Australian (ASX) Stock Market Forum

Daytrading - How to make a profit

Jump to new
CanOz said:
Wayne, aside from Pivots, what other tools do you like to use in trading commodities?

Cheers,
Click to expand...

I use different tools for different contracts. As I only look at less than 30 charts, I can do that and some contacts behave completely differently to each other.

Also it depends whether I'm trading a swing, or trying to pick up a trend. But basically what you see on my intraday charts in this and the index thread is what I use in higher time frames as well. Just different parameters. I will throw a trendline on and maybe a fib retracement just for fun.

But thats it.

Oh and the ubiquitous oscillator on the bottom as discussed.
 
Ron1n,

I have always used a stochastic..14/3/3..as in those days i had never heard of cci..and the 34 ema on price for eod charts, as i have found that to be of great use,and as some here who would know me from previous charts posted eod, i use the Andrew's pitchfork, which i find runs true to form with fib nos, never ceases to amaze me really.as it also goes into time.

My futs charts all look the same, even metatrader for fx..i like to keep them all standard

I use sierra chart and fibonacci trader..

I am not as good with ft as frank, but I manage :)

Hope this is of some help to you.

Enjoy your evening

ac

;)
 
Hi Canaussieuck
Backtesting:
Why not do some backtesting for yourself?
My current software is Bullcharts, prior to that I used Metastock - they both have a training mode - whereby you can step your charts back in time, then click forward one period at a time - pick off your trading signals as they appear at the right hand edge of the screen and keep clicking forward till you get an exit - be it a stop loss or profit
You can select charts from periods where the overall market was in different phases ie up, down, sideways
Or you can just pick any old chart and check the results which your indicator signals give. The results are there before your eyes, but if you cheat - you are only cheating yourself

I have found my entries to be approx 70% good. I do not buy a full position on initial entry, the stock has to prove itself before I buy the other half. If the stock looks good, I also pyramid some extra capital into the trade.

Why not just bring up a plot of the CCI on yoiur screen and compare it with price action - any stock.
I think you will be pleasently surprised.

ROn1n
Indicators in my toolbox
My core indicators are: RSI(fast), CCI, RO, Stochastic (very slow), MACD, ADX, Std Dev, GMMA's and volume. Most are just used for confirmation
My signals come from CCI and RSI
I primarily trade breakouts and trend continuation following an uptrend correction. I sometimes trend trade.
I trade stocks below $5 and which have a minimum daily traded value of $300,000 - thats the first scan I do each night (2mins). I then do another scan on the results of the previous scan, looking for all my possible entry
signals ((2mins)
This gives me my possible trades for to-morrow. I eyeball the charts, usually around about 20/30 to find what I think offers the best risk / reward. I'm more often right than wrong and my risk/reward ratio is pretty good.

Adriane,
Thank you for the tip, I'll try out the 20 period CCI
I've been using 14 for a l-o-n-g time. I tried a whole range of settings before I settled on 14, but its no big deal to try out the 20 period again. I always try to keep an open mind - nothing is set in concrete.

I use one of my "windows" for oscillators. I display the 14 period CCI and a 63 period Regression Oscillator on it. The Regression oscillator is based around linear regression, and I have my own rules on how I interpret their combination, based on my own observations

Indicators in general - it is always worth looking at indicator extremes (abnormal conditions)

Wayne
Indicators or price action - its our individual choice, what works for one person may not suit another - as they say "they are only tools"

Regards
Peter :)
 
Hi Adriane,
Have just overlayed a 20 CCI on a 14CCI - looks promising, it certainly filters out some "dodgy" trades, on the other hand sometimes the signal is a bit late

Hi Wayne
How do you come to the conclusion that "20 is a more suitable setting"?
I use a 45 period Stochastic on my EDO data - it gives me what I am looking for.
(Its hard to teach an old dog new tricks)

This posting takes up quite a bit of time, but its back to "work" again to-morrow.

Have a good day
Peter :confused:
 
BBand said:
Hi Wayne
How do you come to the conclusion that "20 is a more suitable setting"?
I use a 45 period Stochastic on my EDO data - it gives me what I am looking for.
(Its hard to teach an old dog new tricks)

This posting takes up quite a bit of time, but its back to "work" again to-morrow.

Have a good day
Peter :confused:
Click to expand...
20 MA (as is 50 & 200) is followed by the bigger players, and CCI is an oscillator based around a moving average.
 
a lot of u guys have mentioned RSI for buy indicator. Can you eleborate ? like RSI 2 or RSI 15.

Also what criteria must a stock satisfy for you daytraders so that it becomes a buy. What do u use for exit.

Peter and Adriane, I have learned a lot from you thanx a lot to you, and to all the other experienced traders for your input. This forum is gold mine.
 
