.

Unfortunately the new trader with a smaller capital base has few options.
Minimise YES eliminate---not possible.


----------



## barney (28 October 2006)

MichaelD said:
			
		

> Any trader who puts 50% of their capital into one trade is assured of blowing up eventually courtesy of the rare but inevitable outlier black swan event. For this reason, an essential part of robust position sizing is setting a limit for any one given position, so that even if your basic money management calculation says put 50% of your capital on one trade, you downsize this to less. Personally, I won't put more than 15% of my capital into any one trade. Some would go as high as 25%.
> 
> A corollary of this is that using wide stops pretty much mandates small risk % position sizes.





110% correct Michael .......... I am living proof of what you say, but in the words of a famous individual .......... "I'll be back"   (I hope


----------



## MichaelD (28 October 2006)

Porper said:
			
		

> However now with guaranteed stops with CFD'S, you can have a big play with a volatile stock.Some of the stocks IG offer have pitiful volume at times and have wild swings.



Please tell us more. I have not thoroughly researched the use of CFDs with a GSLO yet, and my question would be;

What is the outcome if you compare a sequence of 30-50 trades in volatile stocks using a positive expectancy system WITH a GSLO versus WITHOUT.

I have a niggling suspicion that despite the black swan and slippage protection, the overall bites at your account of the GSLO costs will outweigh the benefits - after all, why would a CFD provider give US something? Despite this cynical belief, however, I would be happy to be proved wrong.


----------



## Porper (28 October 2006)

MichaelD said:
			
		

> Please tell us more. I have not thoroughly researched the use of CFDs with a GSLO yet, and my question would be;
> 
> What is the outcome if you compare a sequence of 30-50 trades in volatile stocks using a positive expectancy system WITH a GSLO versus WITHOUT.
> 
> I have a niggling suspicion that despite the black swan and slippage protection, the overall bites at your account of the GSLO costs will outweigh the benefits - after all, why would a CFD provider give US something? Despite this cynical belief, however, I would be happy to be proved wrong.




Ok, I can only speak with any knowledge on IG Markets.

They provide a GSL on most stocks ( ASX top 300) for around 0.3% of the value of the transaction.

The closest you can put a stop is within 5% of entry.

As for the question of expectancy, I don't have the software to back test (I suppose you could manually go through 70 stocks individually and compare) so I can only gauge expectancy on a win/loss ratio, win percentage basis, obviously no good for testing this.

As you say probably wouldn't give a higher expectancy than trading a normal account apart from saving you in a crash type scenario.

As you know all CFD providers are here to help us, so maybe this is why they offer GSL'S.


----------



## Kauri (28 October 2006)

For the trader with a small capital base I guess the GSLO could be looked at in a similar light to insuring your house against fire, what percentage of people actually have their house burn down???.. but if it does and you are not insured... likewise if the under capped trader is loaded up in one position with no GSLO and "_the black swan_ " touches down...    The CFD provider, like the insurance Co. no doubt has the numbers weighed in their favour, but I personally don't mind paying the .3-.7 or 1% premium for the peace of mind. It, along with commission, is factored into my trading setup.
    Also, a little dangerous maybe, but with a GSLO set at the minimum of 5% the under capped trader can either take a larger position or take more positions as the margin is reduced to the GSLO amount of 5%..  from the typical 10-15% required on the average GSLO stock.


----------



## tech/a (11 November 2006)

Discussion here thanks.


----------



## Freeballinginawetsuit (13 November 2006)

Hmmm, I probably accumalated yours T/A. I also had my stop at 19c, am I right off the mark as I seem to be totally different to your strategy on this one.


----------



## tech/a (13 November 2006)

*Free*

Just a matter of approaching this trade a little differently.
I maybe trading larger parcels have a lower tolerence to risk.
I may also be wrong in my methodology on this trade.

I'll do a commentry later when more time.


----------



## nizar (14 November 2006)

tech are you out at AIM yet?
or holding until 2mrw?
(i noticed you picked up some more at 24c)


----------



## tech/a (14 November 2006)

No Still in there no reson to sell yet.

Ill update my thoughts from a technical veiw tonight.


----------



## nizar (14 November 2006)

tech/a said:
			
		

> No Still in there no reson to sell yet.
> 
> Ill update my thoughts from a technical veiw tonight.




