A strategy that needs to be shot down...please.

[yoyomama]

This is probably another form of Roulette I suppose but hear me out and please shoot me down....I need it. I've been wanting to test this so I need to be told it's ludicrous.

I have a list of about 20 stocks in the $3.50 - $6.00 range.
The past 5 days I'd say all of them are better than 85% of getting from "Market Open" to at least +.05 at some point. Is it suicide to buy a few of them at the Market's Open...and set the limit for +.05 of Market Open to pick up a few hundred dollars. It has to be at least 2500 shares a piece to make it count.There's no guarantee you can grab the Open price I understand....that's one of the wild cards.

I'm sure this can't work but it does seem like alot of stocks hit +.05 pretty early. Obviously I can't do this with Google or Apple, etc so I'm looking at lower priced stocks.

[tlsurfsupper]

Yo. I like how you think. I would say however, this is full of holes in many areas. Not even sure if curve fitting would increase the probabilities / decrease the 1:1 risk.

You have transactions costs to include in your run for $.05.

You have a money base constraint forcing you into low priced stocks.

A $.05 as a high probability likely has a $.15 down side. A minimum r/r ration would put yuour stop at $.04 or more depending on comission structure.

Try this...for starters.

Draw previous high, low, and close and today's open on a few of those stocks that have decent average range. Also draw any major resistance you may see on the dailies that are in the vicinity of those above stated lines (you don't want to pay the price of an obvious s/r line if you are staring at short term charts!!).

May want to see how close you are to the MA50 and MA200....those effect a group of traders and can influence your trade.

Calculate the size of the swings in relation to your lines over at least 10 days and look for patterns.

Keep the r/r above 1. Look for expectancy above 50%.

That is the basis of a profitable system.

[madcowdisease]

There's no guarantee you can grab the Open price I understand....that's one of the wild cards.

Not sure if your broker offers them but At The Open and At The Close orders do exist. The premise is if the order cannot be executed at the opening or closing price then it is canceled immediately.

[fizzziks]

This is probably another form of Roulette I suppose but hear me out and please shoot me down....I need it. I've been wanting to test this so I need to be told it's ludicrous.

I have a list of about 20 stocks in the $3.50 - $6.00 range.
The past 5 days I'd say all of them are better than 85% of getting from "Market Open" to at least +.05 at some point. Is it suicide to buy a few of them at the Market's Open...and set the limit for +.05 of Market Open to pick up a few hundred dollars. It has to be at least 2500 shares a piece to make it count.There's no guarantee you can grab the Open price I understand....that's one of the wild cards.

I'm sure this can't work but it does seem like alot of stocks hit +.05 pretty early. Obviously I can't do this with Google or Apple, etc so I'm looking at lower priced stocks.

Mind sharing that list? I'm quite interested in it.

[simpletradesnet]

This is probably another form of Roulette I suppose but hear me out and please shoot me down....I need it. I've been wanting to test this so I need to be told it's ludicrous.

I have a list of about 20 stocks in the $3.50 - $6.00 range.
The past 5 days I'd say all of them are better than 85% of getting from "Market Open" to at least +.05 at some point. Is it suicide to buy a few of them at the Market's Open...and set the limit for +.05 of Market Open to pick up a few hundred dollars. It has to be at least 2500 shares a piece to make it count.There's no guarantee you can grab the Open price I understand....that's one of the wild cards.

I'm sure this can't work but it does seem like alot of stocks hit +.05 pretty early. Obviously I can't do this with Google or Apple, etc so I'm looking at lower priced stocks.
Getting from "market on open" to +.05 AT SOME POINT will get you stopped out unless it moves immediately in your direction in that first few seconds. If it opens, you fill and it immeditely drops .15 then spikes up .3 all in the first minute bar it will probably look to you after the fact like it belonged in that 85% that worked but it really stopped you out and fast.

http://simpletrades.wordpress.com/

[yoyomama]

Mind sharing that list? I'm quite interested in it.
Hey. I'm not recommending this & I think I exaggerated some...here's 11 of them, not 20:

FIG HBAN FITB SNV LIZ AMR LXP RF REV F AMD

For the past week(5 days)they got to +.05 from the Market Open 51 out of 55 times.

[yoyomama]

Getting from "market on open" to +.05 AT SOME POINT will get you stopped out unless it moves immediately in your direction in that first few seconds. If it opens, you fill and it immeditely drops .15 then spikes up .3 all in the first minute bar it will probably look to you after the fact like it belonged in that 85% that worked but it really stopped you out and fast.

http://simpletrades.wordpress.com/


Thanks for the reply...I know I'm missing something.

