Daffy Trades Micro Patterns under $1

[tech/a]

Something I've done for years.

I enjoy it and best of all I do well out of it.

Haven't done much lately so thought Id crank it up.

Petes done such a great job with the continuation of PAV's thread with
his own twist and generated some good interest.

Inspired me

If there is enough interest (say over a month)
Ill keep it going for 6 and see how we go.
The aim is to get quick running trades with high reward to risk.
All the way minimizing risk and maximizing profit.
Lots of losses---good wins.

Trades are discretionary and entries and exits are during the day.
Hold time is based on technicals.

When I'm seriously doing this I use live data feeds and
3-15min charts---might do this again if it pans out.

I think this is sufficiently different to anything else presented.

Will expand as we go.

What you think---??

 

[RazzaDazzla]

Re: Daffy Trades Micro Patterns under 10c

I like the idea of the thread. There seems to be some money moving from big banks to small caps at the moment, so you might be onto something.

I noticed in your charts it had an "Alert". Do you have software scanning throughout the/end of day for setups? Are you able to give the basics of your setup criteria?

From quickly looking at your provided charts, it looks something like:
- after 31.8% - 50% retracement, buy using a TTE.

Re. the risk/money management - you'd be risking ~1% of available capital on any one trade?

From a position sizing practical side of things - are you able to get much margin on these using IB? Or are you using a OTC CFD provider, who too probably wouldn't offer margin on these low caps.

Lastly, is low volume on the small caps a concern?

 

[DaveDaGr8]

Re: Daffy Trades Micro Patterns under 10c

Like the idea ... will be watching this one.

I have a scan VOL/Total shares. It sorts out in order of tradeable through to untradeable, well that's my theory and i'm sticking to it.

 

[myrtie100]

Re: Daffy Trades Micro Patterns under 10c

I will definitely follow this thread tech/a.

I usually avoid any stock under 50c.
I'll be really interested to see how you trade these, especially how you manage low liquidity.

Thank you for giving so much of your time, I'm really grateful..

 

[tech/a]

Re: Daffy Trades Micro Patterns under 10c

Under the pump.

I'll get some time to answer questions today.
Both trades triggered stops moved on both
This morning.
To 8c and 8.3c Ill go through position sizing
Trade logic ( mine ) etc soon.

I trade these aggressively.

 

[tech/a]

Re: Daffy Trades Micro Patterns under 10c

I like the idea of the thread. There seems to be some money moving from big banks to small caps at the moment, so you might be onto something.

This is not the reasoning behind my trading this particular stock type.
I'm looking for volatility and this is where you can find large swings. I'm also looking to work Reward to Risk very hard and I find micro patterns ideal for this. One big plus is that once stock reaches 10s it then trades in half cent blocks so moves can often be explosive but pullbacks in pricing below 10c are only in .01c lots.
Fast up and slower down!---well that's the theory.

I noticed in your charts it had an "Alert". Do you have software scanning throughout the/end of day for setups? Are you able to give the basics of your setup criteria?

Yes I do Its very simple I look for trades under 10c that have an average liquidity above $300k
I also find that if these get going then for the time there is action liquidity isn't an issue.

From quickly looking at your provided charts, it looks something like:
- after 31.8% - 50% retracement, buy using a TTE.

No No fib only pattern and price. Pattern can and does include single bar and multiple bars--also Support and resistance plays a part.

Re. the risk/money management - you'd be risking ~1% of available capital on any one trade?

Around that but it will vary. Initially the risk could be 1-2% but I'm looking for a final Risk to be well under this level possibly .5 to .75 of a cent. (This will be from closed trades.) You'll notice I move stops wether the trade under or over performs. I'm very aggressive to Break even then a little more relaxed unless I see price action or volume or pattern that is alarming. Exit can be due to this or at a target.---Discretionary. Ill look at trading around 10 stocks if I can find them. That is pretty rare. If it gets hard to find ill increase the criteria to max 20c---but they react differently as well---from my research.

