What signals do you use to trade?

togs · 29 April 2009

Hi all,

I'm pretty much a trading greenhorn, been plugging away at it for about six months, not doing too badly -- most days I'm in front! My issue is that I can only attribute this to 90% blind luck and 10% to ASF; not a good statistic.

Anyway, in about two years I would like to trade full-time.

I know:

why I want to trade -- as a stepping stone in an overall 'passive income' strategy
how I want to trade -- systematic/mechanical technical analysis, most probably in a custom developed piece of software, but always with a human pushing the Buy/Sell buttons.

Where I am falling down is what! Generally, let's say my weapon of choice will be Australian shares.

A few people on ASF have mentioned that they trade based on signals that their system gives them; often the only thing they know about the company is the stock symbol. What are some of the signals that people are using to indicate that of the thousands of stocks available, these ones over here are worth digging into?

Thanks for your time!
togs

saiter · 30 April 2009

Re: What signals you to trade?

A trend following system that buys/shorts after 2 days of successively higher closes with increasing volume, with trailing stops being used as an exit.

I'm currently trying to see how I go if I buy off of supports/flags & penants with tight stops.

I'm still using a simulator though, not trading with real money.

Boggo · 30 April 2009

Re: What signals you to trade?

togs said:
A few people on ASF have mentioned that they trade based on signals that their system gives them; often the only thing they know about the company is the stock symbol. What are some of the signals that people are using to indicate that of the thousands of stocks available, these ones over here are worth digging into?

Thanks for your time!
togs

For me the "system" simply identifies stock that may be buy candidates, in other words I use a system to scan all 1800+ stocks in the hope of finding maybe a dozen stocks to "eyeball".

Initially all that I use indicators for is to find a potential pattern as Saiter has mentioned.
Below are two charts of IGO, the first chart are indicators that I have modified so that they all cross either together or within days of one another. A crossing of short term resistance etc may also create a heads up.
There are other conditions applied to the scan to eliminate erratic false signals.
The position of the indicators when they cross is also a factor, boxed area on first chart of IGO around mid March as an example.

The second chart green arrows are the result and the stock would appear as a potential candidate when one of those is generated.
The onus is then on me to "eyeball" the chart and either scrub it, watchlist it or act on it on the open.
How many, entry, stop and targets etc are some of the next stage of factors to consider.

Basically it is the pattern as Saiter has mentioned that is the winner, use the indicators as tools of trade, find a way of finding the patterns that work for you.

That's my worth, I am sure there are many who may disagree with my method, just find what works for you.

(click to enlarge)

togs · 1 May 2009

Re: What signals you to trade?

Thanks guys. Appreciated.

kam75 · 3 May 2009

togs said:
Hi all,

I'm pretty much a trading greenhorn, been plugging away at it for about six months, not doing too badly -- most days I'm in front! My issue is that I can only attribute this to 90% blind luck and 10% to ASF; not a good statistic.

Anyway, in about two years I would like to trade full-time.

I know:

why I want to trade -- as a stepping stone in an overall 'passive income' strategy

how I want to trade -- systematic/mechanical technical analysis, most probably in a custom developed piece of software, but always with a human pushing the Buy/Sell buttons.

Where I am falling down is what! Generally, let's say my weapon of choice will be Australian shares.

A few people on ASF have mentioned that they trade based on signals that their system gives them; often the only thing they know about the company is the stock symbol. What are some of the signals that people are using to indicate that of the thousands of stocks available, these ones over here are worth digging into?

Thanks for your time!
togs

A few pointers that may help you:

You'll have to work out what works best for you and makes you money and stick with it. It may mean trying different strategies or taking bits and pieces from other people's strategies and crafting your own. Six months is not a long time. Focus on capital preservation, cutting losses short and try to become consistent in your wins.

'What' to trade should not be your problem. It's a resources boom so focus on resources. Demand from China is not going to go away any time soon.

I don't know how you do your trading, whether you wanna be a system trader or discretionary or how many companies you do or don't want to follow. If you want to look at the whole lot of them, get yourself some scanning software. If you're a technical analyst like me, look for breakouts, increases in volume, chart patterns and other signals that preceed a rise in price.

It's Snake Pliskin · 3 May 2009

Re: What signals you to trade?

Boggo said:
For me the "system" simply identifies stock that may be buy candidates, in other words I use a system to scan all 1800+ stocks in the hope of finding maybe a dozen stocks to "eyeball".

Initially all that I use indicators for is to find a potential pattern as Saiter has mentioned.
Below are two charts of IGO, the first chart are indicators that I have modified so that they all cross either together or within days of one another. A crossing of short term resistance etc may also create a heads up.
There are other conditions applied to the scan to eliminate erratic false signals.
The position of the indicators when they cross is also a factor, boxed area on first chart of IGO around mid March as an example.