How will I get stopped out if I don't have a stop set? Will it just hit the +.05 Limit too quickly and my order won't be filled or will I not be able to set the .05 Limit quick enough since it's moving so quickly at Open or....?

Again I know I'm missing something basic here.

[yoyomama]

Yo. I like how you think. I would say however, this is full of holes in many areas. Not even sure if curve fitting would increase the probabilities / decrease the 1:1 risk.

You have transactions costs to include in your run for $.05.

You have a money base constraint forcing you into low priced stocks.

A $.05 as a high probability likely has a $.15 down side. A minimum r/r ration would put yuour stop at $.04 or more depending on comission structure.

Try this...for starters.

Draw previous high, low, and close and today's open on a few of those stocks that have decent average range. Also draw any major resistance you may see on the dailies that are in the vicinity of those above stated lines (you don't want to pay the price of an obvious s/r line if you are staring at short term charts!!).

May want to see how close you are to the MA50 and MA200....those effect a group of traders and can influence your trade.

Calculate the size of the swings in relation to your lines over at least 10 days and look for patterns.

Keep the r/r above 1. Look for expectancy above 50%.

That is the basis of a profitable system.
Hey thanks...I'm taking this all in!

[simpletradesnet]

Thanks for the reply...I know I'm missing something.

How will I get stopped out if I don't have a stop set? Will it just hit the +.05 Limit too quickly and my order won't be filled or will I not be able to set the .05 Limit quick enough since it's moving so quickly at Open or....?

Again I know I'm missing something basic here.

I was assuming a stop because of the earlier reply from someone who was talking risk/reward parameters.
Even without it I still hate that first minute or so--too many symbols spike one way and reverse the other but you cant always tell which is coming first.

[Stay Liquid]

Looking at a few of these, it seems they spike early then trail off quickly into the session, and many of them never make it back near the early spike. Seems that to make it work you'd need to put in your market order (for opening) and your sell limit order at the same time - missing a few minutes may make a big difference.

It would be interesting to take the same set of stocks and run some numbers on +.05 through +.10, it may be more worth your while to wait for 10 cents up.

[yoyomama]

It would be interesting to take the same set of stocks and run some numbers on +.05 through +.10, it may be more worth your while to wait for 10 cents up.

Hey thanks...my original thinking was .10 but then I chickened out & went lower.


Just did the math...80% of the time it at least hit +.10(44 out of 55 days).

Maybe I'll try it with the Virtual Scottrader thingie on Monday since I've been getting my ass kicked lately with real money.

[tlsurfsupper]

Hey thanks...my original thinking was .10 but then I chickened out & went lower.


Just did the math...80% of the time it at least hit +.10(44 out of 55 days).

Maybe I'll try it with the Virtual Scottrader thingie on Monday since I've been getting my ass kicked lately with real money.

Try this....

The stop is critical.

You have expectancy of 80%, but what is the defined risk?

Say you are trading 1000 shares...profit target is that $.05 for a $50 profit. Using Scott, you net $36 including $7 one way/$14 round trip.

The trade goes against you for $.05 and does not recover...loss= -$64

The trades goes against you for $.10 and does not recover...= loss -$114.

What if it dives $.35....do you stay? Hold overnight?

So on, so on, so on. Losses can quickly get out of hand.

2 losses at $.05 and you're first $.05 target remains a net loss of $92.

If you hit a string of losers while still maintaining the 80% expectancy, you will experience a large drawdown and that will effect your decisions. You cannot control which of those 80% trades and which order they will appear.

SO.....defining risk is the key piece of this system. Without a stop, at least mental, you are gambling.

Now, if you can capitalize on the $.10 target and it's associated expectancy with a $.05 or better stop, you will have a profitable system. Then, it is a matter of share size overcoming your fees and your ability to execute thousands of shares to make it worthwhile.

Hope that helps somewhat.

[yoyomama]

Try this....

The stop is critical.

You have expectancy of 80%, but what is the defined risk?

Say you are trading 1000 shares...profit target is that $.05 for a $50 profit. Using Scott, you net $36 including $7 one way/$14 round trip.

The trade goes against you for $.05 and does not recover...loss= -$64

The trades goes against you for $.10 and does not recover...= loss -$114.

What if it dives $.35....do you stay? Hold overnight?

So on, so on, so on. Losses can quickly get out of hand.

