Stone Kettle Soup Project: An Onion

Discussion in 'Journals' started by rlb21079, Apr 6, 2003.

  1. The following is a post found at:

    Firstly, I am a beginner trader with too small an account to day trade. I am looking to make trades lasting days, and sometimes weeks. My three most profitable trades have been in AMZN (currently the only stock I follow) and have been made without the use of a mechanical system.

    My basic assumption is that with a bear market that has lasted as long as this one has, it is only reasonable to bet on the long side. Certainly the market could go down further, but I feel using tight stops there is greater reward on the long side at this point in time. As a result, what follows is my attempt to create a universe of stocks which I will either trade as I have traded AMZN or upon which I will apply a more mechanical Buy/Sell system.

    The filter process went as follows:
    (1) Get the total # of stocks in the NYSE and Nasda markets
    (2) Remove all stocks with a falling 200 day EMA
    (3) Remove all stocks trading for less than $5 as of 4/4/03
    (4) Remove all stocks with a daily volume of less than 100,000 shares (a 20 day MA was employed)
    (5) Remove all counter-cyclical stocks - Searching for issues which had a falling 200 day EMA between 03/03/2003 and 04/03/2003
    (6) Create a list of stocks with an RSI above 50 and below 70 (outperforming, but not overextended) relative to there respective markets.

    Backtesting is a problem since the idea is initially based on current market conditions. Also, I have yet to determine a system of trading. I have, however, begun marking some basic points of resistance/support based on the methods of Trader Vic.

    Based on this filter I have culled a smaller list of stocks which I will begin trading. Because of my account size I also needed some lower priced sotcks so I went back the lists created by steps 1-5. I believe I may have erred in step 6 somehow, but for this exercise it is not important anymore.

    I will be trading by the following guidelines:
    (1) All positions will be long
    (2) Every trade will be accompanied by a stop 0.5-1.0 below the entry. The exact stop will be determined based on a number of factors such as perceived resistance points, historical volitility, and yes.. intuition.
    (3) Stops will trail any of the stock's upward movement. I will allow the stop to be a maximum of 1.5 points from the then current market price before adjusting. As a stock's rate of change slows I will be bringing the stop closer to market price.
    (4) Entries may occur as follows:
    a) Buy Stop at Resistance
    b) Buy Stop set 0.5-1.0 points above market price when Support has been met
    c) Buy Stop set 0.5-1.0 points above market price when stock has retreated to old resistance (only in those instances where an issue has already exceeded the demarcated resistance level)

    The links placed here are (1) universe to be traded, and (2) charts of each stock including lines of resistance and support.
    If you find this at all interesting post herein or visit the thread linked above.
  2. what is with the "clever" thread titles??
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  4. that's my bag
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    #10     Apr 6, 2003