From a position sizing practical side of things - are you able to get much margin on these using IB? Or are you using a OTC CFD provider, who too probably wouldn't offer margin on these low caps.

I don't use margin on these---you could and if IB offered it like they used to Id be happy to use it---but I think the way I use margin and most others (Punters) use it is vastly different.

Lastly, is low volume on the small caps a concern?

Yes my criteria is average of $300K but this will in some cases not be reached on a daily basis.

To the Charts

I will use a base Capital of $30000.

Initial risk will be 1% or $300 but this may alter as I go I may also add to positions quickly
and remove part positions (after addition) just as quickly. I have re loaded live data so hopefully I'm looking at the screen if we get a runner.

Click to Enlarge



I do place all closed trades on my watch list.
Because I am so aggressive on stops opportunities may come up again quickly.


This is being presented as an educational thread and I am not recommending any stock or trade.
Seek professional advise---I'm a DUCK.'

 

[myrtie100]

Re: Daffy Trades Micro Patterns under 10c

Do you put your stop order into the system in advance?

 

[systematic]

Re: Daffy Trades Micro Patterns under 10c

One big plus is that once stock reaches 10s it then trades in half cent blocks so moves can often be explosive but pullbacks in pricing below 10c are only in .01c lots.
Fast up and slower down!---well that's the theory.

I just had a very crude, one day point in time look at this (so take it with a grain of salt). This was not a sophisticated analysis, I just wanted to see whether a rough look at one day would show this to be a pattern.

All I did was look at those under 10c and then the 10-20c lot.

I set a minimum of 1c for the first group (figuring that, according to the hypothesis, these stocks might move differently again).

I then obviously confined it to those that actually traded and moved on the day.

Due to potential differences in companies, I took a look at market cap (which did show a difference in median etc, as you'd expect) and equalised it crudely to incorporate the same market cap range.

From there I simply looked at the median % move of stocks that went up (or down) on the day within each group: Group A (1-9.9c) and Group B (10-19.9c)

I expected to see bigger one day moves in the second group (if the hypothesis were true) but didn't.

The median move of stocks that went up in Group A was 5.9% to Group B 5.1%
The median move of stocks that went down in Group A was -4.3% to Group B -4.4%

Of course, there'd be other ways of looking at this other than simple median move (such as percentage of those that have big moves) and other things like equalising for volatility etc. Even with this crude measure you'd like to look at it over more than just one day in time! But this was a 5 minute job, and for whatever it is worth (if anything at all) it certainly didn't scream out a pattern at all.

Anyway - just wanted to take a quick look and in no way intend to take this thread off topic. All the best with the trading and posting!

 

[tech/a]

Re: Daffy Trades Micro Patterns under 10c

Do you put your stop order into the system in advance?

If I move the stop at the EOD then ill place it in the system.
If I see a move during the day which is particularly adverse I can sell
at market straight away or place it in the market as a conditional sell.
in this case it was set in the market as a conditional sell order.
So is the other one.

Systematic.
Can you measure Volatility on average for each.
Id expect then that B would be greater.

(got the resident quant in the next office but don't want
to get him involved in this).

Moved stop to B/E on NMT

 

[systematic]

Re: Daffy Trades Micro Patterns under 10c

Systematic.
Can you measure Volatility on average for each.
Id expect then that B would be greater.

(got the resident quant in the next office but don't want
to get him involved in this).

A very quick and dirty job, but it was 5 mins or I'd probably not get back to it...

Yep, Group B had a lower volatility score on average (or median)...so if you equalised it, you'd get bigger moves for Group B (but only slightly, nothing major here). I'm also not sure in my mind, what the practical difference is.

I did have a quick look at: what percentage of stocks that were up for the day (in both groups) had a big move (as that's what you want). Both groups had the same percentage of stocks making a big move. In fact, given this is limited to one day's data, I was surprised that it even worked out like that.

This isn't market truth of course, just a point in time look. But based only on that point in time look, I wouldn't personally be tempted to see any practical difference between the groups. But again, this is only one way of looking at it, there could be much better ways.