The second chart green arrows are the result and the stock would appear as a potential candidate when one of those is generated.
The onus is then on me to "eyeball" the chart and either scrub it, watchlist it or act on it on the open.
How many, entry, stop and targets etc are some of the next stage of factors to consider.

Basically it is the pattern as Saiter has mentioned that is the winner, use the indicators as tools of trade, find a way of finding the patterns that work for you.

That's my worth, I am sure there are many who may disagree with my method, just find what works for you.

(click to enlarge)

Bogo from your chart I can see you use price to take the trade. What are the 4 indicators?

tech/a · 3 May 2009

Dont know that you need 4 indicators you dont even need any.
But Stochastic is the only one I'll look at regularly

Click on chart to expand

beamstas · 3 May 2009

Price, Volume & As above, stochastic.

I like to keep it simple
Im not a very clever guy so if i see too many indicators my head starts to spin

Cheers
Brad

>Apocalypto< · 3 May 2009

Signals I use.

15 min EUR/USD Chart.

I use MACD signals in relation to the Hekin Ashi indicator (developed by kinonen Forex Factory) and the EMAs.

Trading Bands. (developed by Wavepicker from Hurst principals.)

Price extremes reached on the bands with MACD patterns.

Both still have some testing to go.......

Cheers,

tech/a · 3 May 2009

Apoco

Those trading bands look similar to Keltner Channels.
Like those ones Waves has been working with.
I guess they are used sort of like regression channels but fluent.

tech/a · 3 May 2009

How about this one.

This chart shows the high of the ORDS
and the one below a close up version.

Click to ENLARGE

>Apocalypto< · 3 May 2009

tech/a said:
Apoco

Those trading bands look similar to Keltner Channels.
Like those ones Waves has been working with.
I guess they are used sort of like regression channels but fluent.

similar, but I have no idea how it actually works that's Wavepickers master mind!

professor_frink · 3 May 2009

tech/a said:
Apoco

Those trading bands look similar to Keltner Channels.
Like those ones Waves has been working with.
I guess they are used sort of like regression channels but fluent.

The main average used(in blue) has been centred, which is the main difference between it and regular trading bands/channels.

It's Snake Pliskin · 5 May 2009

Re: What signals you to trade?

It's Snake Pliskin said:
Bogo from your chart I can see you use price to take the trade. What are the 4 indicators?

Boggo I was curious what the 4 indicators were on your chart.

bowman · 5 May 2009

I'm with tech/a and beamstas.

I use price, volume and stochastic to trade the pullbacks. Patterns like flags and pennants to trade breakouts.

I reckon I could trade sucessfully using just one simple strategy. For example a daily scan of 'a new five day low' brings up plenty of short term trade possibilities.

Boggo · 5 May 2009

Re: What signals you to trade?

It's Snake Pliskin said:
Boggo I was curious what the 4 indicators were on your chart.

Hi Snake

See the first pic (MCR), on the left of each window is the indicator name.

On the second pic (MIN) is the commentary window, it just shows all of the items that can generate a signal and which one(s) generated the signal in question.

I can post the Metastock formula's if you wish. You can easily create something similiar though, find a chart pattern that works and then place a few indicators on there, modify them so that they cross within a day or so of one another and place the lot in an explorer and scan away.
Some days only one crosses, other times three or four cross on the same day.
(see the two vertical columns on the first pic for examples)

There are other factors such as volume,where the close is in relation to open, high, low on any bar etc and signals are inhibited on each indicator when that indicator is over what is considered overbought on that indicator.

Its just a method of scanning, you still need to eyeball the results.

(click to enlarge)

Boggo · 5 May 2009

beamstas said:
Price, Volume & As above, stochastic.

I like to keep it simple
Im not a very clever guy so if i see too many indicators my head starts to spin

Cheers
Brad

Re the discussion on indicators...
I should mention that I never look at the indicators, they operate behind the scene to find the signals, the only chart I look at is equivalent of the bottom chart in my last post, my default, I am not really interested in which or what item it was that created the signal even though the commentary can show me which, its all about the pattern.
The indicators are simply a scan function.

My

ThingyMajiggy · 5 May 2009

Price & Volume. I check the longer time frame to determine the main trend, then enter on 15m or 30m chart. Sometimes refer to some fib, but usually just S&R.

ojm · 5 May 2009

bowman said:
I reckon I could trade sucessfully using just one simple strategy. For example a daily scan of 'a new five day low' brings up plenty of short term trade possibilities.

What program do you use for scanning?

bowman · 5 May 2009

I use Phoenix AI. It's probably not the most comprehensive scanner out there but it does enough for me, and the flexibility of the rest of the program really suits my trading style and multi screen set up.

http://www.phoenixai.com.au/main/index8.php

What signals do you use to trade?

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