Setting Buy Prices

[Milk Man]

Hey guys,

Just looking for some tips on setting contingent buy orders once you get a buy signal so as not to chase prices too high.

The method i'm intending to use is to calculate the average trading range then add this on to price. How many days should i calculate the ATR over and what should i add it to?

I can't really follow live price action (too much bloody work!)to do it manually so any other methods/tips for automated systems would be much appreciated.

 

[tech/a]

This will depend on your timeframe.

But if a stock triggers a buy my own philosophy is that I want to buy it.
So Ill place orders at market--same when I sell--at market.

But to your idea.
The longer the trading timeframe the wider you can go as your return to risk is generally larger.(If you dont know your return/risk (and most dont) then you should keep records to determine it.)

But I would be using a 14 day ATR and initially say a 1.5 deviation as an intitial buy maximum.
It really is an arbitary thing.

You could also use say a % of your stop.
EG if you have a 10% stop on purchase price here is an example on a $3.50 stock.

Stop 35c from buy price
Maximum buy 17c from buy then raise stop to 35c from buy.

Can you see what I mean?

 

[Milk Man]

yeah, thanks for that.

would you be placing the ATR buy order on top of closing or high price?