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Breakouts, gaps and candle set-ups in speccy stocks

Discussion in 'Trading Strategies/Systems' started by bowman, Oct 2, 2009.

  1. bowman

    bowman

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    They say that patience in the market is a virtue. The problem with that is that I am an impatient guy.

    With that in mind, I have been looking for ways to maximise my returns (and minimise my losses) by trading those explosive moves that occur at the speccy end of the market.

    I have some way to go before I would suggest that I have perfected a 'system' to do this, but I thought I would begin by posting some before and after charts of such explosive moves.

    So here we go, and if you would like to contribute your 2 penny's worth to our education in this fast money endeavour, then please jump in anytime.

    It's pedal to the metal time. ;)
     

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  2. bowman

    bowman

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    I found NWE in today's 'Market Movers by Volume' feature in Phoenix charts.

    As you can see it was one of only a couple of stocks earlier this morning that showed a positive gain on big volume.

    I managed a couple of quick scalp trades.
    One after the gap up on the intraday chart and one on the first pullback.

    Making wages is a reasonable strategy on a day like today.
     

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  3. kam75

    kam75

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    It's always good to get on board a spec that goes for a gallop. Good money can be made nice and fast. The difficult part is getting the timing right and where to place a meaningful stop loss. A part of my trading is in the specs, namely focussing on trades between 0.05-0.10; 0.10-0.15, 0.15-0.20, in liquid stocks. Can I ask what your buy signal is, ie, the trigger to get into a trade? And how long you give your trades to work out before you close them?

    I only trade resistance breakouts. The break of resistance is my trigger. I look for a volume increase and price rise up to a good resistance. This alerts me to the stock. Then I place my order to buy the breakout and I set my stop immediately.
     
  4. tech/a

    tech/a No Ordinary Duck

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    One of the ways I like to trade them.
    Dont have to use live data to find them either.
    But live certainly helps timing for entry.
    Setting contingent orders gets them if they trigger the signal.
     

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  5. tech/a

    tech/a No Ordinary Duck

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    A few more past and present examples for interest.
     

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  6. bowman

    bowman

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    Hi kam

    Let me first say that during my time as a trader, over the last 7 years, I have looked at TA from just about every angle possible.

    My conclusion for now, is that I am personally not suited to trading from purely a mechanical method, even though I have done quite well in the past by employing strict rules for entry, exit, stop loss, position sizing etc.

    I am not at all interested in doing quite well. I need a bigger target.

    What I am sure of, is that on any given day, the market throws up incredible opportunities to make serious money in very quick time.

    To partake in those opportunities you need to be able to time the market, and as you suggest, and as most of us know, this is not an easy task.

    My performance in this respect leaves a lot to be desired but there are days when I am totally 'in the zone' and open to whatever the market offers up.

    At other times I really suck.

    What I suspect is that the potential to maximise fully in these opportunities has as much to do with one's state of mind than any mechanical signals. At the same time I acknowledge the importance of all the technical thingys I have learned ie. patterns, breakouts, gaps, position sizing, stop loss etc. and my trading strategy would be non existant without these.

    I have the trading tools at my disposal to be exactly where the action is (I'm live in every sense of the word) and I now intend to develop the mental tools to maximise the possibilities that my trading tools offer me .

    What I am aiming at, is to be fully open to the possibility of making high returns on any given day in the market.

    I have started this thread with some charts that show the kind of 'footprints' that I look for which might lead to high returns and I will post more of these in due course.

    I'm not sure where this thread will be in six months time, but I hope it will be a progression.

    It's possible that I have not fully answered any of your questions at this time, but I'll give it another bash in the cold, sober light of day.

    Bottoms up. :D
     
  7. bowman

    bowman

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    Unbelievable:eek:

    I'm hungover, and I just struggled through a lengthy reply to kam about my entry strategy on speccy stocks.

    I hit the preview tab to polish up the grammer etc. and my whole post disappeared - gone, vanished, finito.

    Not a good start to the day.:banghead:
     
  8. Chris45

    Chris45

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    I don't mean to sound patronizing but years ago, after losing a lengthy email, I learned to type up first in Word or Notepad, hit Ctrl+C every minute or so and then, when finished, copy and paste to the browser box. :)
     
  9. Chris45

    Chris45

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    I meant Ctrl+S of course. :eek:
     
  10. bowman

    bowman

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    You're right Chris and I should know better.

    A Sunday morning fuzzy head doesn't help to think straight. :)

    I'll have another crack at it when I'm in the mood again.

    In the meantime, and with a bit of luck, there will be a real time example to post on tomorrow morning.
     
  11. bowman

    bowman

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    It's goodnight from me for the next few weeks.

