michaelday, The stocks I normally trade are: SDLI, JNPR, BRCM, BRCD, EMLX, and CHKP. Out of those, my three biggest bread and butter stocks have been JNPR, BRCM and EMLX. As far as calculating the BP's myself, I wish I could say it was more scientific, but basically I look at the daily high and low for the stocks each day and those are my BP1 and BP2 (+/- a point or so). If the stock is near one of its key moving averages I'll use that as a stronger BP than the high or low. I found while using Trade Prospector that each day's BP's almost always correlated with the daily high and low, give or take a point or two.
hello michaelday aside from TP's calculations, which are based also on intraday trading data, not only EOD data, major S/R levels can be defined by using EMA's ( 13 day, 20 day, 50 day ), Fibonacci retracements & projections,XXday highs - lows etc. These price-levels form the areas where breakouts to either side are most likely. Or where support & restistance is the most strongest. You can find some useful education and general formulas at http://www.sixer.com. Although not so precise in it's calculations as TP, sixer provides a good overview about the various techniques to derive entry & exit points for a trade. Sixer provides also detailed TA on a number of stocks ( about 400 ) on a daily base. Here an excerpt from their website about Pivot points, Support & resistance : Pivots, Resistance and Support As prices continually rotate to enhance trading, prices of perceived value (support) and perceived over valuation (resistance) can be recognized by the volume of activity at different price levels. The active range of trading expands as the off floor traders enter the fray. If more longer established support and resistance can be successfully breached during the new short term trend that emerges, with the activity of the off floor traders, then longer term traders, position traders, with an intermediate or long term intention of their market commitment will be attracted to join the market. If one knew the range parameters of support and resistance used by floor traders one would have a handle on the significant areas where off floor and possibly position traders may take over the market direction from the rotating locals. Well the locals calculate from the previous day's range the pivotal or inflexion price and the areas of support and resistance. The calculations are very simple and the results invariably have an influence on the market activity of the day. In fact, if no other information that relates to the market becomes available then the floor traders parameters may dominate the day. The calculation for the new day are calculated from the High (H), low (L) and close (C) of the previous day. Pivot point = P = (H + L + C)/3 First area of resistance = R1 = 2P - L First area of support = S1 = 2P - H Second area of resistance = R2 = (P -S1) + R1 Second area of support = S2 = P - (R1 - S1) So unless significant market news has been made available between yesterday's close and today's opening you can expect locals to take prices to test the near term support and resistance and the pivot price. Should, for any reason, these near term support and resistance areas fail then the second such area will likely be tested. If these support or resistance areas fail, because of market influencing news or observations, the off floor or, more particularly, intermediate term positional players will likely enter the market and make the market trend. So these floor trader pivot points are areas to be aware of and respect. They are both dangerous and areas of opportunity. Stop orders to enter at these points are readily whipsawed by 'floor sweeping' by the locals as they rotate up and down the perceived range. On the other hand, if you find support or resistance was forthcoming as appropriate it offers a low risk entry point with a close Stop loss point identified. On the other hand, failure of anticipated support and resistance, as appropriate, offers a low risk entry point with a close Stop loss point identified in what is likely to be a trend emerging from the 'local' noise of the market. Even if you are not a day trader, knowing the key pivot, support and resistance points can help the short term off floor and intermediate positional trader to identify potential entry points and stop loss levels for your trade if your other criteria have determined the direction in which you should be trading. Make it a daily ritual, calculate the pivot point and the areas of support and resistance after the close each day for the markets you are interested in. Study the next day's price action in the context of those pivot points so that you get familiar with the dynamics of the market. Hope this will help you a bit. regards &
Privateer and Zboy I'm trying to implement some of your trading tips and I'm having trouble getting proper use of level II and time and sales windows on Qcharts. In my opinion they move way too fast to be of much use. When the price approaches potential breaking point what tools do you mostly use to confirm your entry? I'm being succesfull mostly when I only watch QuoteTracker's real time tick by tick chart and using S/R and BP levels and confirming entry with direction of Nasdaq and with the direction of few other Nasdaq stocks. Also what is your opinion of japanese candlesticks method? Thank you for your help
Michaelday, You can use Level II and T&S to watch the speed and momentum of trades as the stock approaches one of its breakpoints. Usually, if the stock is going to break through its breakpoint, the volume in the stock will increase as it approaches and/or breaks through. If volume and the number of trades flying by seems to slow down or be average as it approaches or breaks through its BP, chances are it's a false breakout or will be repelled back off the BP. It's also a very good idea as you mentioned to watch the overall NASDAQ and/or sector of the stock you are watching as an indicator of whether the stock has a high probability of breaking or repelling off its BPs. For instance, if you're watching JNPR, and both the NASDAQ and networking sector are in the red for the day, there's a high probability that it will break down below its lower support or be repelled from its upper breakpoint. Conversely, if the NASDAQ is up and networkers are doing well for the day, JNPR will probably bounce off its support or bust through its upper breakpoint. As far as Japanese candlesticks, I don't much use them. There is one quasi candlestick pattern I look for that is almost always on the money, and that is a topping or bottoming tail.