2 losses at $.05 and you're first $.05 target remains a net loss of $92.

If you hit a string of losers while still maintaining the 80% expectancy, you will experience a large drawdown and that will effect your decisions. You cannot control which of those 80% trades and which order they will appear.

SO.....defining risk is the key piece of this system. Without a stop, at least mental, you are gambling.

Now, if you can capitalize on the $.10 target and it's associated expectancy with a $.05 or better stop, you will have a profitable system. Then, it is a matter of share size overcoming your fees and your ability to execute thousands of shares to make it worthwhile.

Hope that helps somewhat.

It's very helpful & I should know better...I've taken some large losses by not having a stop. The thing is I suppose if it goes bad then yeah I'd have to hold overnight but these are those awful stocks that at a moment's notice will sell millions of shares at 4:15 pm killing the value of your holdings. I've been busted 3 timesthis way in the last month for stupid amounts...I should know better. 80 percent is great odds but yeah your right if you hit the 20% you could be screwed.

I'll try the $.10 with a stop.

[timmhaan]

we've had a pretty strong upward bias in the market lately, but that may be petering out. you might want to check the same opening level performance of these stocks when the market was netural or heading downward.

i would simply look at something like a 5 day moving average for the s&p as an indicator. go back a little ways to see when it was flat and compare the price action of your stocks during that time. do the same when it was heading down, etc.

[tlsurfsupper]

YO.

In regards to my comment "If you hit a string of losers while still maintaining the 80% expectancy, you will experience a large drawdown and that will effect your decisions.", here is an exceptional thread on psychological aspects of drawdown and strings of losing trades.

http://www.elitetrader.com/vb/showthread.php?threadid=163574

[tlsurfsupper]

So, what are your thoughts?

[yoyomama]

Hey, sorry I should have replied...the psychology of losing article was very interesting & pretty dead on...at least for me. The losing streak has definitely had an affect on me.


I'm still curious about my little theory...and am going to test it tomorrow although I know what'll happen. On paper I'll be in the green big time but as soon as I use real funds...it'll be a loser.

[Florida]

yoyomama, you just keep messing around with these volatile stocks and trying to play via these little theories, and you will be out of business in a heartbeat.

Stick with basic technical analysis, plan your entries and exits, use prudent share sizing, know your stops and goals before entering a position, then stick to them, let the trade come to you.

STEER CLEAR of the volatile stocks like you keep listing until you have mastered the art of trading, and quit trying to come up with some little scheme that on paper and backtesting looks like a winner.

Otherwise, just PM me and I will send you my address and you can send me a check equal to your entire trading capital, I might as well have it now as opposed to you giving it to the market as a whole over a very short period of time.

[yoyomama]

Otherwise, just PM me and I will send you my address and you can send me a check equal to your entire trading capital
Heh, this seems to be a recurring theme of yours...but I do appreciate the insight.

[Florida]

This is probably another form of Roulette I suppose but hear me out and please shoot me down....I need it. I've been wanting to test this so I need to be told it's ludicrous.

I have a list of about 20 stocks in the $3.50 - $6.00 range.
The past 5 days I'd say all of them are better than 85% of getting from "Market Open" to at least +.05 at some point. Is it suicide to buy a few of them at the Market's Open...and set the limit for +.05 of Market Open to pick up a few hundred dollars. It has to be at least 2500 shares a piece to make it count.There's no guarantee you can grab the Open price I understand....that's one of the wild cards.

I'm sure this can't work but it does seem like alot of stocks hit +.05 pretty early. Obviously I can't do this with Google or Apple, etc so I'm looking at lower priced stocks.

In addition to ALL of the other concerns that have been posted, without a stop at some point, you could really be in trouble if the stock was to continue down without ever recovering. Even with a stop at the end of the day, you could be down as much as 30% in one day on FIG as an example, (Oct 15, 2008). And without a stop at the end of the day on the mentioned day, you would have been down as much as 90% before it recovered and you would have finally got out with your .6% profit on 5-6-2009, almost 6 months later.

You have to have a reasonable stop, at most, half of what your goal is. So if your goal is $.05, your stop would be at $.03 and on a bunch of the days, you would be stopped out well before your goal is hit with such a tight stop. With a stop that is double your goal, you would have to be correct twice for each loss just to break even, not to mention commissions and fees.

If you want a tested theory to just enter at open, refer to a post I made back in early April on FAZ/FAS.