 

[RazzaDazzla]

Re: Daffy Trades Micro Patterns under 10c

Moved stop to B/E on NMT

You must be happy with NMT after today.

What's the stop loss strategy? I know you said you were aggressive to get to B/E but then is it a trailing SaR? Last x days low?

It would be good if you could continue to show new charts of setups as they present just to give an insight into what you are seeing out there.

P.S. I liked your previous comment re. you don't use Margin like the punters do. My understanding is the punters use Margin to put it all on one or two stocks - where as the duck uses margin to maximise the number of positions he can have open.

 

[tech/a]

Re: Daffy Trades Micro Patterns under 10c

You must be happy with NMT after today.

What's the stop loss strategy? I know you said you were aggressive to get to B/E but then is it a trailing SaR? Last x days low?

Good day --- Ill be looking for weakness as it tests the latest high.

It would be good if you could continue to show new charts of setups as they present just to give an insight into what you are seeing out there.

That's my intention as they appear.

P.S. I liked your previous comment re. you don't use Margin like the punters do. My understanding is the punters use Margin to put it all on one or two stocks - where as the duck uses margin to maximize the number of positions he can have open.

No----different again.

I use it only when my position sizing means that I don't have enough capital to take a trade I want.
This way I don't increase risk.

Here is the latest setup I like.

It appears 8c is a support level having held on 3 occasions.
There has been strong volume pushing this back up into the range again.
Very aggressive trade at .088c, Less aggressive at .094c

Click to expand

 

[RazzaDazzla]

Re: Daffy Trades Micro Patterns under 10c

No----different again.

I use it only when my position sizing means that I don't have enough capital to take a trade I want.
This way I don't increase risk.

That's kinda what I meant by "more positions". E.g. If you're risking $500 on a $0.0950 entry and a 0.085 stop; this means you need 50,000 shares @ $0.08 = $4,750. For a modest account of $30,000 you can only enter 5 positions before you're maxed out.

But then even with IB leverage or CFD leverage - I'm guessing they're not offering much LVR on these penny stocks.

 

[Wysiwyg]

Re: Daffy Trades Micro Patterns under 10c

Something I've done for years.

I enjoy it and best of all I do well out of it.

Haven't done much lately so thought Id crank it up.

I don't believe market conditions are right now for speculation in this sector and will be interested in how the paper trades go.

 

[tech/a]

Re: Daffy Trades Micro Patterns under 10c

I don't believe market conditions are right now for speculation in this sector and will be interested in how the paper trades go.

I don't think the Market has an opinion of right or wrong conditions.
People of course do.
My observation is that in the short term unless there is a GFC in
Progress opportunities tend to be ever present.

 

[tech/a]

Re: Daffy Trades Micro Patterns under 10c

NMT
Pending order at 10c for another parcel.
Initial Stop .096.

 

[RazzaDazzla]

Re: Daffy Trades Micro Patterns under 10c

NMT
Pending order at 10c for another parcel.
Initial Stop .096.

Nice pyramiding. Is your additional position size the same as your original or a fraction of?

Do you then have 2 separate stops - one for the original position and one for the added position?

 

[tech/a]

Re: Daffy Trades Micro Patterns under 10c

Nice pyramiding. Is your additional position size the same as your original or a fraction of?

Do you then have 2 separate stops - one for the original position and one for the added position?

Yes
Separate trades.
Parcel is 75000 Initial Risk is .004c
Stop moved now to .098

 

[tech/a]

Re: Daffy Trades Micro Patterns under 10c

Pyramid stopped $150 loss.
Initial trade still open.

 

[craft]

Re: Daffy Trades Micro Patterns under 10c

Pyramid stopped $150 loss.
Initial trade still open.

I take it this thread is only for entertainment value as NMT gapped from 9.9c to 9.6c and didn't trade enough volume to exit 75,000 until 9.4c - and that's without considering your impact if the trade was real.