Hello michaelday, zboy gave already some useful comments. Here my few cents : Speed of L2 & T&S movement is, of course, related to the volume traded in certain stock. Only the heavily traded stocks show this kind of fast movement.I suggest, to have also a 5 minute chart and a 15 minute-chart of the stock open in Qcharts, just to filter out the noise. When a stock I want to trade approaches a BP level ( or any other significant level as laid out by TP ) I add an additional tradesize-alert in Qcharts for this stock : I want to see strength in the direction of the trade as an confirmation, so I need to see increased volume on the bid for longs or on the ask for shorts. Example : If the stock trades most of the time in lots of up to 2K , I want to see 10K or even 50K ( the more the better ) on my side of the trade. It's important to see the trades on these volumes happend on T & S . IMO, it doesn't make sense trying to be smarter than the MM's. You want also to see the leading MM's on your side of the trade with higher volume than 1K or 2K lots. For what concerns Candlesticks : well, I use only candlestick-charts since they give me a better visual impression of what's going on in a stock. Certainly, identifying Candlestick-patterns in RT is not really possible on a 1 minute chart. However, I do look frequently for certain important patterns ( formations ) on a 5 minute or 15 minute chart. But I use them not exclusively. I use also 10 & 20 period EMAS as well as MACD on my RT charts. ADX, +DI and -DI can also help to identify / confirm the strength and direction of the current trend. I use 14 periods for the latter three indicators. In any case, higher volumes in the direction of the trade is for me the most significant indicator. For more info about the various important Candelstick formations, you could ( if you haven't done so already )download the Bigeasyinvestor Software for free @ http://www.bigeasyinvestor.com . BE comes with an automatic Candlestick-pattern recognition and the build in Candlestick-wizard explains the patterns in detail. Confirming a NASDAQ stocks movement by monitoring the NAZ & the S&P is certainly very useful. In addition, you could monitor ( or even trade ) the specific ML Holders or iShares, if you trade a stock in a sector covered by these index-tracking stocks. The movement of the holder and, more important, the trading volumes on the bid & ask of the holder-stock can give a good indication for the strength of this specific sector at any given day. Most stocks move along with their sectors most of the time. So I consider the action in these sector-tracking stocks as more important than, i.e. the action in the NAZ or in the QQQ's ( unless you trade the QQQ's directly of course ) Holders and iShares are not subject to the uptick rule when you short them. For more info on Holders's stocks or iShares see : http://www.amex.com/structuredeq/sp_holdrs.stm and http://www.amex.com/indexshares/index_shares_over.stm Best regards
zboy, priveteer and praetorian Thank you for your help so far, I have been trading full time for one month now and so far I'm breaking even. Stocks I have been trading are AMCC, ITWO, JNPR, CIEN and HGSI. I have been doing 7-10 trades per day. Mainly I have been using 12 minute and 4 minute EMA's as my entry signals.I also like to see Nasdaq trin below 0.5 if I'm going long and above 1 if i'm going short. For the first few days I tried to use trade prospectors entry points for this stocks but usually they open with huge gaps so yesterdays S/R levels don't help a lot.I don't know if I'm slow but this stocks seem to be moving very fast.They move 6-20 points in a day. I'm using Interactive brokers and trade in 100 shares lots. I'm also using Qcharts and medved quote tracker. From nasdaq level II I don't have much use. It seems to me that it is used by other traders to such extent that it really doesn't tell much any more. All of the beginners mistakes seem to apply to me. I usually lose 1/2 point at my bad trades and that is about 35% of time. My problem is when I am in a good trade I get out too early and miss major ralies. I get out with 1/2 point when I should get 5 points. And as soon as I make some profit I am eager to trade more and then I always make bad judgment and lose money. I tried to use bollinger charts but it produces to many signals.Do you think that 12 minute and 4 minute EMA's are suitable to trade stocks I have been trading? It seems to me that many times they produce signals and when I get in I get shaken out by noise. My stop loss is 1/2 point. Should I make it 1 point and use EMA 20 with EMA 7 instead? Do you think is it too early for me to trade so fast moving stocks? I was looking at some NYSE stocks but they are moving very slowly and with 100 - 200 shares not much profit can be made. I'm using interactive brokers and execution is not bad but it is definitely not possible to scalp. When I want to get out I use market order, it costs me extra 1/8 but gets me out on time. Sorry for so long post, I appreciate your help so far. Good luck with your trading.
Ahh, where to keep the stops once you're in the money, that's often the magic question. At least you're sticking to your stop loss if the trade goes against you. I personally plan my potential trades the night before, and set a target price for each trade where I'll take my profits if the trade goes my way. If I get into the trade and it hits my target price, I'll close out at least half the position if the stock still looks like it can go for more, letting the other half ride with a tight stop (i.e 1/2 point). If the stock seems to be running out of gas, I'll close out the whole position at the target price. While I'm in the trade, if it hasn't hit my target price yet, I'll move my stop 1/16 for every 1/8 point the stock price moves. So when the stock is 2 points in the money, my stop is 1 point behind. At 3 points I'm 1 1/2 behind, and so on, until my target is hit or I'm stopped out.
A couple of you mentioned a discussion forum at Ragingbull for TP. I'm looking all over their site, and I don't see where you type in TRPSPCTR. Where exactly is this search engine at the website?
mjt It's on the upper left hand side where you typically type in your stock symbol. Also, the symbol for Trade Prospector on Raging Bull is tprspctr.