Ok i look forward to tonight.
i would especially like to know if your stop is now trailing. i expect it would be.


----------



## moses (14 November 2006)

tech/a said:
			
		

> No Still in there no reson to sell yet.
> 
> Ill update my thoughts from a technical veiw tonight.



Terrific. And I owe thanks to you having bought and sold AIM today on the strength of your charts and remarks. I sold to lock in because I was concerned about a speeding ticket, but will buy in again if it makes sense. Thanks again.


----------



## Freeballinginawetsuit (14 November 2006)

tech/a said:
			
		

> No Still in there no reson to sell yet.
> 
> Ill update my thoughts from a technical veiw tonight.





Really?, and what was yesterday's reason to sell T/A, still waiting for that one.


----------



## tech/a (14 November 2006)

Freeballinginawetsuit said:
			
		

> Really?, and what was yesterday's reason to sell T/A, still waiting for that one.




I posted the full reason last night here 
https://www.aussiestockforums.com/forums/showthread.php?t=4650&page=3
Post 57 or 58 I think.

I sold 50% as mitigation of risk.
Read the post and you'll see why.

I have discussed the change in sentiment shown on the shorter timeframe charts and the reason why I bought back in. Actually I bought a little more than the 50% I off loaded.

For those following Ill post up the charts when I get my EOD download.

They will be EOD,15 min and tick.

*No need to get snakey * you'll have plenty of time to laugh your head off when I get it wrong.

I only started posting how I trade short term as some seemed interested.
My apologies if my style irritates you. I have no interest in fundamentals and dont look for a fundamental reason for price action.

I simply trade it.


----------



## Freeballinginawetsuit (14 November 2006)

Not being Snakey T/A, just couldn't see a reason why you would sell at 21.5c, that seemed the resistance buy price.

Really appreciate that you followed AIM, SMY and CSM with your discretionary trading thread, it correlated nicely with the posts of the said stocks on the threads.
Its a bonus for any holder to follow your info on a stock their holding.


----------



## tech/a (14 November 2006)

*Firstly the tick chart.*

As can be seen solid buying started at just after 2 pm.
You can also see some daytraders un loading just before close.(Last 2 read bars). Most recient buyers are in around 21-23c with a heap at 23 upto 28c.

This current build up isnt showing any signs of off loading *yet.*

*The second chart the 15 min chart * 

Shows clearly the strength of the current breakout with no sign of weakness.

*The last chart is the EOD chart*

From experience selling pressure arrives when a stock moves 50% plus in a few days.This has moved just on 50% since the breakout at 20c high.

Im expecting around 32.0c before selling pressure.(20c x 1.618)
If it looks like gaping to there then Ill set my sell order at open.

If it doesnt gap to there then I will be watching any trading below the opening price for weakness then a sell.

If it trades to or through 32.0 then I will be watching volume on the short term charts along with consolidation and accumulation areas.

If there is a large fall on the SPI tonight then there could be an inside day.
High chance this will spike open then sell off.
Id expect this to pull back to 24.5-26c area as can be seen on 15 min and tick chart.

My opinion only not trading advice.


----------



## ezyTrader (15 November 2006)

Oops, the chart didn't upload earlier ... 15-min chart.


----------



## nizar (15 November 2006)

AUZ looks a goer.
2 down days on friday and monday on low volumes.
Tuesday up on significantly larger volume.
Today up of double tuesdays volumes.
Market depth building.
2morw will be interesting.


----------



## ezyTrader (15 November 2006)

Sorry, something went funny earlier. Meant to post the following before the chart.

Hello tech/a,

I'm interested in your analysis of the AUZ trade as it stands. The buying seemed to have dried up a bit in the latter half session, or rather a selling/profit taking session taking place. But to have 54M shares turnover today is still significant, I agree with Nizar there's more upside tomorrow.


----------



## tech/a (16 November 2006)

Ill post it up soon when in the office---where the live charting package is.


----------



## tech/a (16 November 2006)

The first cahrt below shows the initial interest I have.
This was on a watchlist and the gap open triggered an alert. I and im sure a few others see this as a possible start to the 3rd leg of a larger move.

These sort of entries often take some time to get underway due to selling pressure.Those who dont have the confidence to hold from the last move are the ones we are buying---plus a few day traders--scalping---you see them normally in down volume on minute charts near to close.


