Hi - anyone have any thoughts on these 4 stocks? They caught my attention today, gap/wide range moves. For tomorrow, Friday July 19th, my personal entry points would like something like: ticker (long entry+ short entry-) SEBL (10.4+ 8.7-) NSIT (14.7+ 11.5-) then (16.4+ 9.6-) PNC (43.4+ 37.7-) ITRI (17.4+ 13.5-) using .2 to .4 max stops, trailing stop the same, preferably on entry occurring 9:30am to 11am., for trades lasting no more than a couple of hours max, preferably 2 to 15 mins round trip How do I come up with them? usually it's support/resistance with a small safety margin added to help filter false breakouts/gap retracements/breakdowns those 4 patterns caught my eye, as they're either gaps or relatively wide range moves .. as a note, I like to map out my entries ahead of the open each day, at least the initial ones, so i can focus energy on order routing and position size stuff vs wondering where to get in .. then moderate it by the TRINQ, seeing which sector charts are strongest/weakest from the open, is the compq in a 2d range or breaking out/down etc etc .. thoughts/ideas? aloha, ken
Playing wide range breakouts for 2-15 min trades seems a bit risky on the risk/reward ratio; most likely you'll get some follow through for a break of prior day's high/low but you'll also run into alot of noise. .20-.40 feels pretty tight given that you are going to be buying hod/selling lod. The setups look more like position trades rather than short-term flips. Looking at SEBL's chart, a break of 10.24 could possibly confirm a climax bottom, and a long would be worth holding several days with a stop at yesterday's low.
Instead of looking at wide-ranging days, you might do better looking for the opposite setup -- contraction/inside days for buying/selling breakouts. What you'd be looking to do is playing the trend day which normally follows a period of low volatility. This would also better suit your intraday holding time parameters, as well as giving you much better risk/reward (ideal stop is would be a break of prior day's range in the opposite direction, rather than just a random number ie .20-.40). Connors/Rashke outlined some decent strategies for playing this known as ID/NR4 (inside day + narrowest range of past four days) in one of their books.
Could you give a little bit more information about this tatic, I would like to understand this principle?
You'd be looking for days where stock has narrowest range of the past 4 days (NR4), as well being an inside day (high and low of day is within range of yesterday's high and low). What you're looking for is a recent drop in volatility, betting on volatility returns, in order to play the breakout either way. The book is called Street Smarts btw.
good points re noise etc, that's why I like to set entry triggers "just out of reach" of where noise/chop tends to occur, though of course it's still not 100%... I'm always looking for new technical filters to help avoid false breakouts .. someone let me know if you've found other consistent ones... there was an interesting active trader mag article on the topic this month july 02 using candlesticks.. so far today (3:30pm) looks like the market's mostly flat .. par for the course, summer friday .. NSIT looks like the best volatility for the day my main tactic is, focus most entries for when a stock is trading outside of the high/low range defined by the previous trading day .. best when the COMPQ is out of the previous day's range too ..