Simply put, you enter long at open if the stock gapped down, with a goal of 12% and a stop at 3%. If it gaps up, you enter short at open, (or use the contra ETF if it is not available to short). If the stop or goal has not been reached by the end of the regular trading day, you just exit at that time.

Since April 1st, there have been 17 full or partial gains, and 15 full or partial losses, but overall, the position is up 85% in 6 weeks, a 4 to 1 reward to risk ratio does wonders to your profits!! I share size based on the same maximum loss each day, and set the OCO immediately after the trade is opened, then I forget about it until close to the close of the day.

Should the volatility pull in on these stocks, I will look to modify the range to maybe a 3% stop with a 9% goal, or even a 2% stop and 8% goal if it pulls in dramtically.

Try at your own risk, it has been working, but who knows what tomorrow, next week or next month will bring. Since the inception of these ETF, the strategy would have returned 254% in just over 6 months, not to bad.

[tlsurfsupper]

Hey, sorry I should have replied...the psychology of losing article was very interesting & pretty dead on...at least for me. The losing streak has definitely had an affect on me.


I'm still curious about my little theory...and am going to test it tomorrow although I know what'll happen. On paper I'll be in the green big time but as soon as I use real funds...it'll be a loser.


It was not an article.

There is likely 200 years of cumulative experience in that thread and each piece of input provides exceptional application to the topic at hand. It would quite possibly speed your learning curve by 2 years.

If you are still going to pursue your initial srategy you wanted "shot down", I am not sure if you are ready for probability and statistical trading. Or effective risk management for that matter.

With that being said, good luck to you....you have a long road ahead. I wish you the best.

[yoyomama]

It was not an article.
Sorry, I meant thread.


There is likely 200 years of cumulative experience in that thread and each piece of input provides exceptional application to the topic at hand. It would quite possibly speed your learning curve by 2 years.


Again I thought it was right on. Unfortunately some of these things you don't learn unless they happen to you first hand...despite reading about them first.


If you are still going to pursue your initial srategy you wanted "shot down", I am not sure if you are ready for probability and statistical trading. Or effective risk management for that matter.

With that being said, good luck to you....you have a long road ahead. I wish you the best.

Well I was just curious why it was a rotten strategy...and the case was certainly made. I'll stay away from it. I don't think +.05 as a goal with half that as a stop would have a chance. I'd get stopped out most of the time no doubt.

Again, thanks all for checking in here.

[yoyomama]

FIG HBAN FITB SNV LIZ AMR LXP RF REV F AMD

For the past week(5 days)they got to +.05 from the Market Open 51 out of 55 times.


Just for the record...I got these quotes from barchart.com & I've gone & checked a couple of them against other charts and I don't find these to jive with each other...which is a drag. Some of these stocks according to other charts did not reach the high numbers that barchart.com has posted.

anyway...

[tlsurfsupper]

let me ask Yo.

Are you looking to intra-day / scalp?

It can be very profitable, but very boring. In my opinion, once it became boring, it became very profitable.

If you enjoy reading forums looking for what "experts" tell you to buy, you need to learn the results on your own.

I'm not discounting what those who appear to be in the know suggest...not by any means. But I am simply saying that a system you create is one that you own and become 100% responsible for.

If you come across someone who lays out reasons for a stock pick and you fully understand those reasons, take the trade if it meets your parameters.

If not, just click on one of the myriad "robot / black box" ads that abound on these sites. They will gladly take your money and if you fail, will say you employed the system incorrectly, LOL.

BTW, I've never paid for a "pick"....but I do pay for tools that allow me profitability.

[Florida]

If you want a tested theory to just enter at open, refer to a post I made back in early April on FAZ/FAS.

Simply put, you enter long at open if the stock gapped down, with a goal of 12% and a stop at 3%. If it gaps up, you enter short at open, (or use the contra ETF if it is not available to short). If the stop or goal has not been reached by the end of the regular trading day, you just exit at that time.

Since April 1st, there have been 17 full or partial gains, and 15 full or partial losses, but overall, the position is up 85% in 6 weeks, a 4 to 1 reward to risk ratio does wonders to your profits!! I share size based on the same maximum loss each day, and set the OCO immediately after the trade is opened, then I forget about it until close to the close of the day.

Should the volatility pull in on these stocks, I will look to modify the range to maybe a 3% stop with a 9% goal, or even a 2% stop and 8% goal if it pulls in dramtically.

Try at your own risk, it has been working, but who knows what tomorrow, next week or next month will bring. Since the inception of these ETF, the strategy would have returned 254% in just over 6 months, not to bad.