The second chart which is an hourly chart of yesterday shows the battle.
Buyers did win the day but not convincingly. This is a good sign however as high volume means that those who do want to sell will be taken up quicker.
Light volume means the process will be protracted.
Often high volume and little movement gives rise to explosive moves as new buyers take out old and build a solid base.
On the plus side the longer and more protracted the base generally the more explosive the breakout move when sellers dry up and buyers scramble to get in.
Massive volume and quick rises tend to be very short lived.
Today will show much.


----------



## nizar (16 November 2006)

tech/a said:
			
		

> The first cahrt below shows the initial interest I have.
> This was on a watchlist and the gap open triggered an alert. I and im sure a few others see this as a possible start to the 3rd leg of a larger move.
> 
> These sort of entries often take some time to get underway due to selling pressure.Those who dont have the confidence to hold from the last move are the ones we are buying---plus a few day traders--scalping---you see them normally in down volume on minute charts near to close.
> ...




tech,
Wat do you make of the action so far?
I reckon it has to close above 8.5 today, or else it will trade sideways for a bit before the up leg. If we have a bit of volume (arvo run) and a close nearer to 9cents, then tomorrow could be special.
Alot of selling happening at the moment.


----------



## tech/a (16 November 2006)

The whole markets being hit.

If it fell to my buy then I would get out and let it settle.
In the meantime those that took big positions and Ive seen a few of them originally taken and now sold off. Id do the same near my buy price.

No decisions on the stock till then. If at all.


----------



## vert (16 November 2006)

have you noticed the large orders go through, 990000 & 1000000 @0.084. they are marked as crosstrades, would they have been buy orders?

go easy if this is obvious, im rather new at this.


----------



## tech/a (16 November 2006)

These are broker arranged.

One broker has a buyer and the other a seller.

The price is agreed and then the transaction takes place.

As they are above the market rate at the time I see them as buying confidence.

The seller however is happy to get out at a tad above market.
Cross trades are often at market.


----------



## vert (16 November 2006)

thanks tech/a, thats what i was hoping some buying confidence. sitting tight to the end


----------



## tech/a (16 November 2006)

> sitting tight to the end




"The End" where might that be?


----------



## nizar (16 November 2006)

LOL! zero cents or 20cents i guess whichever one comes first!


----------



## nizar (23 November 2006)

tech if you got time id be keen to hear your thoughts on a few breakouts iv been watching:

SLA
MLS
SIM
WMT

thanks.


----------



## tech/a (24 November 2006)

WMT Im trading bought yesterday. Strong new buying.

SLA needs to settle too volatile wait for consolidation.
MLS needs to hold above .042. 

SIM A bit far away from the ideal entry Id wait for a pullback to get on as I would on MLS.
The only time I wouldnt is if Volume indicates that momentum has taken hold.

Thats not the case with these.


----------



## ezyTrader (24 November 2006)

hi tech/a,
HYO has a strong climb albeit in relative lesser volume (Noticed you had that in your watchlist - from another thread). 
What would your thoughts be on that? (I'm not trading it, just wondering what your entry point would be, if you enter) On breakout of 0.25 on 22/11, or, when volume(new buyers) is confirmed on 23/11 (yesterday)? Or, a different approach from above mentioned, eg, on rebound from retracement?  Cheers, ezy.


----------



## tech/a (24 November 2006)

*EZY*

Sorry just noticed this.

The daily chart is below.
Like all good breakouts it comes from comsolidation.
This current move is a bit old if your not in yet.
So I were going to buy now then would expect a pullback so would take a smaller position.
If it continued then consolidated then I would top up that position if it broke from new consolidation.
Or if it dropped to 23c that would be my stop.I would workout parcle sizing from this equation from the buy price at the time.

*Risk mitigation first then profit comes.*

Its not shown any great weakness on the chart at all.


----------



## tech/a (24 November 2006)

tech/a said:
			
		

> WMT Im trading bought yesterday. Strong new buying.




WMT.

I'm having a good day for a change!!
This is an outlier move,didnt expect it to go this strongly watching carefully for any sign of prolonged weakness.


