StockFetcher Forums · General Discussion · Daytraders dont make it poll........<< 1 2 >>Post Follow-up
SFMc01
272 posts
msg #64633
Ignore SFMc01
7/2/2008 9:10:24 PM

Jim: Do you know exactly where to find the "Run Forest Run -- Travel Guide" that you mentioned? I've put it into SEARCH and get too many references to go after Do you have it?

Steve

jimhbutton
104 posts
msg #64634
Ignore jimhbutton
7/2/2008 9:47:31 PM

SFMc01,

In "Filter Exchange" under TRO's "Run Forest, Run" thread you will find it mentioned first (I believe) on page 17.

jhb




jimhbutton
104 posts
msg #64635
Ignore jimhbutton
modified
7/2/2008 10:45:28 PM

Hi miketranz,

"Jim,can you explain in plain English basically how this system works. Where and when are you entering? Are you buying the open, buying the close? Is it basically a pullback filter for strong trending stocks? Thanks, Mike...."

TRO uses this filter to monitor SPF, apparently the sole stock that he trades long on a daily basis. As he states on page 23 of his "Run, Forest Run" thread:

"(6/27/2008 6:01:26 PM): ...I just trade the same stock everyday. I wait for the drop target for my entry and wait for the bounce target for my exit. If I hold overnight, then I want to exit at the run target."

The next day he wrote the following: "(6/28/2008 3:53:25 PM): ...I trade SPF. I wait for the price to hit the drop target, then I enter on the bounce meaning price is going up. I look to exit at/near the bounce target. If I am holding overnight, I look to exit the next session at/near the run target. I'll make 1% or more per trade. It's that simple. There are people making a TON OF CASH using the RFR filter. Some make a lot more than I do. But since I am busy with other things, I keep my SPF trade simple and profitable..."

I believe that you can adapt (or cannibalize) RFR's run-pullback and drop-bounce feature and insert it into just about any other type of filter and strategy which will then give practical targets for any number of entry or exit points -- depending on the system that you personally develop and are comfortable with. However, tempering this opinion of mine and keeping the run-pullback and drop-bounce feature in the context of RFR filter TRO wrote:

"(6/29/2008 1:32:21 AM): ...I write filters that find stocks that behave a certain way STATISTICALLY. Then I trade according to how those stocks behave. RFR stocks behave a certain way. I have spelled out how I trade them. If I am flat and SPF doesn't hit the drop target, then I wait for the next day. If you don't see your stocks on the RFR list, then they are NOT RFR stocks... RFR stocks are NOT FADE THE GAP stocks. FADE THE GAP stocks are not RFR stocks... You asked about the PULLBACK TARGET. I don't use it for entry or exit. I use it to see if the stock is behaving normally or abnormally..."

Mike you asked, "Where and when are you entering? Are you buying the open, buying the close?" You can do either. As far as the filter's originator TRO had the following to say about entry and exit points (from Page 4 of the “I Trade Just One Stock, TRO-style” General Discussion StockFetcher Thread):

"(4/14/2008 2:03:20 AM): ...Someone asked about ENTRY TRIGGERS. I use a 30 minute candles and go long on green candles. The reason I use 30-minute candles is because SPF is a NYSE stock and the price usually follows the normal reversal periods: KEY TIMES DURING THE MARKET DAY FOR TRADERS: As you will see, there are key times that we look for during the trading day as being pivotal. Most days, the action centers around those times. Other times of the day are more suitable for a trip to the gas station or lawn bowling. Here are the pivot times we look at for signs of life (all times are EST): ..."

I encourage anyone to go to this post and read the remainder of what "The Rumpled One" wrote. Also, on page 23 of the "Run, Forest Run" thread I compiled a handful of TRO-isms that really helped me get a handle on what this filter had to offer. That particular post is listed @ "jimhbutton (6/28/2008 1:14:06 AM)."

You also asked, "Is it basically a pullback filter for strong trending stocks?" It can be if shorting is your game.

jhb








miketranz
670 posts
msg #64664
Ignore miketranz
7/3/2008 5:10:56 PM

Thanks Jim.....

SFMc01
272 posts
msg #64735
Ignore SFMc01
7/5/2008 11:50:44 AM

Thanks Jim

SteveMc

chip
67 posts
msg #64790
Ignore chip
7/8/2008 4:35:38 PM

Jim,

I've been using that travel guide since the day it was posted. I've never lost money with it.

That said, you wrote:
-------------------------------------------
More important than all of the above is to have a zero tolerance for losses in the hope of preserving all-important trading capital. When the stock verifiably moves against me -- by breaking through pre-set indicator lines that I've learned to trust through practice, practice, practice -- and I don't have a reverse short or long play in place ready to be triggered, then I immediately and mercilessly exit the trade with as small a loss as possible. Keeping the losses small and manageable, while learning the art of continuing with the runners or droppers till they reverse, is where money is saved on one hand and where money is made on the other.
-------------------------------------------

What are you using for a stoploss, to draw that 'pre-set indicator' line?
Right now, I feel like this one point -- how to set that stoploss -- is keeping me from being more successful. Without this, I don't really know how much I can lose, and this slows down the trigger pulling.

Also, are you trading SPF with it?
For instance, yesterday's drop target was 3.37. It hit 3.35 and I entered when it came back up to 3.36. I'm only looking to make a nickel or so, so I had a target price of 3.41. It dropped on down to 3.25 yesterday and took until mid-afternoon today to make my target. I had arbitrarily set my stop-loss at 3.20 so was able to stay in the trade, but that was a totally random number. If I had set it at 3.25, I would have been out and that would have been my first travel-guide loss....


klynn55
418 posts
msg #64791
Ignore klynn55
7/8/2008 6:04:03 PM

thanks jim and chip for the explanations

jimhbutton
104 posts
msg #64814
Ignore jimhbutton
modified
7/9/2008 4:38:52 PM

Hi Chip,

Good to hear from you.