Well, just plugged everything back in following a shut down due to tornado warnings in the area, (it's getting to be that time of year again down here), and found that my FAZ long trade entered at the open per the above listed parameters, had taken me out at the goal, to the penny.

That gaurantees a profit for the week, even if I stop out the next 2 days. Hit the stop on Monday, did not play on Tuesday, (one parameter I left out of the initial post is that if it does not gap at least 1.5% don't trade it, as you have a 90% chance of stopping out), so 12% profit today, 3% loss Monday, up 9% for the week on this strategy.

It continues to work, but again, who knows what tomorrow, next week or next month might bring.

[Florida]

so 12% profit today, 3% loss Monday, up 9% for the week on this strategy.

It continues to work, but again, who knows what tomorrow, next week or next month might bring.

Could not get sufficient shares of FAZ short this morning, so went long on FAS. Moved up quickly in AM, then pulled back all day, until the very end. Closed the long out for a 5% gain at close. So now up 14% for the week, and one day left, so even if I stop out, it will be an 11% week on this simple little strategy.

Again, who knows if, or for how long it will continue, but is working for now.

[yoyomama]

Could not get sufficient shares of FAZ short this morning, so went long on FAS. Moved up quickly in AM, then pulled back all day, until the very end. Closed the long out for a 5% gain at close. So now up 14% for the week, and one day left, so even if I stop out, it will be an 11% week on this simple little strategy.

Again, who knows if, or for how long it will continue, but is working for now.
I've been trying to digest this method...sounds interesting. I still need to get a handle on it but I might check it out.

Of course I had to give my little risky idea a test this week and will report back after tomorrow's close.

[Florida]

Could not get sufficient shares of FAZ short this morning, so went long on FAS. Moved up quickly in AM, then pulled back all day, until the very end. Closed the long out for a 5% gain at close. So now up 14% for the week, and one day left, so even if I stop out, it will be an 11% week on this simple little strategy.

Again, who knows if, or for how long it will continue, but is working for now.

Well, after all day long, closed out just before the close for a 4.2% profit for the day, giving a total of 18.2% for the week. (By the way, I don't think this would qualify for a "liars trade" as shown in another thread, as the specific criteria for the trade is listed in previous posts. No need to make a seperate post at the time of entry.)

You all can track this for yourselves in the future. As for me, I will continue to trade it until it does not work anymore, perhaps adjusting the parameters a bit if the volatility on FAS/FAZ continues to come in.

[yoyomama]

Simply put, you enter long at open if the stock gapped down, with a goal of 12% and a stop at 3%. If it gaps up, you enter short at open, (or use the contra ETF if it is not available to short). If the stop or goal has not been reached by the end of the regular trading day, you just exit at that time.


I share size based on the same maximum loss each day, and set the OCO immediately after the trade is opened,



Are you using a Trailing Stop? Scottrade's OCO Order only lets you use a Trailing Stop with a Limit?

[Florida]

Are you using a Trailing Stop? Scottrade's OCO Order only lets you use a Trailing Stop with a Limit?

no trailing stop, just a hard stop-market at a 3% loss, and a limit at a 12% gain on a OCO order that is set right after the entry, let it breathe.

[yoyomama]

This is probably another form of Roulette I suppose but hear me out and please shoot me down....I need it. I've been wanting to test this so I need to be told it's ludicrous.

I have a list of about 20 stocks in the $3.50 - $6.00 range.
The past 5 days I'd say all of them are better than 85% of getting from "Market Open" to at least +.05 at some point. Is it suicide to buy a few of them at the Market's Open...and set the limit for +.05 of Market Open to pick up a few hundred dollars. It has to be at least 2500 shares a piece to make it count.There's no guarantee you can grab the Open price I understand....that's one of the wild cards.

I'm sure this can't work but it does seem like alot of stocks hit +.05 pretty early. Obviously I can't do this with Google or Apple, etc so I'm looking at lower priced stocks.
So in the interest of fair dislosure I'll go ahead & say that of course I had to go ahead & try this. It almost worked. 4 out of the 5 days my trades hit the Target of +.05 from the opening price with me only having to hold a stock or two overnight & then it hit the mark the next day.....

Then the fifth day came & I got blistered as was probably predicted. Three out of the three stocks I chose didn't hit the target...pretty good sizes(for me) also. One stock I held for a day & it hit the mark but two of them didn't get back up there & one I just finally bailed on because I couldn't stand to hold it one more night....probably be up a dollar tomorrow morning. Anyway...