Mav, Yet another great post. Do you have anything else to add for those actively trading futures and/or forex markets intra-day rather than stocks?
Hello Mav, I'm guessing that ACD was not involved in the trading you describe above. Am trying to tie this to your "Hint: ACD can help you do this" comment. If you were using ACD back then (and maybe you were) how would this have impacted a scenario such as this? Again, not asking for your secret sauce.
I've discussed this at length throughout the thread but I'll mention it again. The number lines provide an excellent tell that is often NOT in the charts. I would look for stocks that that have been dead and buried for the last 6 months that have NOT been confirmed and now are showing improving number lines and are about to confirm. Those stocks often have explosive moves and they are NOT on anyone's radar...yet. Keep in mind that once they make those moves, Johnny 20 second chart scanner guy will be in there to muck it up. But you'll get the easy money before he arrives. This can be applied to stocks, commodities, FX, whatever. Focus on the stuff not everyone is talking about. In FX land this will NOT be the most watched pairs usually but the cross rates.
So basically you need to automate the number line across hundreds of stocks (at least), then look for improving patterns with current low volatility? Suggested software to do that?
In your experience does this still work today or have too many people caught on to this? When it comes to competitors they usually move in line (eg if M reports good earnings then JCP and KSS will also move up)
If I was going to make my living solely from daytrading, I would automate. One of my partners did it using Python but R would work as well. The other alternative is to manually score a basket of say 50 diverse names that nobody watches (i.e. midcap names) with modest volume.
You have to dig deeper. So going straight to the obvious competitors won't work today. Think outside the box. Software today makes it very easy for lazy people to get info that took us hours to find 15 years ago. You are going to have to be a much better detective than that today. Although the good news is, today you have much fewer daytraders to compete with. When I was doing this the market was swamped with daytraders. My firm alone had 1000 all doing the same thing I was. LOL.
Hello Mav, In many, many posts you refer to your number line "confirming". Would you please elaborate a bit on what it means for the number line to confirm. First, without any additional qualification, I somewhat assume that when you use the term "number line" you mean the 30NL. It makes perfect sense to me that a daily, weekly, monthly, etc A level would confirm by price going above/below that level by an amount that would signal a confirmation. As the NL is is a sequence of numbers (a time series) I don't quite get what you mean when you say that the NL confirms. For example, if the 30NL goes above the highest of the last N (say 10) values might that be a confirmation? Thanks
Tony, the textbook definition was two consecutive closes at >=9. The idea was not to get faked out by a single +10 print. I don't hold strictly to that. I generally look for that level to hold. In other words, look for constructive development i.e. NLs moving higher vs lower. And also relative 30 NL movement. For example say AAPL's 30 NL was getting stronger while the ES was getting weaker.