Thanks for the thread ("I trade just one stock, TRO-style") that you began. It's been a great encouragement and informative.

-----------------------------------------------------------

You asked, "Also, are you trading SPF with it?"

-----------------------------------------------------------

I'm not trading SPF presently. I've been using a modified Bearish scan (with the Run-Pullback feature) to take advantage of the latest down market through short-selling & buying-to-cover. When stocks are dropping like flies I like to ride that strong downward trend till the tide turns. When they eventually start climbing like an F-16 skyward I'll use any number of modified Drop-Bounce Bullish scans to buy & sell. The trend is still my friend.

I won't enter a trade till TRO's "run target" or "drop target" numbers have been reached (as you demonstrated and explained in your latest SPF trade). What I do differently or in addition to that basic formula is that the "run target" or "drop target" number is just one entrance indicator that I'll use. For me the "drop target" is an excellent guide and alert as it captures the typical five-day movement of the stock.

For example, if I am wanting to play TRO's "drop target" then "bounce target" numbers I'll wait till the "drop target" is triggered. Next, I'll FURTHER wait till a few of the stock's technicals let me know that this bearish movement is bottoming out at the latest trough or valley (and optimally around the Low-of-the-Day) before entering a bullish buy position in anticipation of the "bounce target" being reached later.

In my case that means that I'll make sure that the short-term trend (on a 1-, 3-, 5-, or 10-minute chart) is reversing from bearish to a bullish direction -- by monitoring especially the Parabolic SAR indicator and the Directional Movement Indicators (+DI, -DI, ADX) -- before entering the trade.

------------------------------------------------------------------------

Note: I also use the MACD crossover/histogram, the Commodity Channel Index (CCI), and the Variable Moving Averages lines to help nail down this short-term trend reversal from bearish to bullish.

------------------------------------------------------------------------

My goal is to minimize the angst that you described in your latest SPF trade -- felt when entering the trade at the "drop target" and nervously watching the stock continue to descend as it further hunts out the Low-of-the-Day before reversing direction. Technical indicators aid me from prematurely entering the trade allowing me to be slower on the entrance trigger as I continue to monitor the stock as it noses downward in its technically verifiable bearish trend till a bottom trough or reversal is established. Then, in a perfect world, I would be able to get-on-board by entering the trade, ride the tide up to the "bounce target," before disembarking with some $$$.

In summary, by using these confirming technicals at the very least I've bought myself additional insurance from unnecessary anxiety. I am playing the better odds that when I enter the trade at or below the "drop target" this stock is a whole lot closer to the actual "Low-of-the-Day" than atypical days when it flies past the typical "Drop Target" like a dropping elevator.

Another thing Chip, you asked the following question:

-------------------------------------------------------------

"What are you using for a stop loss, to draw that 'pre-set indicator' line? Right now, I feel like this one point -- how to set that stop loss -- is keeping me from being more successful. Without this, I don't really know how much I can lose, and this slows down the trigger pulling."

--------------------------------------------------------------

TRO's "drop target" or "run target" are my general indicator lines that when triggered are then FURTHER modified by the additional input of the technical indicators that I've mentioned. Therefore, my "pre-set indicator" line is actually fluid, depending on an aggregate "buy" or "don't buy, wait" signal provided by a combo of the "drop target" and reversal confirming technicals.

If I play my hand perfectly, and enter the trade with all signals green for liftoff, and the stock then unexpectedly reverses direction on me -- with the technicals and red candlesticks confirming -- and continues its bearish decline, I'll bail if it squeezes me too much and I'm not in the mood to hold it for a later-in-the-day "bounce" or overnight in expectation of cashing in at the next morning's "run target." That's just me and my loss averse personality. I'll take a small loss, bait another hook, and fish for those "drop" & "pullback" stocks that want to behave.

This aforementioned negative experience isn't as common as finding a stock that cooperates with TRO's numbers, weakens in its descent past the "drop target" as it loses momentum and flattens out, reverses nicely with green candlesticks, and allows me to GIGO ("Get-In-Get-Out") with a profit at or near the "bounce target."

If I know in advance what stock I'm going to be trading (e.g., SPF) then I will check a stock's recent reversal points against my technical indicators in order to calibrate them to this stock's unique reversal signature. In other words I can fine-tune the technical indicators' settings (from their defaults) in order to more accurately and quickly discriminate between a simple retracement reading compared to a reversal reading. This tweaking of the technicals can be worth its weight in gold as the one-size-fits-all default settings are usually to broad, general and vague to give me critical discernment necessary to distinguish when to wait before entering a still down-trending stock or when to exit when my position is reversing.

Finally, thanks again to TRO for his filter building magic and for his benevolence in sharing his expertise with the rest of us.



chip
67 posts
msg #64820
Ignore chip
7/9/2008 8:21:13 PM

Thanks for this excellent write up! I look forward to applying some of this technique to future trades..... I still, clearly, have a good bit to learn.

I've been tweaking the travel guide filter, with regards to an entry point. In it's original form, the drop target is the open minus the average_drop_from_open(5). While open is important, a stronger number might be yesterday's 'average' price and how that relates to the next day's low. I'm thinking a value for average price could be ((H+L)/2+O+C)/3 and that the average drop from that value, applied to that value, might make a reasonable entry point. Or maybe somehow transform that value to the open price?

Thoughts?

StockFetcher Forums · General Discussion · Daytraders dont make it poll........<< 1 2 >>Post Follow-up

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