Interesting you say that Ken. I have looked at trading this scenario as well. However I found that I was not as succesfull in my trades. I will be reading your blog to get more insite. I think it's a very interesting concept of trading.
Thanks for responding. I am glad to see that I am not the only crazy one on here. One of the most imortant things you said is you have to go with how you feel a lot of the times. I don't enter every top ten % gainers, I usually will try to keep it between 1-3 trades a day. And your right it's not for everyone, I have had some very stressful days watching charts. Happy Trading..
My advice is to look at a chart with moving averages first before you enter any trade to see if it makes sense. Establish resistance points and ceilings... However, the trade being described is unpredictable and highly volatile. You shouldnt do this until you have more experience. I would never attempt this trade myself. I believe I am good with a chart, but this is too risky.
depends on many things. I would say OVERALL it is a lousy strategy in a bull market. in a bull you are better off following the biggest losers for a bounce on resistence after an exhaustion rally to the downside. I would say what you are doing right now would be a 1 way trip to brokesville.
The guy that started this thread (link below) now runs a hedge fund. He stared buying GROW a few years ago. I think he is up about $14 million. Anyway this thread discusses a similar strategy. http://www.elitetrader.com/vb/showthread.php?s=&threadid=881&highlight=great+AND+new+AND+pattern
One of my strategies is similar to this. It started by buying the gainers and selling the losers, but after a while I began to recognize which stocks had the potential to continue their morning direction, and which would fail. If you continue to trade this you should be able to recognize this after a while also, then you can take both directions and be more market neutral. For example today my favorite continuation stock would be MWRK, and the best gap reversal is MOT. Position management is very important, you should lose a little when you are wrong and make a lot when right. Re: the last post about P2. I traded that with him and helped develop that strategy. It was mostly just a long bias, and based on volume reversals...so not really related to this thread.
I have been looking into a similar strategy for some time, but for stocks that are down on big volume. There will usually be a pullback starting around 10:00 - 10:30. I only consider stocks that are priced above $20, and with a potential pullback of at least $0.50. I will buy 500 or 1000 shares and look for a $0.5 to $1.0 pullback, with a $0.5 stop. Most of the time you will find these stocks with a simple dollar or percentage drop scan (I use TradeStation), but some days you will not find any. I found this easier than to chase gainers. It might have something to do with the mini bull market that we had lately, or is just that when stocks drop they will drop faster than when they go up. Not to mention that you only go long, so you don't have to worry about the stock beeing available for shorting. For example, today (I didn't trade this today): HSL GPN
Dustin that is a good idea to go both ways. I will start watching the loosers as well and see if I can get comfortable with them. I have noticed that if I short three stocks a day I can usually make money on two out of the three trades.
2/3 is pretty good. I only have around a 55% success rate but winners far outweigh losers. Usually I will trade 10-15 stocks a day, and 1-3 will be big winners. For example yesterday I caught ABFS, ANGO and WITS. With this stuff the longer you do it the better you get so keep plugging away.