mslattery@dc.rr.com
91 posts
msg #98430
- Ignore mslattery@dc.rr.com |
1/5/2011 1:39:30 PM
Hi: I have several strength filters that produces lots of candidates. My problem is choosing an entry point. Many of the stocks are hits to these filters because they have made big moves the previous day. These wide range candles make me resistant to enter a stock because the now also look like potential shorting opportunities.
So the question is this. When your filter returns a lot of strong stocks, (Strong: Price, Volume, MA(10) > MA(30) > MA(200)), What can you use as an entry signal that will distinguish between stocks that have undergone a short surge from those on a true upward trend?
My trading time is flexible. Glad to hold a stock for a year but looking to yank some short term profits out of the market in a more "hit and run" fashion while the market is moving this strongly. That would put the time frame of this question at just a few days.
Thanks to everyone who has assisted me in developing my filter.
Michael
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jimvin
173 posts
msg #98626
- Ignore jimvin |
1/17/2011 10:31:29 PM
For what its worth, first understand that my style of trading is 5-day-hold-'em; I buy on Monday at Market open and sell at a 5% profit or at 3:30 on Friday - everything, regardless of whether its hit the 5% mark. Also know that I use a stop-loss of from 5% to 8% depending on how I feel about the Market. Finally, I only buy 3 to (a maximum of) 5 stocks per week.
All of that background is - I think - an essential qualification to what follows (since different styles require different strategies.)
That said, in the course of my trading I've found that on the whole gap-ups do not work for me; a gap-up (at least in this market) is usually followed by profit-taking and a plunge in price. A gap-up play may work for day-traders or long-termers, but not my trading style.
Things I look for when considering a stock include the candlestick pattern (a steady rise over sonsequtive days perferred) and - depending on the fuilter (since each filter is sensitive to sifferent criteria) - the P&F chart.
Diisclaimer: StockFetcher does not support P&F charts, so I supplement it with data from StockCharts.com.
In this market (starting at about August of last year) I've found that the RSI is of little consequence in the stocks my filters identify. (Traditionally, an RSI of about 80 is disasterous and idnicates an overbought stock.)
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Walid
130 posts
msg #98702
- Ignore Walid |
1/22/2011 2:32:58 PM
[Quote]
What can you use as an entry signal that will distinguish between stocks that have undergone a short surge from those on a true upward trend?
[/Quote]
I am not sure how is the entry signal will distinguish between the two above mentioned scenarios!
Maybe I am not clear on what exactly you are asking. If your question is how to identify a strong up trend, stocks in an uptrend are identified by the slop of of EMAs, the relative position of of two EMAs (slow and fast with the fast being > slow and both sloping upwards), trend lines, the vast majority of the price is between the fast EMA and the upper price channel or Bollinger Band, etc.
On the other hand, if you are asking where to enter after you have already identified your uptrend, I follow Dr. Alex Elder approach of entering in or very close to the value zone. He defines the value zone as the area between the two EMAs. Profit taking will eventually pull the price back from extreme highs to the value zone. You should wait - patiently - for this to happen before you get in. Once the price is in the value zone, you buy with a stop below the slow EMA. Once the price start moving to your favor, move the stop to breakeven and wait for your target to hit, normally the upper channel. Then it is your decision to get out, scale out or trail stops. Not all up trended stocks return back to the VZ, it might take off without you of course leaving you questioning your strategy and bite your nails. However, this strategy has much better odds of success than chasing. Hope this answers your question. if not, feel free to prob.
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miketranz
961 posts
msg #98708
- Ignore miketranz |
1/23/2011 12:06:25 AM
From my trading desk:The best way to enter on wide range candles is to buy into the close.This is one of my bread & butter set ups.I would buy only if the volumes at least 100% higher than the previous day.When the stock opens the next day,one of three things will happen.1)Stock gaps open for a decent profit,you take it.More times than not,this is the most likely scenario.2)Stock opens where it closed the previous day,you place a hard stop right under that price,see if the buying power resumes.3)Stock opens below close from previous day,you sell out.It's really that simple.Money management is what it's all about.It will keep you in the game long enough to find out what works for you and what does not.....
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four
5,087 posts
msg #98710
- Ignore four
modified |
1/23/2011 12:42:02 AM
miketranz,
1. Your filter to find "wide range candle" is posted where?
2. What do you take as a "decent profit"?
3. Any thoughts on the "tall candle" filter below as it relates to your post above?
Thanks
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miketranz
961 posts
msg #98713
- Ignore miketranz
modified |
1/23/2011 11:42:17 AM
Four,I don't use any one particular filter.What I do is wait till the end of day,near close,scan for stocks 1)Moving on high volume w/longest day range 2)Moving on news w/high volume.3)Highest % gainers.4)Stock must trade 1,000,000 avg vol 30 days.5)Volume 100% higher than previous day.You want to trade in highly liquid stocks,that you can get out of right away,to protect your downside.These are the stocks I want to be in on the close.Also,if the stock has "followed through or gapped open" in the past,all the better.Where you take your profit on a gap open is subjective.I have found through experience that the bigger the gap,more often than not,the stock retraces,sells off,profit takers come in.The more you use this set up,you'll get a feel for when to exit.You really have to be "on the screen" at market close & on market open to trade this set up successfully.Your filter is a good start,but I would like to see if you can add in my qualifiers to your filter.Also,if you can come up with a filter with just my qualifiers.Thanks,Mike....
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