Good morning,

This is my spi daily working chart..i always work on a daily chart..

targets and dates on the chart..

green lines are the Andrews pitchfork.

the cci is a 50 with a 14 overlay

stoch is a 14/3/3

the yellow ema on price is a 34

have a great day

ac

;)
 

Attachments

  • spita.jpg
    spita.jpg
    94.5 KB · Views: 309
Guys excuse me for going off topic,

The CCI is a really great indicator.

I never used it before i read your posts in this topic.

I have found using a 16 period on a daily chart works great in confirming a reversal after a correction with my other price analysis.

Once the price hits over sold and moves back above the -100 it lines up with my entries! Great to have found something that adds to the evidence.

Thanks for introducing this indicator to some of us that had not seen it before.

I will get a chart on later.
 
WARNING.

Use it CCI or ANY OTHER Oscillator ONLY within an established trend,as a confirmation indicator for a possible resumption of trend after a pullback.

Place it on a non trending stock and You'll see what I mean---particularly if you attempt to trade it realtime.
 
tech/a said:
WARNING.

Use it CCI or ANY OTHER Oscillator ONLY within an established trend,as a confirmation indicator for a possible resumption of trend after a pullback.

Place it on a non trending stock and You'll see what I mean---particularly if you attempt to trade it realtime.
Click to expand...


So damn true Tech,

MA's and other indicators do turn into chaos in a sideways market.
 
Hi R0n1n,
The RSI is my number 1 indicator - it is never off the screen, all other indicators are basically filters which help me decide which stock to trade from my scan candidates

The RSI is ideally suited for providing my scan criteria to locate possible trades.

I do not use it in the conventional way but rather as a derivative of Constance Brown's definition and more recently that of John Hayden

PS if you delve into the RSI theory - you know what? - these famous fibonacci ratios appear!

I will not tell you how I actually trade (thats my beliefs), you have to put in the time experimenting and find what works for you. But what I do not mind telling you is what features I have fouind useful regarding my "toolbox", how you may use them is up to you

Before using any indicator, you should at least have an idea of how it works - then the signals you get will have more meaning.

There will always be sceptics who dismiss a theory/concept because it does not fit in with their beliefs, but if you have an open mind and at least check it out - you never know what you may find useful

When it comes to selecting trading stocks - if they meet your beliefs, then thats what will most likely "work for you" and you should have no problems trading the results

The RSI
The RSI is the ratio of the total daily changes in price in up moves, to the total daily changes in price in down moves, over the selected period
ie it measures the internal strength of a security

RSI=100-[100/1+(U/D)]
Where U=average upward price change over the selected period
D=average downward price change over the selected period

If U and D were equal, then RSI would be 50
If U was greater than D (up move), then RSI would be hIgher than 50
If D was greater than U (down move), then RSI would be less than 50

The RSI can be used to define the state of price action, ie uptrend, consolidation or downtrend

RSI attributes
Very good at defining support and resistance levels*****
Dow theory can be applied to the RSI
Trend lines can be drawn on the RSI
RSI /price divergence

To help you understand the following - it may be of help if you bring up the RSI on your monitor, in a window above the price chart
Set the RSI period to 7
Draw in green dotted lines at the 40 - 80 levels
Draw in red dotted lines at the levels of 60 and 20
Draw in a faint black dotted line at the 50 level
(I would have done this for you but I do not know how to post a chart)

Significant RSI levels
Consolidation(sideways price movement)
RSI 40-60
when the RSI trace is contained within the 40-60 levels, this tends to indicate sideways consolidation. Some indicators do not work in non trending situations, so these levels may be of interest to some traders
RSI 50-60
If the trace is contained within the 50-60 level, this indicates that the probable move following will be up
RSI 40-50
If the trace is contained within the 50-40 level, this indicates that the probable move following will be down

UPTREND
RSI 40+
An existing uptrend can be considered to be still in place as long as the RSI does not fall below 40
A fall below 40 would signal a trend reversal
RSI 40-80
An uptrend exists when the RSI trace is contained within the 40-80 levels
RSI 60-80
When the RSI trades above 60 the price is trending up
RSI 40-60
When the RSI trades in this range - price is trading sideways
RSI 40
If the trace falls below 40, this signals the expected price movement will be down, and thus indicates the start of a down move. This is confirmed when the subsequent trace is contained within the 60-20 levels
RSI 60
If the trace passes up thro 60, this signals the expected price movement will be up, and thus indicates the start of an up move. This is confirmed when the subsequent trace is contained within the 80-40 levels
RSI 80+
When the RSI trades over 80 and trending up, the recent price action up days moves far exceed price down moves, this is an abnormal condition that cannot last too long
This relates to fast explosive moves
When the RSI falls back below 80 - this is a good indication that the max price has been achieved and indicates a good time to exit the trade

