I currently day trade EBAY using Mark Fisher's ACD opening range breakout method (refer to end of this note for ACD details). I will post my trades at the end of each day. I will also post a 1 minute chart noting entry and exit points. The rules of my system are as follows: System Rules: Rule 1: Trade EBAY exclusively Rule 2: Do not trade until an *ACD bias has been established. Rule 3: Never fade the *ACD bias. (If bias long I can only be long or flat, if bias short I can only be short or flat.) Rule 4: Entries short must be on a minimum of a 15 tick bounce. Rule 5: Entries long must be on minimum of a 15 tick retracement. Rule 6: I cannot take a loss of less than 10 ticks (move my stop closer or further). I must allow myself to be stopped out. Rule 7: If the market retraces below the daily Fib 50% after establishing a bias then my default position size will be reduced by half. Rule 8: Profit target orders will be placed for all or half of the position a minimum of 10 ticks from the entry. (Therefore I cannot take a profit of less than 10 ticks) My aim is to place bets with a 1 to 2.5 risk/reward ratio. Rule 9: Maximum loss per trade is 10 ticks (1 to 2 additional ticks may be incurred as a result of execution slippage. Rule 10: Maximum drawdown on any given day is 5% of my equity. Rule 11: Default position is 100 shares per 1000 dollars of capital. (this rule assumes EBAY remains within a price range of 30 to 50 dollars) Rule 12: Exception to rules 2 to 5 . If no bias has been established by 10:45 am then I can range trade, fading strength and buying weakness at levels of resistance and support, with the objective taking quick profits. A 10 tick risk point remains in effect. If a bias is established at any point in the day rules 2 to 5 become active overriding rule 12. *ACD Bias currently uses a 5 minute opening range and requires 5 minutes of trading activity above/below that range in order to establish a bias. If the market trades 5 minutes above the opening range then I am bias long (Market is in A-Up) until the bottom of the range has been breached. If the market trades 5 minutes below the 5 minute opening range (market forms an A-Down) I am bias short until the top of the range has been breached. This is essentially Mark Fishers ACD range breakout system. If you need any clarification on the way it works then get your hands on Fisherâs book âThe logical Traderâ or simply ask me for clarification on my variation of his system. All number values may be adjusted as the system evolves but only as a result of prior planning outside market hours. My broker is Genesis Securities and my base commission rate is .003/share. This journal will commence tomorrow (Tuesday April 18th) IMPORTANT: Generally, I find it counterprodutive to tick watch once I'm in a trade. If a bias has been established my aim is to get a low risk entry point, set a stop and a profit order and then walk away from the screen until I hear the beep notifiying me that I've been filled. This keeps my origional idea/bet intact and keeps me from getting psyched out of the trade.
Attached is a chart of today's trades and a file detailing the actual trades. I missed most of the days down move due to technical problems with my broker. INCA was changed to ISLD and the traders were not formally notified. Hence I missed several entry points before I realised what was wrong. Once these tech problems were solved I was generally happy with my entry points but was not so pleased with my exit points. The last few trades of the day in particular I was nervous and took profits prematurely. The only way I have found to resolve this nervousness is to bracket the trade with a stop and a target profit order and then just walk away and let the chips fall where they may. I'll try and do that tomorrow. I aim to catch at least 20 to 25 cents per trade holding a 10 cent stop.
It seems I can't attach multiple files to a singe post. So here is a second post simply to attach today's trades as listed by my broker.
When I convert the html file of my trades into txt. format so that it can be posted the columns get jumbled. To summarize; I had one loser of $22.00 and 4 winners totalling $72.00. Net gain is $52.00
Good start. So in other words you would've been short that trend down in the am except for broker error? I watched the Fisher video on the nyse page, do you do that other tracking he mentioned to figure out longer trend and month of day relationships? I thought of trying to use his system and I look forward to your journal!
I'm not pretending I would have been short that entire move but certainly would have tried to catch some of it. I think you are referring to Fisher's number line indicator. I haven't used it yet. I try and take each day as it comes rather than going into the day with any preconceived opinions. Using his number line will give you a better idea of the long term health of the stock. As a day trader however, I just go with the stocks direction on the particular day that I'm trading it. So my focus is the opening range, I use it as a reference point and go from there. As Fisher says: where the stock trades relative to its opening range is equivalent to the stocks pulse, ie. the most critical factor in determining the health of a stock on any given day. That is my opinion for now. Maybe it will change some day, at the moment i'm trying to keep things as simple as possible.
FWIW i trade a variation of fisher's method across a group of stocks... if EBAY has a 2 point range, and the 10min OR is .50, it's already traded 25% of its range, so i might expect less of a return than something that has traded a lesser pct of its daily range for example, PETC has a %RNG similar to EBAY (4.7 vs. 4.2), but traded a lesser part of its range during the first 10 minutes, then had a nice sell-off of about 3.5% upon the break of the morning low.... just something to toss into the hopper for consideration... i'll look forward to your postings
Backman that is an interesting idea. I'll certainly keep it in mind as my style evolves. I used to filter trade using First Alert. At some point in the future I may return to filter trading and at that point experimenting with the idea you've just mentioned might prove interesting and profitable. Fisher did mention that a tight opening range tends to produce better trends for the day. While wild and wide opening ranges tend to produce non trending days. So this aligns with what you've just mentioned. Thanks allot for the input.
Stick around Backman. I'd love to chat with you at some point in the future. I've been quite curious about that new functionality of FA and haven't spoken to anyone that has actually used it.