StockFetcher Forums · General Discussion · Advice on short term indicators - Please<< 1 2 3 >>Post Follow-up
rsarno
103 posts
msg #34647
Ignore rsarno
1/1/2005 3:12:33 AM

What can i use for a very short term indicator?

My goal (like every other human) is to make some very quick cash, but doesnt have to be a 40% jump in one day ....

Im even happy with profits of $100 per day. I have about $20k to play with, so im hoping i can use it wisely :)

It doesnt seam that hard of a concept, buy a 1000 share position, wait until stock raises .10 and then sell. easy right? NOT! lol

seams like i have a rough run of luck, nearly every stock i go long drops, and when i sell to cut my losses, it rises! haha I always seam to buy in way to late, and sell way too early.

Anyhow, what id like to work on my own filter. What indicators can i use that will tell me a stock is on the low side of its daily swing?

Thanks, i know this is a very newbish question, hope i dont get flamed too badly for it ...

advice is very much appreciated!





jpistell
123 posts
msg #34649
Ignore jpistell
1/1/2005 10:38:46 AM

rsa,
Please put on your fire suit ;-)

This ol' trader cringes when ever I hear this
"...I'm even happy with profits of $100 per day. ..."

I cringe because I've had those thoughts myself back when I first started, so I know where you are in the learning curve.

Here is my $.02 on HOW TO SURVIVE (aka protect your cash while your learning).
READ THIS AND SAVE YOURSELF A LOT OF CASH.

======Trading is all about LOSS CONTROL.======
Thats why we trade. "Buy and Hold" knows nothing about risk management.
---If you enter 10 trades, how many will be profitable? (aka win/loss ratio)
---If you enter 10 trades, what is the size of the winners vs. the size of the losers. (i.e. you can run with an 80% loss ratio IF your winners are monsters and losses are itty bitty)
---Before you enter you trade, write down your stop loss plan (and stick to it)
---On your position trades (not day trades), I highly reccomend that you look into Chuck Lebeau's ATR based stop loss system.
---While were on the topic of trades, I HIGHLY HIGHLY reccomend position trading 1st, then graduate to intraday trading once you've succeded in doubling your cash. It is far more difficult to scalp than it is to position trade AND if the markets are trending strongly (like lately) scalpers UNDERPERFORM position traders.
---Know your emotional weaknesses. An example on this for me would be Don't trade on a filter that sometimes has big drawdowns before going positive. I've got NO PATIENCE. A perfect filter for this is TheRumpeldOne's RSI(2). It's 100% "fly or die" and suits my lack of patience well.
---Book Recommendation: Dr. Alexander Elder's Trading for a Living (also buy the test book)
---Web Site Recommendation: http://marketocracy.com/ Paper Trading Brokerage. If you're good, you'll know it, if you're bad you can't hide it... BUT, you've not lost your cash while you're falling into and out of profitibility (read: luck).

Traders Writings I highly highly highly recc:
---Jim DePorre. Quite possibly one of the finest traders of small cap stocks that I've ever met. He runs a trading web site called supertraders.com and writes for thestreet.com.
======Read his excellent SURVIVAL SUMMARIES below======
http://www.thestreet.com/p/rmoney/revshark/10179689.html
http://www.thestreet.com/p/rmoney/revshark/10197860.html

G'Luck,
Trader Joe


xplorer
257 posts
msg #34650
Ignore xplorer
1/1/2005 10:43:21 AM

It is best to find a chart that exibits the "personality" that you are looking for ... reverse engineer the chart from there.... also keep your screen simple so that you get a good sampling of stocks. From what you have said, it sounds like you are looking for stocks that have upward mommentum... and have pulled back a bit, and show signs of making the next leg up.

So to start I would use a basic screen like :

Fetcher[Fast Stochastic(10) Fast %K has been decreasing for 3 days lag 1 days
and Fast Stochastic(10) Fast %K has been increasing for 1 days
and the Fast Stochastic Fast %K is below 35
and close is above open
]



...yes there are alot of dogs in this pile ... but also a few gems....(though still in the rough).
From the results on Januanry 01, 2005

The "rough gems" I see are GI, WLK, IAF, MGRC, SNT, ERTH .... but thats not the final selection... time to get the microscope out. Generally trending up ? ... hitting support yet (where is the support level) ... and where is the resistance level that may want to take your profits at ... is the reward worth the risk ? Because you are looking for a quick 10% I would look at GI and ERTH.

Look at the recent news on these ... any lawsuits ... recent bad earnings ... or other clues ? What sector are they in ? (how is the sector doing?)

Let me know what you come up with !


rsarno
103 posts
msg #34654
Ignore rsarno
1/1/2005 12:41:55 PM

thank you guys for taking the time to reply in such depth, great posts from both!



rsarno
103 posts
msg #34655
Ignore rsarno
1/1/2005 12:56:33 PM

xplorer, you went through 69 stocks and came up with 2 that actually look good? I think that is too drastic for me. At my level it would take me way too long to research every single one of them i think.

hmm im thinking maybe i can narrow that down by refining the filter, maybe closing the price range? I know i dont want any stocks below $1 or above $30. If it is a penny stock then no less than $0.25 but only if it has decent volume.