----------



## ezyTrader (24 November 2006)

I understand completely the risk mitigation strategy. But what would you advise with a small trading float (~10K) for situations like this?
Brokerage costs is significant in parcel sizes of $1-2.5K, and then if the 20% /2% position sizing rule is breached. RR is a bit top-heavy on risk. 
Guess easy way out is to look for other potentials? And try to spot them earlier?


----------



## ezyTrader (24 November 2006)

> WMT. I'm having a good day for a change!!




I wouldn't be grumpy with that, either!


----------



## tech/a (24 November 2006)

ezyTrader said:
			
		

> I understand completely the risk mitigation strategy. But what would you advise with a small trading float (~10K) for situations like this?
> Brokerage costs is significant in parcel sizes of $1-2.5K, and then if the 20% /2% position sizing rule is breached. RR is a bit top-heavy on risk.
> Guess easy way out is to look for other potentials? And try to spot them earlier?




*EZY * 

This is a dilema many find themselves in. Basically what you say is correct in part.

Personally I would just buy one stock at a time.
I would be looking for low risk entries and the stock in question HYO has moved so far in the last 2 days that it is no longer a viable trade at this time.
so it goes back to the watch list.
I would only risk 2% or 3% on any one trade.
The closer you can get to a sustained move taking off the more you can buy.
There are often good moves in stocks prior to breakout which you'll have on your watchlist.
WMT I only saw just before close yesterday.

Lets have a look at one I have on my watchlist currently and see how that goes.
LEG.
You'll notice the range .085 to .083 and the odd spike below the .083.
*Thats what I dont want to see. * 

My aim is to buy at .086 if there is consistant spiking above .085 with a stop at .082.
Id place a buy on a spike over .086 at .085 giving me a 3 tick stop if taken out. This band is the sort of consolidation which either---

Soaks up sellers or dries up buyers.The longer it goes the more violent and prolonged the move either way is likely to be.
So I'll report back on this as time goes by.

*The chart is a tick chart.*---every trade.


----------



## tech/a (24 November 2006)

*WMT* thanks for the ride out at 10c


----------



## nizar (24 November 2006)

ezyTrader said:
			
		

> I understand completely the risk mitigation strategy. But what would you advise with a small trading float (~10K) for situations like this?
> Brokerage costs is significant in parcel sizes of $1-2.5K, and then if the 20% /2% position sizing rule is breached. RR is a bit top-heavy on risk.
> Guess easy way out is to look for other potentials? And try to spot them earlier?




Agree.
I find myself in a similar situation.

See the placement of the stop is crucial. A stop, if hit, is meant to indicate to you that the reason you bought is no longer there ie. the trend has changed. But if a stock has already run so hard then it can fall a significant amount, and still be in an uptrend. In such situations, the trade is almost not worth it, because to ride the trend for as long as possible, you need a wide stop, and thus you can only buy a small parcel.

Yesterday would have been an ideal entry point for this one. Note the close at the higher part of the days trading range. Wednesday, though a close on the low, was still bullish is the wider scheme of things and the chart still looks very good on the daily and uptrend still intact.


----------



## tech/a (24 November 2006)

For anyone interested in my thoughts.
First ride .059 to 10c now they are rare indeed.


----------



## tech/a (24 November 2006)

Great finish to the week,off on a 2 day getaway.

WMT set again for next week..085c
(And they say Tech Analysis is voodoo!!).


----------



## ezyTrader (24 November 2006)

> Great finish to the week,off on a 2 day getaway.




Well, have a good one, tech/a!  Cheers!


----------



## alankew (25 November 2006)

Tech from the tick chart of WMT do you expect it to pullback to the support zone before taking off again(to my untrained eye if it were a longer timeframe it would look as though it is consolidating,what do you think)


----------



## ezyTrader (27 November 2006)

Hi tech/a, 
Are you trading these - BLR, MLS, NLX?

Editted:
Plus a whole heap of others - MSC, MRX, etc.

How do you select which to enter??? :


----------



## tech/a (27 November 2006)

BLR MLS.----and PEN.


----------



## nizar (27 November 2006)

tech/a said:
			
		

> BLR MLS.----and PEN.




and OMC?
Broke above 90c into all time highs now.
Volume isnt special but its about 6x average.


----------



## tech/a (27 November 2006)

Only the three Nizar.

