i trade the QQQs. i was thinking that when it gets close to the target, my patience gets short - im not looking to give up profit on a reversal. there is a volume component for me - lower volume, lower volatility? also, im less likely to go long near the range extreme - i know ill miss some due to this, but the the risk/reward my be out of whack... its just another consideration.
Consider selling half your shares when price hits the target and leaving the rest at breakeven. Then, if you happen to be in a range expansion day, you can sell the rest once you've reached the limit of that expansion. If there is a genuine reversal and you still haven't sold, go ahead and sell the other half, then enter on the short side if the reversal pattern is one that you like. As for entering near the range extreme, the percentage just isn't there. There's always the chance that there might be a range expansion that day, but they are relatively rare. --Db
have you tracked how many range expansion days there are on relatively low volume? ... i'd guess very few, and the majority of those id wager are to the downside (like those days when there are just no buyers). when you introduced it in your thread, i was kinda looking for the range to be the low-end (smallest) of the daily ranges within the past 2 weeks... what i am suggesting is tight stops near the ADR of the past 10 days on a "typica/normall" volume day; tight stops near the extreme of the smallest range of the last 2 weeks on low volume days and giving it more latitude for potential range expansion on high volume days... i have not backtested it, but seems to me range expansion beyond the 10-day ADR is most likely to occur on a high volume day. also, range is expansion to the upside is likely to be very limited on a low volume day...
Volume is not available, but I had stopped considering it anyway since it seemed to have little relevance. As for the range expansion, the more pertinent factor is consolidation near the top of the range, though occasionally there is a retracement as well. But low volume or high volume, the expansion days are so rare that it's going to be quite a while before I can make any probability statements that are based on anything more than empirical data. In the meantime, as I said earlier, the best way to deal with that situation is to take half profits at the target, then leave the rest at breakeven, or at least the last reaction low/high, then wait and see if there is a successful reversal of not. As long as your bar length is long enough to enable you to exit one position and enter the opposite side, you're covered. Not sure if any of this is still germane to the thread. --Db
The thread brings up an important issue: is it possible to combine target trading with a flexible attitude towards letting profits run? Or are we dealing with the old trader's dilemna of balancing risk and reward, and as such no theoretical answer can be found, only empirical? OPC
Sure. As I said, all you have to do is exit part of the position when you reach the target and leave the rest at either breakeven or the last reaction point (or wherever). The downside, of course, is greed. If there is a range expansion, the emotionally immature will kick himself for not having held it all throughout the move. If there is an abrupt reversal, he will kick himself for not having sold it all at the top. But that's the problem of the trader, not the tactic. --Db
I agree. In a way or the other it sounds like the trader will be always working with some kind of target. The range expansion might be just a target of another time frame. OPC
Guys..... this has been a great thread. Hope it continues! My 2 cents on qlgc and comments on the above ... Caracal made some very good points about qlgc. It can be difficult. It is crowded. Where I take issue is a blanket statement to never trade it; look elsewhere. That depends. Dojibear makes a great point about P/L affecting judgment. This is a biggy for me. On another thread I wrote about a friend and "mentor" wanting to stay away from anything that tainted her judgement and took decision making away from her plans. To simplify some advice she imparted to me: if one enters on TA do not exit by looking at how much up or down the trade is moment to moment other than to the extent it's an integral part of your exit plan. And as far as "counting your chips at the table" and looking at your "hand" repeatedly, she advised... don't! As far as Dantheman.... bro, I respectfully submit that you are being too inflexible (and a bit haughty) in not reflecting on the "substance" of Caracal's admonishment (and others'). There is no doubt in my mind, having traded equities/options for many years... that picking and choosing "what" you trade does/can make a difference on your bottom line. Period! Thus I don't agree with your overly- broad statement: "It is never what you trade, it is HOW you trade." It does matter WHAT you trade. Every equity, future and index has a "personality'. And, being students of the market as you and most of us are (or wish to be) one should realize this simple point... early on. Quick example. I like trading AMAT. Traded it for years. Rarely lose. Make consistent profits. Same with some others. But certain equities I cannot seem to get in sync with. Doesn't fit 'my' style?! Or who knows why?! Just cannot do as well. Period! So should I try to put a square peg into a round hole just to say "I'm good! I can trade ANYTHING?!" Negative bro. A trader has a "relationship(s)" with what he/she trades. And just like any relationship some personalities match better than others. Maybe AMAT's "sign" matches my astrology better. I don't know. Maybe it's nature and how it moves, beta, etc. fits me better. Feeling comfortable with 'what' you trade is a giant first step toward consistently better profits. An integral part of my trading plan is to identify and trade THAT WHICH I UNDERSTAND and "I" feel comfortable with. What seems to be a good match... for me. Suggest u think about this before taking a hard-headed attitude trying to defend some caveman image of being an omnipotent trader (submit this as "constructive" criticism, not a personal attack b.t.w.) Thanks again to all who posted good insight... it's been helpful. iceman
Iceman wrote, This is exactly my point. When you understand what you trade, then it does not matter what you trade. What makes you think I do not understand qlgc? I don't understand AMAT...you do and so you should trade it. I trade qlgc because it has a daily range of greater than $1, great liquitidity, can easily get short in it ...etc I am in sync with qlgc, erts, nvda... tech stocks in general though obviously not every one (don't trade nvda anymore because of its price level). I don't know what qlgc does as a business and I don't care. I know how it moves, and when I don't...I don't trade it. By the way, what does "it's a crowded stock mean", that there are too many people placing bets? What difference does it make how many players there are. Please notice again, that I WAS in sync in my trade. The problem (which caracal wrongly attributed to my stock selection) was a psychological factor outside any individual stock. If the trade had been in ERTS I would have had the same problem. I personally don't believe that there are "easier" stocks to play. If I believed that then I'd be on a search for easier and easier stocks without getting to learn any of them and bettering my skills. So I guess in the end what i'm trying to say is this, if everyone thinks that qlgc "is so tough to trade" then the more power to me, because if I can consistantly pull money out of this stock then I can do it with any stock.
Well... it sounds like you got it all figured out; which does bring us to an interesting question... what compelled you to publicly express your angst on ET if you know so much? My suggestion: go for it! You don't need anyone else's advice. G'luck I