Leland C: i only trade the index emini for past 2 years but when I used to trade stocks news plays were absolutely the best way to trade stocks.Unless things have changed dramatically I would advise relooking at the possibility of playing the big plays " the day after". I stopped because it is lots of research but it used to work EXCELLENT! aS I STATED i have been away from the individual stock action so i am curious what you think of my idea.
I have traded the index futures since 1985 and the best method I personally have found is to sell strength and buy weakness. I trade the ES and NQ contracts using 1 min charts and have developed a method that works for me with strict rules and well defined stop placement and targets.
as public participation drops, odds increase that if you use a common strategy you are competing with others just like you. daytraders used to be brothers in arms. now they are eating each other. this intensified competition will kill off many daytraders and keep killing them off until the decreased population reflects the decreased food supply. the exact same thing is happening to all participants in a contracting market: specialists, brokers, ibanks, mutual funds, hedge funds, all the way up the chain. solution? find an uncrowded niche, i.e. do something that most of your fellow traders aren't, or buckle down and fight for scraps in hope to be one of the last ones standing when the smoke clears.
For us little guys its still a good idea to find where the large orders are being placed and ride coattails; a large fund that needs to buy/sell isnt gonna spend too much time shaking out the fleas. Though this sounds like a "passive" or derivative style, you can find good trades for size every day by just noting which stocks are laggards or leaders and tagging along. Today for example, note NVDA on the downside, QLGC on the upside; both exhibited weakness/strength early enough for one to take out a nice chunk of movement, with barely any limit on position size. Agreed on the .10 trades, you really want to find a method that doesnt bog itself down when you try to increase size as equity grows.
Great responses here on the thread. Plenty of "food for thought." larrybf: I have messed around with playing news stock the day after (as you so eloquently put it). Haven't really found any consistency here either but it does have potential. I agree with you that news stocks are probably some of the greatest daytrading candidates around. I like playing stocks that have news/sponsorship because these stocks tend to move. They normally have good liquidity because plenty of other people are involved in them too. Maybe it's just me but when I enter a play I like to know that there is something behind it giving it a little push. I hate saying gee stock XYZ looks great and the market is rallying let's go long and then getting hammered.... darkhorse: I agree with your views on the trading world. The tough part is finding that niche and capitalizing on it. All we can do is keep plugging away I guess... illiquid: Thanks for the comments. Thats why I like news plays because IMHO news provides fuel for the stock to move... Leland
We all know that momentum is no longer in vogue. Another approach is buying weakness & selling strength. The opposite was buying strength & selling weakness............ The 90's. Buy wk/Sell strg is not easy because sometimes you step in front of a moving freight train. But doing it on strong stocks (buy a pull back and & on a weak stock (Fading the rally). is not a bad idea in this market. If it helps I also am looking for something that is more robust/consistent.
If you want consistent results you need to use a systematic approach. Note: a trading method can be systematic without being mechanical. An approach has to be repeatable to be systematic. If you are like me then a having objective entries and then using a bit of discretion on the exits and when not to trade works best. Doing it this way also cuts down on overtrading. If you're not like me then some other method might work better for you.
Yes I do this with some degree of success as well though with a twist. The market is not nice enough to make it nice and comfy and predictable at .9 and .1 as it can wiggle to .8 and .2 or .7 and .3 etc. (it can wiggle to what ever the hell it wants for that matter). So I only take on a portion of my maximum position at the .9 or .1 level and then I average down at .8 and .2 if it truly looks like it is just wiggling around. THis avoids taking as many small losses at the .8 level after going long full size at .9 which means what once was a loser can be a winner. I do not view this as averaging down in a bad way as I still take the small loss if it does not hold after the 2nd add and I always factor in overall market feel before adding to begin with. It is still whippy but has reduced some of the excessive small losses I was taking in this freaky market. Basically I hope for about a 50/50 win loss ratio and with a risk/reward on any given trade of not much better than 1:1 ie I take quick profits. It sounds crazy but swing the bat enough times without trying to swing for the fence (always take the small loss) then occasionally I get the homerun regardless which takes the risk:reward on the overall strategy to more acceptable levels. I am just fishing like everyone else to find something that works OK in this market. Gee I sound defensive don't I ....guess I anticipate getting ripped for risking my capital on this seemingly mindless strategy
i dunno...is it the style that is or isn't consistent or the trader? Both I guess. I mean to say that whatever you do, if you do it consistently, will be a consistent style over time and markets.. If you mean consistent in profit or avoiding loss, the low risk approaches will be more so I think, but they cost more to execute in both costs and labor.
Interesting thought about being a consistent trader. I guess a trader probably should stick to their style as long as it is working ok. It's probably a dangerous thing to try and switch styles too often and try to adjust to the market? Find something that works well (like buying strength) and exploit the hell out of it!!!