Discretionary Trading Method-----Trading Outliers

I'm going to offer this as it is one of the discretionary methods I use with excellent results.
I wish to present some charts and is purely a price action based entry and exit methodology.
Designed to pick up quick spikes,which may last a day or a week.
Exit is critical when you get one.

I'm not ready with the info yet but at the moment a classic "Shark Bar" blow off is occuring in PMH. Thought it worth mentioning for you to take a look at if interested.

I will over the weekend present the strategy.

tech/a said:

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I'm not ready with the info yet but at the moment a classic "Shark Bar" blow off is occuring in PMH. Thought it worth mentioning for you to take a look at if interested.

I will over the weekend present the strategy.

Click to expand...

Great idea Tech, for those who want to do some brushing up on the Shark Bar, this is from a TA thread started by Tech, link is to the Shark Bar post: https://www.aussiestockforums.com/forums/showpost.php?p=11955&postcount=15

Will look forward to seeing it when you are ready.

Cheers.

For those who would like to compare TA v Fundamental strategies you can follow the PMH thread, but let's keep this thread for Tech's project only: https://www.aussiestockforums.com/forums/showthread.php?p=77853#post77853

I like to trade stocks under $3 in a discretionary manner as these are the most likely to rise 100% a year.I trade them this way as I havent been able to automate the method I use and because I trade strictly price action and use only bar analysis,coupled with volume,breakouts and a custom indicator,I havent been smart enough to code it or the time.
Not only that but I also have the advantage of live data which I can also track support and resistance on a tick chart. While very helpful not an essential tool---well for best performance it is!!. Ive been doing this a while with suprisingly to me excellent profit (Suprising as I dont know to many longterm successful discretionary traders).
I'm going to present here what I do and how I do it as a help to those interested in how I think and those who may find something that may help them.
Also someone maybe able to add a trick or 2 to help us all.

I'll post plenty of charts as time goes by but will only have time spasmodically---my apologies.

"Duck shooting season" is in so let it rip.

Ok lets start with some Statistics.

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%
(3) 217 increased in price 200%

Its these which I look for and trade as often as I can (Place myself in the position to is more to the point)

At the time of taking a trade I have no idea wether a stock will increase 1% let alone 200%.
I dont often get 50% less often 100% and every now and then 200% plus.
However I do currently have a pretty high success rate---around 65%.
and a current return over the last 18 mths Ive been doing this of approx 400% in that 18 mths.---$15k to 64k less tax but brokerage included.

I trade in 15K parcels now or 25% of total capital and trade at most 4 open positions liquidity is an issue I want to get in and out easily!.
Thats all I can track at one time. Very rarely do I have 4 open positions most often 2--currently 1 SGL. (This is my discretionary portfolio ONLY).

Is there anyone here who trades live data (besides myself) with a search capability to find % risers,most trades,and Volume? plus a charting package .
Price action in tick form or 3 min is all thats required.

For those who dont I'm sure you can trade in this way without it BUT your timing wont be as good,as you wont have that instant alert.
I wont go into my use of the above tools if no one has it! I use Marketcast at $170/mth plus now I think $395 to set up. Ive had it for years.

I'm often out early (In hindsite) never stuck in a plunger I take losses very quickly and I dont care how many I take,I only allow a 2-3 tick stop.
I can do this due to live data.Unless it has momentum and its moving then Im not interested. I dont trade for the sake of trading I have specific things I look for which I will pass on as we go.

HINT#1
So Quick to take a stop.
Slower to take a buy --but if its screaming Im on at market.
Quick to exit if early momentum stalls.
Slow and very slow to take exits as a trade matures.
Quicker to take an early exit if price stagnates.

Trades can last a day to a few weeks.

To help if I have a hint Ill place it in HINT#1 etc form.
In the end I'll post some trades as examples only----you understand!!!!

The following is NOT trading advise,but a commentry on the way I trade fast moving stock and those who at times give outlier (Much above average) performance. The analysis I use and the application of it.
I am not licienced to give financial advice and past results do not guarentee future results.The only liciences I hold are a Builders and drivers licience.

Tommorow I will look at entry as I need answers to the question above.
I'll either cover both,use of live data or just EOD entry.

HINT#2
In all seriousness having live data will be very benificial often early morning enthusiasm sees fantastic profit for those in the day before and in some cases disaster for those in next days open who dont know what to look for.
Is a good live data feed worth the $$$s---you bet!

tech

Ive also started a seperate discussion thread so the commentary hopefully wont get lost if thats OK: https://www.aussiestockforums.com/forums/showthread.php?p=78825#post78825

Firstly I will present trading EOD as most will be able to associate with this form of trading. Below are 3 charts showing Ideal candidates.

Beginning with some entries.
What to lookfor.
All break from consolidation which has been in place for sometime.
All go on with it pretty well straight away.Volume is supportive of the break.

The bar first highlighted is the trigger bar and the next bar is the first buy bar.
I have a number of scans which I use infact you all may have scans which will find prospects.

