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Philip wrote:
> So short term trends are your cup of tea. Well, tell a little more
> about how you identify them. What implications does your trend
> definition have for getting on board the move? Do you place a stop
> above/below the market and wait to be stopped in, say, at a certain
> set distance from the close, the high, the low? Do you simply trail a
> stop behind each successive high/low? Do you buy/sell the close if
> it's sufficiently strong or weak? How about the open the next
> morning?
I've been paper trading lately with the idea of trying to capture about
10% on very short term trades. In a recent 3 month span, I did 6 trades
that were closed out the same day of entry (some were real money, some
not). Most of the other trades lasted up to about 5 days, but that's
longer than I like to hold.
My approach has been to screen for stocks that have, for the past 3
weeks, been in rising short term trends. These are now correcting and
falling to or slightly below a 10d EMA. I look at volume to have slowed
in this correction, and OBV remains pretty strong. I try to set up
these buys a day or two ahead. Then, just before the close with price
looking like it will close once again above the 10d, I put in the order.
The next day, I watch the first hour, or so. If price falters, I exit.
The assumption being that I've made a mistake. If price moves out, and
it will often gap up and give me my target (or better) right from the
open, I hold. Following a gap, price will sometimes pause the next day
(day 2 in the trade) and that's when I take what's there and move out.
This shows promise of getting me from about 7% to 12 or 15% much of the
time. So far this year, in real money trades with this, my losses are
averaging about 5% and my gains are in the range I just stated. I pay
$9.95 per ticket for any size order and including limits or stops. This
idea wouldn't work well with higher commissions.
Ken
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