    I'm moving house, and moving some smelly excess baggage from my life which will take up most of my time in the short term (have you noticed that the short term is my favourite timeframe :)).

    I hope to continue posting on this thread, and others, as soon as I can.

    In a nutshell, I'm going to focus on how I maximise the trading tools I have at my disposal and also I want to pick your brains about how to be mentally open to taking from the market, some of the large amounts of money that's available to us all EVERY day .

    Alternative new age psychobabble meets capitalism in a high speed head on.
    Should be good for a giggle at least.
    ;)
     
  12. bowman

    bowman

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    Does this forum have real members or just a tired old load of bollocks?

    Or maybe just a couple of gurus who need their egos massaged daily, and a whole bunch of sycophants who gladly oblige.

    This is not a trading community and probably never will be.

    Since I first started posting here I've tried to make some genuine charting contributions, and tried to provide some banter which I hoped would put a smile on your face, but it seems that not one of you have the balls, or even the madatory sense of humour, to carry on the simplest of dialogue with me - particularly at the one time when I really need it.

    The pod bay doors are now permanently closed.

    Hope you all have enough oxygen to go the distance.
     
  13. newanimal

    newanimal

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    Hey Bowman, I'm kindof a semi newbie and dont feel seasoned enough to contribute that much at this stage. However, my trading style/approach is very much the same as yours. Going for those explosive moves...specy set-ups, breakouts, etc. I particularly valued and appreciated your posts and contribution. I dont have the tools yet to throw up charts/trendlines or I'd be doing so. I sure hope you reconsider and stick around and Im sure others feel the same.
    ok some dialogue...DRA appeared(appears) to be breaking out of a down trending retracement(last couple weeks of Sept) after it's explosive breakout at beginning of Sept. I guess one could construe it as a large flag as well. When gold broke through $1020 I couldnt resist jumping in. They seem like a good outfit and I like the fact that they're unhedged producers. Also, im a little perplexed that more miners arent firing up more givin golds action.:confused:
     
  14. nunthewiser

    nunthewiser

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    take care bowman and thanks

    i have not added anything here as the line between analysis and low content is a bit too fine a linefor me to walk on ,so i,d rather leave the space for those that will add meaningful content

    i have enjoyed your posts over the time and find your humour entertaining

    i do hope whatever it is thats got ya down is fixed shortly and you make a return to ASF as your input i regard as valuable

    take care

    an off topic nun
     
  15. Timmy

    Timmy white swans need love too

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    Good luck with the move Bowman - and I hope you can see fit to return to ASF. ASF needs more posters like yourself who actively seek out trading opportunities - you will probably find many of them, like Nunthewiser, in the chat room on a day-to-day basis, comparing notes and posting some insightful comment and analysis.

    If you want to trade some futures contracts in the future there are some of us (like me) trading in the S&P500 thread, and we welcome traders' input over there.
     
  16. explod

    explod explod

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    I think you are being a bit hard on yourself, there are many of us who admire your contributions greatly and as time and the thread develop I am sure more worthwhile input will come from others. Like you I have been trading for about 8 years and followed all the technical stuff and glued myself to the screen with success. It drove me round the twist. I now look at things more as a steady investor and by keeping my eyes open (but not too much) have picked up some magniificent opportunities in the verly lively market we have at the moment.

    My old fashined type way does not seem to be acceptable to the wizz kids on the block, who also know about shorting, and derivatives etc., I like trading as in buying and selling cows, look it up0 and down, look at the seasonal conditions, the onmarket/demand so to speak and you will not go far wrong.

    Cheers old Son and be good to chat again when redomiciled.

    explod
     
  17. michaelananya

    michaelananya Old dog

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    Thanks for your detailed posts
    I am retired and a total newcomer to day trading and it's all a bit like the first week at kindergarten for me.
    Clueless but keen and listening intently to what sounds like a foreign language.
    So, when you say:
    "I have the trading tools at my disposal to be exactly where the action is"
    I have to ask,
    what are they? and where are they? (these tools)
    Cheers (and feeling like a tool for having to ask)
     
  18. Habakkuk

    Habakkuk

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    bowman has last posted in 2009.

    I don't know specifically what trading tools he used. Maybe he gives details in one of his posts.

    Your question is not directly related to the thread title as such, but since you asked about day trading, I'll respond to that.

    The tools needed for day trading are live data, charts and depth of market (DOM), if available for the security being traded.
    That's the easy bit. You have a demo account already. If you want to look at many stocks at the same time you will need a subscription for the live data and software costing typically $50-200 per month. I believe you can get something along those lines from Interactive Brokers for $10 per month. However, to open an account you need to deposit $10,000.

    I said that's the easy bit. The knowledge to use those tools effectively is what's important. How do you propose to acquire that? And I don't mean the user guide.
    How do you decide what to trade, when to buy and sell and how much to allocate to each trade? How do you know that your trades will even have a chance of being profitable? And if you actually did make some money, were you just lucky?

