hey guys, heres food for thought; yahoo has pretty good pre-market commentary on the likely DIRECTION of the broader indices, i was thinking of a strategy that is based on probabilities of WHERE the market is going to go not WHEN. So setup would be; Bullish sentiment -> long -> no stops -> 5pts limit profit Bearish sentiment -> short -> no stops -> 5pts limit profit close position at end of day if limit profit has not been hit. I am aware that a loss would be huge, but wouldn't consistent forecasting outweigh the occasional loss. What does everyone think about this and is there someone out there that currently uses a strategy similar to this, please discuss. cheers. jonny.
Premarket "sentiment" is never a good indicator of market direction, and a strategy based on trading subjective market "forecasts" is a loser's game. In fact you are better off fading a market open that is strong or weak based on premarket sentiment.
Jonnysharp, I cannot give you facts like the more sophisticated ones here on ET that have more experience. Just run the numbers to see if it makes sense. Here is a handy site to help you with the winrate and the Avg Win: Avg Loss Ratio. Paper trade you methodology forward and make a spreadsheet, before committing real money. www.hquotes.com/tradehard/simulator.html Michael B. P.S. be smart and not jonnynotsosmart P.S.S. if your into "ranking" try this low cost little program to get a consensus of picks throughout the internet besides yahoo: www.tickerank.com or sector ranking here (you can trade ETF's with your idea): www.activesectors.com