How they are found will vary,I see these appear in scans which are not specifically looking for these moves. If anyone has a scan that finds these please share it.I dont have a specific scan to find them.

I will broaden the discussion as time goes by Ive just got a few minutes to get the thread going,much more to come.
Please discuss in the discussion thread.

Here is an early one to watch which I will discuss as it pans out.

Very interesting thread Tech.

I'd be interested in building scans to detect these situations. What could we use? I'd be interested in hearing your thoughts on the following ideas for making a scan...

What do we notice all of the previous charts had in common that we could build into a generic scan?

(1) Increasing volume
(2) a short term moving average would be heading upward
(3) an increasing daily range
(4) on the breakout bar and/or the retest the close is in the top half of the daily range

doctorj said:

Very interesting thread Tech.

I'd be interested in building scans to detect these situations. What could we use? I'd be interested in hearing your thoughts on the following ideas for making a scan...

What do we notice all of the previous charts had in common that we could build into a generic scan?

(1) Increasing volume
(2) a short term moving average would be heading upward
(3) an increasing daily range
(4) on the breakout bar and/or the retest the close is in the top half of the daily range

Click to expand...

I finding these types of trades difficult to find also, although I only have data every hour.I tend to find these by chance, but I have found the breakout from a long standing resistance area to be highly successful.

I also would like to see type A divergence with these set ups, you can almost see the prices about to blow up sky high

Sorry, can't help with the formula with trying to find these as I use incredible charts which has limited search criteria, however for those interested I find that searching for a gap up on 2X the 50 day moving average volume on breakout day the best at finding these set ups, we can use the slow stochastic to try and find positive divergence also,but then it seems they crop up more by chance.

The thing I like about these set ups is that you have a very tight stop, and as I seem to win less than 40% of the time anyway that helps me a great deal.

Guys please keep discussion in the separate DISCUSSION THREAD.

Wayne or RichKid can u please move those posts to that thread.

Thanks

Here are some examples of trades that have triggered and why I would NOT take them.

While it is ceratinly possible to trade them I have found that when they are more mature like these are R/R is to low purely as a sensible stop is to far away.
I would rather wait and be more selective.I will revisit these charts as time goes by to comment further.

If you really had to trade these then I would suggest using fixed fractional position sizing.If anyone needs a hand with this I can post one of the charts in the example with an example of how to calculate it.
MBP could be a good example.

This will atleast keep your risk low.

Ah.
It works.
These are 2 scans I did early in the day.I had no hope trading today so just took these snaps to highlight what I look for.
3 interested me IIN,AUZ and KZL.
I would discard KZL as it was to expensive, leaving me IIN and AUZ.
Both retraced on open as you will see.Had I traded any of these I would have looked for the open to be taken out in the near future,of these AUZ did this.
I will post tommorow the tick chart showing that.IIN failed so would not have traded.Unfortunatley business took precident over trading today and I missed AUZ---but lets follow it through anyway. Next Ill post the daily chart with comment.

The trdae could well have been an EOD trade as well if so stops would have been the high of friday originally and I would have only had a small position due to the gap open.If it didnt gap then I would have traded a small position with the stop 2-3 ticks below---Id want momentum immediately.
In both cases we would still have open positions.

Ill post more examples as they come up and will now look for an EOD example.

AH our EOD trade setup was a buy!!

CSM

We will re visit both trades tommorow and any others.

There are 4 great setups I will follow in the coming days.

APG, ETE, FXR, NEC.

Im also trading BRW was in at 47c.From the scan.

I would trade them in the same manner as the others posted here.
So it would be wait for open to settle and take trades after the open was taken out from the initial pullback.
If there is no pullback then I wont take the trade for the firt 1/2 hr and look for support to place a stop.

These are NOT recommendations to buy but prospects that will be used in a demonstration on how I would trade them.

Hi Tech, Would this chart of BSG fit the criteria, or is the volume a little inconclusive?? Cheers Barney.

HI Tech,

Thanks for another excellent contribution mate.

One question about position sizing. I understand what you have explained in regards to why and when you change your position sizes. But in your opinion should this method be applied regardless of the amount of money you are trading?

Regards Stink

No.
There becomes a point where Brokerage becomes an issue.
If trading CFD's its even worse.
If your trading a very small account say 10K and less then Id be inclined to choose only one prospect at a time and use the positioning as suggested.
Spreading yourself to thin makes it more difficult.

Number of positions and position sizing can increase as you profit.
As you can see the main aim is to survive and increase BOTH win rate and reward to risk.

OK FXR would be my choice.
Opened above the close and yesterdays high.(Chart 1 before open)
Has re tested the open at $1.525 so my stop is $1.52.
Buy is $1.54.5. (See chart 2) Note the support and resistance.
Bugga have to take $1.55

APG is the standout from the open v 30 min scan.

Ive taken shots of the scans and charts but dont have time to post now.
will go through them later win lose or draw.