    You can't answer any of this now.
    But you have already decided on day trading. First you will need to learn the basics, read some books, blogs and forum posts, maybe view youtube videos and trading guides, learn about the importance of risk management and psychology. Then you need to create a trading strategy. Back testing, robustness testing and paper trading are next. Eventually the big day arrives and you can trade for real.

    Let us know how you get on.

    There is another way. You can start trading tomorrow morning. DEMO ONLY !!
    The tools you will need are a coin, a piece of paper and a pen. You've got the demo account, right?

    Here's how it works:
    at any given moment the probability of the next price move being up or down is roughly 50/50. It's not always EXACTLY 50/50 but to identify those moments and exploit these non-random moves is beyond your ability for now ... unless you are clairvoyant.

    I would suggest you trade the ASX 200 Index CFD tomorrow. I don't know what they call it at Saxo. It should have a 1-point spread during the day. If you look for it at night, the spread will be (much) wider.
    That market opens at 9:50 AM. Because you are not in a desperate hurry, you place your first trade at 10:00.

    This is bar #1
    Flip that coin and click on BUY if it's heads, SELL on tails. Make it $1 a point. No stop loss, no profit target.
    Display 5-minute bars on the chart and just sit there ... until the next 5-minute bar begins.

    This is bar #2
    If the price has moved against you, close the trade STRAIGHT AWAY. Otherwise do nothing. Either way, whether the price has moved in your favour or against you, there is nothing more to do until the next 5-minute bar begins. So, if the previous bar was a loser, you will have NO TRADE on in this current bar; if it was a winner, you are still in the same trade.

    Now the next bar begins.
    This is bar #3
    If you are in a trade, check to see if that last bar was a winning bar. If so, do nothing. If it was a losing bar, close the trade.
    If you are NOT in a trade, it's time to flip that coin. Click BUY on heads, SELL on tails.

    Bar #4
    If you are in a trade and it was a winning bar, do nothing. If it was a losing bar, exit.
    If you are not in a trade, flip the coin. BUY on heads, SELL on tails.

    That's it! Your trading strategy. Look at 5-minute bars. Every time one of them has completed and a new bar has started, it's decision time. The simplest thing to do is to take action as above purely on the result of that single bar.

    Wait. What about the piece of paper?
    Your trading rules are written on it. You write them and you follow them. Make a little flow chart or something.

    At most you could make 6 trades each hour, 36 buys and 36 sells a day. On a typical day about 10 trades.

    In case you don't realise, this is a losing strategy with a written guarantee. If the coin was biased 55/45 and you knew which way, you might be on a winner.

    The point of this exercise is for you to find out what day trading is like. Is it even possible for you to execute this primitive strategy reliably day after day? There is no monetary risk involved. Your ego is not on the line - because I gave you the strategy. It's not your fault that it's losing money.

    The alternative as I said above is to do all the 'learning' first and then find out if you can execute the plan. Keeping in mind that you can't learn this stuff like you can learn Geometry or Dancing. There are no TAFE courses that make you a profitable trader.

    While you're waiting for those 5-minute bars to form, you might want to take the opportunity to observe how the chart progresses and how the price behaves. It's very simple, no DOM to confuse you, no volume to worry about, just the price chart. Eventually you might recognise some 'pattern' that seems predictive. This is what you will need in the end to be profitable. To replace the coin with directionally informed entries. Similarly with exits - predict when a trend is likely to reverse.

    But that's further down the track. Just for now try to follow simple rules reliably. Not everybody can do that. I know, I can't, although for me there's always real money on the line.
     
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  19. michaelananya

    michaelananya Old dog

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    I appreciate your thoughtful remarks and your time, and I thank you for spending it my way. So far I have been playing the demo for 2 weeks and lost $5,000 already doing the most idiotic things. FX was especially bewildering and I still don't quite understand the basics of even a trade ticket. I didn't realize just how difficult this is, how much I don't understand, how much I may never understand. But I am beginning to realize just what a steep learning curve lies ahead. I have learnt a lot in 2 weeks but I realize it is a tiny amount of the discipline overall. If it is indeed a discipline and not some self-deceiving form of gambling.

    I do not intend to leave this demo for 12 months minimum - And I have persuaded them to let me play their demo for a year. But I may well never trade at this rate. Not a lot of cerebral neuroplasticity left at mine age.

    But I am enjoying learning something new, that will be good for my brain.
    And I do enjoy meeting good people along the way. That will be good for my heart.
    So thanks again for taking the time
    ["How long, O Lord, must I call for help?" - Not that long at all, it seems]
    Cheers Habakkuk
     
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