Down trend
Follows the same principles as above and I am sure that you can work them out for yourself

I only trade long, but it would be
no big deal to figure out how to trade short

If you want to trade from the RSI on its own then possible buy signals are:
RSI levels rising up thro 40, 60 and 80
Sell signals : RSI levels falling thro 60
RSI 40 levels are usually associated with the comencement of an uptrend following a retracement of an uptrend.
RSI 60 and 80 are associated with uptrends from congestion

Thats it - easy and simple

All our analysis is doing is hopefully increase the probability of our entry being good - the exit is more important!!

Anyway, I hope the above rambling will be of use to you

Keep your position size and RISK small while you are trying out something new

The above works for me - it may not work for you

Posting does not come naturally to me, I hope you can make some sense of the above and that it is something you can make use of

Posting is very time consuming for me - this is my last attempt. I'll leave the good stuff for the more experienced and talented posters

I hope your trading proves to be successful
Have a good day
Peter :)
 
might be of interest for some,

some notes from a trader a long time ago regarding RSI...

Learn your tools, but don't ignore the laws a physics enroute. There is enormous difference between looking at an adulterated (ie 14 period RSI) and using the raw 28 period cycle. You have the luxury of measuring "angular velocity" vs "angular acceleration" from anywhere on the indicator ..

use the 28 period for better results with a 14 and 55
moving average over it for reference. The RSI was originally
constructed around the biggest oscillation cycle that affects the
earth, that being the moon and its 28 period cycle..

have a great day
ac

;)
 
tech/a said:
WARNING.

Use it CCI or ANY OTHER Oscillator ONLY within an established trend,as a confirmation indicator for a possible resumption of trend after a pullback.

Place it on a non trending stock and You'll see what I mean---particularly if you attempt to trade it realtime.
Click to expand...

Hi Tech,

Did you mean to say that oscillators should be used in a trading range ?? In a strongly trending period, these oscillators take you out of the trade too quickly. Therefore systems like TT should be used for strongly trending markets as they have the ability to capture the bulk of the uptrend. Appreciate your clarification.
 
ok.. based on the info from a lot of u I created my chart. What do you think ? My reading is that it got some steam in it, but not for long.

Your comments please.
edit : the chart parameters are not clear so I'll explain them
the First one is price with EMA15 (red) and MA 15(blue)
CCI 14
volume
RSI 15
SMI 14,3,3
 

Attachments

  • Chart of BPO1.jpg
    Chart of BPO1.jpg
    119.5 KB · Views: 248
Hi R0n1n,
I think we are cluttering up this thread - it really is for day trading - I was responsible for the deviation due to a remark I made - I did not think it would lead to this

Sorry Wayne

Anyway, just to complete this EOD stuff and my involvement, I'll answer your question

By the way I use RSI 7 it makes the signal more responsive but not too noisy.

Before you enter a trade you should have a management plan, including the condition (s) under which you will exit. When these conditions exist - you exit!!

"Does the move have some steam left" - depends on your risk level and what time frame you are using, and if you intend exiting on the first available exit signal

My interpretation of this trade would be classified as a breakout from congestion - these trades are great because you can set really tight stops

The 1st confirmed entry is 2nd April - when RSI passed up thro 60 and CCI crossed zero and my other indicators confirmed it.
The 2nd confirmed entry (conservative) was on the 10th April when RSI passed up thro 60 and CCI passed up thro 100+
(PS I never act on a single signal)
Entry signal must correspond to a break above a resistance

Exit
Ist exit signal was to-day - when RSI fell below 60 and CCI fell below 100+
Would I have taken this signal? Probably not, this retracement has been on low volume - probably just profit taking, and my other indicators back this up eg the ADX14 has not turned down

If you look at the big picture - this trade could have good potential

According to the monthly chart - this move is just beginning, and the weekly backs it up

But who knows!!

Thats it - just my interpretation, definately not a buy signal!!!

Over and out
Peter :)
 
thanx Peter, I didnt mean to hijack this thread, but couldnt resist asking since soo many experienced traders are on this thread.

Your comments have cleared a big cloud. I am actually going to save that jpg with ur comments at the bottom. lol.. for reference.

BTW .. I traded my first cfd today.. was PDN .. made a decent amount. had bought at 9.45 sold at 10.2 . I know I just made about 6% but baby steps for now till I get my confidence through experience.
 
some lower targets for the er 2


have a great weekend

ac

;)
 

Attachments

  • er2b.jpg
    er2b.jpg
    87.4 KB · Views: 169
Top