Discussion in 'Journals' started by sobemark, Jan 15, 2005.
absolutely ... pattern recognition leads to confident trading
thanks for the comments
i would like to hear more when you finalize your trading model..
thanks for the comments
I use 2-day and 1-day charts with no technical indicators for trading breakouts. I look at price, volume, sector, news and the direction of the overall market intraday. Risk is the big thing in daytrading and I know of only two ways to limit risk: Trade in the direction of the market and keep a tight stoploss.
This is how I do it:
I do a scan and the results are displayed on mini charts. I scroll through the charts and see three stocks that are in a gradual uptrend since 9:35am. It's now 10:30am. The indices are up and having pulled back have turned up again.
I watch the three stocks. They all make it to the previous day's high resistance at different times with .40c - .50c range on them. All three stocks cleared resistance and continued in their uptrend after a breif pause at previous day's high. Will these three stocks continue in their uptrend and do an additional 1/2 point or more, each? There is no way to tell. There is no way to tell.
I put 1000 shares on each of the three stocks just as soon as they were .20c above previous day's high resistance. I set an alert at previous day's high as my ultimate stop loss and I set an alert .30c above my buy price as an initial profit target.
An hour later one stock is doing .40c above buy price. Another stock is doing .25c above buy price. The third stock pulled back .10c below buy price after being up .20c above buy price, and I closed that position.
I now have $400 profit on the first position and $250 on the second position. That's $650 gross profit. The third position is a $100 loss. Add to that loss commissions of $20 per round trip on three trades (=$60) for a total of $160 to subtract from the gross profit ($650), for a net profit of $490.
That's daytrading. Stocks go up every day. If you knew which one stock will continue it's uptrend to give you 1/2 point, you need only put all your money on that one stock for a 1/2 point profit, and repeat that every day.
Since you do not know which stocks will continue in their uptrend you must do more than one position and limit your loss on the stock(s) that pull back below your buy price.
Apart from rare hunches and the few geniuses out there that could be trading stocks and can hit trades dead on, mere mortals must "catch a trend" and subtract losses.
My God, why didn't I think of that?
Tell me more...
you are welcome to post your trades to this forum for discussion... I look forward
thanks for the comments
Well....you get my point.
Thanks for your detailed post on how you trade.
It's very intersting.
When I began in this industry I did swing trading where I would have multiple positions open. Very frequently there was a point in time where when I looked at the combined open posistion P&L there was a nice profit if all positions were liquidated.
At the time it came across my mind to figure out a strategy based on this. I never did. Actually I forgot about it until I read your post and it reminded me of this.
Previous days High and Low are Very powerful areas. Your method is one that does not need indicators and will stand the test of time, unless there is no such thing as "previous day" in the futue. But there will always be a significant prior high or low.
Maybe you could start another thread and post charts too.
I like to contribute to discussions on this board in a way that is helpfull to other traders. I have gone as far as I can without revealing my edge.
At the end of every trading day study the charts of the top fifty price gainers using a 2-day chart. Soon you should develop your own approach to trading breakouts and also see how stocks trend intraday.
Hi all, I would like to thank the original thread starter and other selfless contributors to this thread. This journal/discussion and Karol88's journal has been real eye openers for me.
I'm a newbie and starting out on equities only. I plan to study the options in the near future. Anyways, I've only been daytrading with real money for a few months and so far I'm still in the green. But as of lately I was very frustrated as eventhough I trade between 20 to 30 trades and up to 10,000 shares a day, by the end of day my profit/loss usually averages around $60..$70 after the commisions.
After reading this thread many times over I think I've found some of my mistakes and hurdles that's been stopping me from advancing forward.
- First, I was trading crappy low volume stocks that move maybe a whopping 0.10 cents out of a whole day.
- Second, my entries were wrong as my understanding to gap fading was totally wrong until I read this thread.
- Third, charts with wrong time frames. The shortest time frame chart I usually emphasize on was the 15 min. chart.
Once again, thank you very much all for revealing some of your trading techniques. This thread has been one of the most mature and helpful threads on ET in a while.
you are encouraged to post your trades, winners or losers, to this forum for discussion .. hopefully, we can discuss many different trading styles and learn from each others methodologies.
thanks for your comments
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