I should add one more part to trading INTC. Don't trade it the first 2 hrs or last hr as that is when all the movement takes place. Let a channel form. It should determine a high and a low and trade back and forth all day. Have a buy order sitting just above the low and a sell just above high. I know quite a few traders who do this well and have great returns. I'm more of a pattern traders trading lots of stocks but looking for certain patterns and knowing how they should react when this type of pattern forms. rtharp
What do you mean by this: "You will be right about 80% of the time making 1R and losing 1R "? What is 1R? Thanks ~EC
"I'm more of a pattern traders trading lots of stocks but looking for certain patterns and knowing how they should react when this type of pattern forms." tharp, what is the meaning of this sentence? I don't have a clue as to what you are speaking to. Please decipher it for me.
ok to address both of these post. I will be right 80% of the time making 1R wins and 1R losses. The question is what is 1 R. Sorry I am very use to using that phrase due to my father Dr. Van K. Tharp coining it and hearing it used by so many traders. R is just a shorten way of saying Risk. Risk is ( Your entry price - your stop )* # of shares The formula above is the amount of capital you will lose if you are wrong on each trade you do. ALL of the parts of the formula can be changed, your position size to adjust your risk, your entry price and/or your stop. One of the things My father talked about in his first book was about systems having multiples of R for winners. So say you risk 1% of your capital but when you have a good winner you make 20% This is known as 20R where you make 20 times what your risked. High R multiples are usually found in either trend following systems during good trends or in very short term trading with tight stops. The system I was talking about makes what your risk and loses what your risk but you end up being right over 80% of the time so it has a positive expectancy (unlike going to a Casino which has a negative expectancy) a positive expectancy means you will make money over the long term if your sample size of your trades are big enough and that means withstanding periods of random losing streaks at different times. SO if I define 1R as risking 2% of your capital Than someone loses 2% each time they have a loser and makes 2% for each winner but ends up being right over 80% of the time. It's a good system. Now shortnfool. Normally I wouldn't even see your messages as I used to have you on ignore but I am now a moderator and need to see everyone's post. You have actually posted a few decent things recently which is nice to finally see so I will address you. I am a pattern trader. I am looking for certain types of patterns and know how the security I trade should react when this pattern is shown. What this means is I am a chart reader. I get a lot of my entry signals off of technical analysis. I own a belief that human psychology doesn't change very often. When I see certain types of charts with very specific patterns that occur I can usually predict what the future outcome will be. I tend to look for extremes in this market. Pretorian2's GNP type of pattern. I am running scans for multiple days down in a row with huge increases in volatility. (basically panic and lots of sellers with few buyers) I then stalk this chart each day until the intraday trend shows that the pain is over and the sellers are out of the market (goes above it's previous closing price) if I am right it will take off like a rocket once I'm long and soon there are a ton of buyers I can unload my position to. Some are just shorts who are taking profits because I'm now hitting their stop and they don't want to see of their profits go away others are jumping on the momentum and increase volume. I also though will play the short side heavily. In fact unlike Pretorian2 I prefer it as I can use a much tighter stop on the short side (stocks go up slowly but down quickly.) I run scans for stocks that have risen for many days in a row also with huge volatility increases. When the stock shows some weakness (going below previous day's closing price) I short it and try to get all of the longs to cover to protect their profits. Usually more shorts join me and I now have a lot of sellers I can buy my stock back from. Hopefully that should clarify a few things for you guys rtharp
Jea Yu's "The Undergroundtrader.com Guide to Electronic Trading" and website www.undergroundtrader.com explain the futures and Tier 1 AMAT,NVDA,CCSO, etc. as precursors to the Nasdaq market. The system uses stochastics 1 & 3 minute charts for individual stocks, 3 min moving averages chart, 1 & 3 min stochastics charts of the Nasdaq futures & Nasdaq Level 2 screens. honus