TheRumpledOne
6,411 posts
msg #28775
- Ignore TheRumpledOne |
9/21/2003 4:39:56 PM
EWZuber:
I tested your filters with one addition:
ADD COLUMN RSI(2).
Your filters give stocks with RSI(2) over 20.
Now here's how RSI(2) would help a trader with those stocks...
Your second filter found ASTM which just so happens to be on my watchlist (I love biotechs).
Look back on 8/7/2003.. the rsi(2) < 1 filter caught ASTM at a price of .81.
ASTM closed Friday at 1.64. THAT'S A DOUBLE.
So, for those momentum stocks your filters find, I would suggest you track them using RSI(2) and entering when they either bottom or show a positive divergence.
Each stock will have a different "bottom" for RSI(2). Just look at the past 3 to 12 months to get an idea what that stock's bottom is. Usually it will be less than 20.
And I agree that one needs to watch their portfolio daily using stops to protect from loss.
Thanks for the educated analysis.
MAY ALL YOUR FILLS BE COMPLETE.
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TheRumpledOne
6,411 posts
msg #28776
- Ignore TheRumpledOne |
9/21/2003 4:48:53 PM
EWZuber:
BCON is a perfect example of how RSI(2) would have saved your profit.
BCON:
on 9/5 closed at $.64 and rsi(2) was 8.93.
on 9/10 closed at $.63 and rsi(2) was 18.78 giving a buy signal on positive divergence.
on 9/17 closed at $.93 and rsi(2) was 97.72 signaling a sell.
on 9/18 closed at $.91 and rsi(2) was 84.96 another chance to exit with a nice profit.
The problem is people get GREEDY. Close to 50% profit in 7 calendar days. Isn't that enough?
If you learn to trust your tools and are not greedy you can make steady returns.
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EWZuber
1,373 posts
msg #28792
- Ignore EWZuber |
9/22/2003 1:50:06 AM
TheRumpledOne
That filter was just something I have been playing with. Momentum players like Oneal only buy stocks that become oversold but once in a very great while due to their very aggressive accumulation. And they are bought very near 52 week highs as the handle pattern ( for example ) of the 'cup w/handle' is complete. A good momentum stock is in such great demand that as soon as one trader sells his shares there are 2 more waiting to buy them. In order to identify the stocks that are in the greatest demand, they need to break above all resistance. So buying oversold stocks in an attempt to hit a long term mover becomes a roll of the dice. One may have to buy dozens before one of them breaks all resistance levels forming a new 52 week high. Some of these with the best ratings go on to make several hundred percent to one thousand percent gains and more is not uncommon.
I'm not suggesting that, that filter I posted was a good example for a momentum play. It was just a for instance. I suspect that a short term indicator like RSI(2) can be applied successfully to getting into these hot stocks, but one may need to apply it to an hourly chart. Might be worth playing with.
A friend of mine turned me onto ADX, DMI+, DMI- which turned out to be a reliable indicator but lagging other TA. In playing with it I found that by shortening the sample period to DMI(2) and applying it to intraday charts it became much more functional for my style.
The very cool part about it is that ( on hourly charts ) if ADX is rising, DMI+ has crossed above DMI- and stochastics are rising, so far as I have found 100% of the time the stock opens higher the next morning.
I'm sure you have a means to signal exit points. My point is that many here on SF forum are not at that point to where they should even be considering day trading or swing trading OCTBB or penny stocks or trading them at all, IMO. It is shark infested waters and extremely risky. Certainly no place to start.
Using linear Regression lines and RSI seems to be a viable option for signaling entries and exits. The advantage to it is that the indicators are all pre made for you and decisions can be made quickly with a minimum of effort on your part.
Here's how my system lays out the trade on BCON.
Trendline resistance was tested as support on 9/15 on daily charts.
Moving to hourly charts a trendline is drawn from the high on 9/11 @ 9:30 @ $0.76 to 9/15 @ the low on 1:30 ~ 2:30 where this trendline resistance is broken and tested as support at $0.65. Here is the entry.
Now a trendline is drawn from 9/15 @ the low of 2:30 @ $0.65 to the low of 9/16 @ 2:30 @ $0.68. Here BCON closed the session and the hourly candlestick right on support of this trendline.
Now a trendline on 9/16 @ the low @ 10:30 @ $0.71 is drawn across the lows of 11:30 @ $0.74, 2:30 @ $0.84 & 3:30 @ $0.87.
From here there are two courses of action, aggressive and conservative. Aggressive is conducted on the 5 minute charts using the same criteria which results in max gains.
The conservative approach is to continue this trendline on hourly charts where it is broken at 1:30 on 9/18 @ $1. Here is the conservative exit.
This yields a 53.8% gain.
Aggressive 5 min. chart trendline break is at $1.05 ~ $1.06.
So it's not just a matter of being greedy or 'is 50% enough' gains. It is a matter of risk for those that are not ready for this kind of fast paced technical trading.
I would suggest a slower paced trading style for most people using daily charts, indicators and trendlines rather than hourly and 5 or 1 minute.
The gains from this type of trading can be very rewarding also.
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TheRumpledOne
6,411 posts
msg #28795
- Ignore TheRumpledOne |
9/22/2003 7:50:04 AM
EWZuber:
Thanks for keeping the discussion both civil and educational.
I appreciate you sharing your "secrets".
MAY YOUR FILLS BE COMPLETE.
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