I would also like to add historical volotility, but i dont know how. so for now i have this filter which narrowed it down from 69 to 14:

Fast Stochastic(10) Fast %K has been decreasing for 3 days lag 1 days
and Fast Stochastic(10) Fast %K has been increasing for 1 days
and the Fast Stochastic Fast %K is below 35
and close is above open
price is between .25 and 30
volume(60) is above 250000

also i didnt mean i was looking for a quick 10% i meant a quick .10 per share, so if i bought it at $7.30 then i sell it on the upswing at $7.40 ... hopefully as i become better and learn more, i can feel more comfortable with larger positions which would make that .10 a much larger profit.

thanks again for such a great post!


xplorer
257 posts
msg #34660
Ignore xplorer
1/1/2005 4:09:49 PM

rsarno,
... "going through 69 stocks" really isn't time consuming at all ... its really just a matter of "clicking through" each of the charts...to see the characteristics of the chart that I find potentailly good, takes a matter of seconds. Once I have a few that I feel are worth looking into, then I will focus more on these ,,, and I will open up view. (News ... fundamentals, and other technicals too)... BIGCHARTS is what I use for the true chart analysis. My broker TDWATERHOUSE has nice fundamental reports/reseach. (there is no way I would waste my time doing this analysis on all 69).

I have found that when I try to refine my screen to produce ONLY the stocks I will invest in... I usually have eliminated the TRUE winners. It pays to not overly refine ... though your additions of adding price and volume are definetly a key attribute that is essential.... good focus! I will tweek a screen until it returns between 20 and 100 stocks.... but thats just my opinion... it is what I am comfortable with...

Well I hope this all helps ...
~x


xplorer
257 posts
msg #34661
Ignore xplorer
1/1/2005 4:15:13 PM

Fetcher[

Fast Stochastic(10) Fast %K has been decreasing for 3 days lag 1 days
and Fast Stochastic(10) Fast %K has been increasing for 1 days
and the Fast Stochastic Fast %K is below 35
and close is above open
and price is between .25 and 25
and average volume(30) is above 50000

]




rsarno
103 posts
msg #34673
Ignore rsarno
1/2/2005 12:58:16 AM

Im sitting here thinking.

Based on my target of $0.10 gain per trade, my filter should be very simple one.

I think i would need only study the following 3 things:

1. volotility over the last 30 days, to make sure its capable of swinging one way or another quite a few times daily.

2. volume over the last 30 days, to make sure the current price is not peaked due to some recent news or financials. Also to make sure if i do take a position that i will be able to get out quick enough when needed.

3. price, since im looking for only a $0.10 gain i must make sure i have a large enough position to make this profitable.

It seams as though the only obstacle involved is to find a stock that has a decent daily range, and is not trending down. Also it is important that the close is not at the stocks peak or else you would end up buying in and waiting 2 months to see green.

I think to iliminate the "peak" problem, i can try something like the following:
the 30 day high is more than 15% above close

what can i use to find avg daily range?

also, am i thinking streight? Or should i be hunting down the 40% bull's like everyone else?

im thinking of the old saying "You can eat an elephant one bite at a time ..."

please advise.




EWZuber
1,373 posts
msg #34675
Ignore EWZuber
1/2/2005 4:54:15 AM

rsarno
If you want to use stochastics as an indicator it is essential that at a bare minimum the Monthly, Weekly and Daily charts will need to be consulted and preferably Hourly as well.
If a stock is in a confirmed distribution phase on Monthly Charts I remove it from my list of potential candidates, no exceptions.
Also I urge you to use a trading simulator until you have resolved the problems that you face now. Conserving capitol is of paramount importance, I can not stress this point enough.
With only $20K in a trading account I would not advocate intraday trading.
With any less than $25K I advocate getting into the best stocks you can find in the best index you can find at the beginning of long term accumulation cycles and trade the trend.
Otherwise you will encounter problems with NASDAQ rule 2052 that will restrict you trading abilities and interfere with trading disciplines and sound trading practices. I believe this is what it is intended to do, to force you to trade the way that they want you to because they know what is best for you. ( lol ).
Don't underestimate the impact this rule has on your trading.

If you are finding that you are selling just as the stock is about to turn around this is a clear indication that you need to revamp your stop loss discipline.
I start out a trade using hourly chart stochastics( minimum ) and short term trendlines. I take long positions primarily at Support or at the break of Trendline Resistance on the hourly chart.
With a position taken at support once support is violated I close the position at a 1 ~ 2% loss max. Basically what you will typically see after support is violated is the stock rising to test old support as resistance. This may be easier to see on the 5 minute chart. If it bounces down this is where i close. This can allow you to get out with less than 1% loss.
If entering at the break of TL Resistance then after 2 hours you will now have 2 candlesticks formed on your chart. I draw a trendline connecting the lowest points on both candlesticks. This is my short term supporting trendline. If the stock chart should break this line i draw a horizontal line to the right at this point and this is my sell signal. This will get you out at a profit just about every time.
A stock that is going to keep running will typically not violate this line because of the volume of buyers.
Hope this helps.
Best of fortune



jpistell
123 posts
msg #34676
Ignore jpistell
1/2/2005 8:46:13 AM

rsa,
Let's say I hand you golf clubs and then tell you to go make money in the PGA. Could you do it? Could anyone do it? Sure, anyone can get lucky... once. Is that luck real skill, or, is it luck?

I smell a train wreck. You're too anxious to trade and your not "learning the game". Your $0.10 scalping idea is going to bite you in the a#@ss. Stock Trading is a zero-sum game. This scalping idea means YOUR TRADING AGAINST THE MARKET MAKERS. They are going to shred your cash into a black cinder.

WAKE UP. Your "luck" has prevented you from seeing reality. The quality posts that I read to your request are excellent, I wish I had this kind of guidance when I started.

You've been warned.
Trader Joe




StockFetcher Forums · General Discussion · Advice on short term indicators - Please<< 1 2 3 >>Post Follow-up

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