Cant keep a track of any more at the one time!


----------



## ezyTrader (27 November 2006)

Would be interested to understand the basis for your trade entries, esp. that there were a number of breakouts. How do you decide on which ones.

(a) Volume substantially more than previous day with HHs and HLs
(b) Identifiable blue sky and/or breakout from resistance level with not much near resistance in sight
(c) All three with a few months consolidation.

Possible entry points:
MLS: @breakout of 0.042-0.044 with support/initial SL @0.038/0.039
PEN: @breakout of 0.042-0.044 with support/initial SL @0.039/0.041
BLR: Not sure how to interpret this one. Would you be happy to discuss?

All three of course, exhibit the cup/handle formation. Well, a bit premature for BLR.
Would it be fair to say, a 5-10% gain with at least a few hundred trades is an initial start to look at these discretionary trades? Or, do you enter at open after weekend research?


----------



## nizar (27 November 2006)

ezyTrader said:
			
		

> Would be interested to understand the basis for your trade entries, esp. that there were a number of breakouts. How do you decide on which ones.
> 
> 
> (c) All three with a few months consolidation.
> ...




Ezy,

I like
(a) Volume substantially more than previous day with HHs and HLs.
(b) Breakout from resistance level into blue skies.

PEN resistance is actually more at 4.6. Hit this and failed the week before last. 4.6c is 2 year highs. 5.1c the intraday. High-6s would be 5year highs. Could be special. I would wait until it closes above 5.1. Enter maybe 5.2. Then maybe stop at 4.5 (?). If it fails at 4.6c resistance again like 2 weeks ago then it wont breakout at least not immediately.

MLS entry at 4.1c (last week) with stop at 3.7c.It couldve easily been a much longer consolidation between 3.7c and 4.1c before the breakout. But the volume today really confirmed it.


----------



## tech/a (28 November 2006)

Ezy.

MLR
I run 15 min scans of the market---actually it does it it self. I briefly look over the page of over 100 stocks and often one keeps moving to the top.
Yesterday MLR was one of these.I then check daily charts back to tick charts to spot volume build ups,I have a look at consolidation breakouts to see how long they have taken to move out,the quicker the better (1-5 min charts best for this.)
MLR had all of that.

BLR.

Same as above at the time of buying but has pulled back and is close to exit.

PEN

This is NOT a breakout trade and is another entry methodology.


----------



## Raging Bull (28 November 2006)

Hi Tech,

did you mean MLR or MLS?


----------



## tech/a (28 November 2006)

MLS.

I keep doing that called it MST on another thread.
My apologies---now where are my altzhimer pills.


----------



## ezyTrader (29 November 2006)

Hi tech/a,

Would you have any comments about your current trades as they stand at the moment?


----------



## alankew (29 November 2006)

Tech looking at AFT do you agree/think that it seems to be consolidating around these levels.I dont hold but have been looking at some of yours posts on this discretionary trading system and this is something to look out for


----------



## ezyTrader (29 November 2006)

> Would you have any comments about your current trades as they stand at the moment?




Just saw the posts in the individual threads. Don't worry. A nice churning day for MLS.


----------



## ezyTrader (29 November 2006)

> Tech looking at AFT do you agree/think that it seems to be consolidating around these levels.I dont hold but have been looking at some of yours posts on this discretionary trading system and this is something to look out for




Hi Alankew,
IMO, AFT is currently trading at below the 250 Day Moving average. Might be best to tread carefully. HTH.


----------



## tech/a (29 November 2006)

Alan.

AFT no I wouldnt be watching this one.
Trading below a 250 day EMA would not influence my decision.
Infact the best breakouts occure well below long term M/A's.
Sustained trending is normally not evident in stocks below long term averages.
Weinstiens methods are for longer term not trading outliers.(or quick breakout moves).

Ezy.

Out of MLS at .064 veiws are on that thread above.

Still in both PEN and BLR.


----------



## nizar (29 November 2006)

Tech,

What are your views on FML and INL please ?


----------



## doritos123 (2 December 2006)

tech,

curious to know what you thought of SML? based on what i've learnt here about price and volume, to me it seems like it will continue up come monday. anything i should look out for?

thanks, been learning heaps from this thread.


----------



## tech/a (2 December 2006)

A few technical views.SML


----------

