| 10/20/01 |
05:16:26 |
<TT0__Ken> |
welcome all, close to 700
registered for today, will be interesting to see how many show up :) |
| 10/20/01 |
05:17:34 |
<TT0__Ken> |
in the meantime, pls review
these links if you haven't done so already: |
| 10/20/01 |
05:17:36 |
<TT0__Ken> |
http://www.daytrading-university.com/dtuliveroomstrategy.htm |
| 10/20/01 |
05:17:43 |
<TT0__Ken> |
http://www.daytrading-university.com/livetranscriptOct08_01.htm |
| 10/20/01 |
05:17:50 |
<TT0__Ken> |
http://www.Daytrading-University.com/freeseminar.htm |
| 10/20/01 |
05:54:50 |
<TT0__Ken> |
*** Good Morning Traders!
Welcome to DTU's First-Ever Online Seminar Event *** |
| 10/20/01 |
05:55:13 |
<TT0__Ken> |
I wanted to start by saying
*thanks* to all of you for showing up today, it will be a fast paced event |
| 10/20/01 |
05:56:03 |
<TT0__Ken> |
we have two guest speakers
as well for later in the session, Alan Farley, author and publisher of
hardrightedge.com , and Scott McVicker of tradecourse.com |
| 10/20/01 |
05:56:21 |
<TT0__Ken> |
I have much to cover today...
I want to jump right into the details |
| 10/20/01 |
05:56:42 |
<TT0__Ken> |
if you haven't already,
please be reviewing/scanning these pages during the first half hour or
so: |
| 10/20/01 |
05:56:49 |
<TT0__Ken> |
http://www.Daytrading-University.com/freeseminar.htm |
| 10/20/01 |
05:56:55 |
<TT0__Ken> |
http://www.Daytrading-University.com/dtuliveroomstrategy.htm |
| 10/20/01 |
05:57:00 |
<TT0__Ken> |
http://www.daytrading-university.com/alerts.htm |
| 10/20/01 |
05:57:05 |
<TT0__Ken> |
http://www.Daytrading-University.com/livetranscriptOct08_01.htm |
| 10/20/01 |
05:57:32 |
<TT0__Ken> |
there is many detailed strategy
tips in those pages, for a starter, and answer most of the faqs I get
from folks worldwide |
| 10/20/01 |
05:57:57 |
<_Susang> |
Looking forward to today
- Thanx Ken for doing this (DWD) |
| 10/20/01 |
05:58:10 |
<TT0__Ken> |
Today's Morning session
will look at two primary areas: Daytrading Choppy Markets and Daytrading
Breakout and Trending Market Days |
| 10/20/01 |
05:58:39 |
<TT0__Ken> |
a note, becuase of the number
of folks we're expecting, eg 688 registered , I have disabled posting,
so it stays focused in here.. |
| 10/20/01 |
05:59:01 |
<TT0__Ken> |
feel free to email me your
questions live and I'll answer within 20 mins here, at mailto:ken@daytrading-university.com |
| 10/20/01 |
05:59:17 |
<TT0__Ken> |
Ok enough for the intro,
let's get to it |
| 10/20/01 |
05:59:44 |
<TT0__Ken> |
first points I'd like to
make, to dispel some of the myths out there / common problems that I've
gotten thousands of emails about over the last couple of years |
| 10/20/01 |
06:00:45 |
<TT0__Ken> |
first, since trading is
a business, you absolutely have to have pro tools, eg a dat broker (I
dont care who), a pro data feed (ditto, i use esignal, many use realtick)
and at least 3-4 monitors and an over-128K connection |
| 10/20/01 |
06:00:58 |
<TT0__Ken> |
in other words, ""don't
bring a butter knife to a gunfight"".. |
| 10/20/01 |
06:01:16 |
<TT0__Ken> |
I am still amazed that people
try to daytrade w/datek and aol on a 56k modem, don't even think about
it |
| 10/20/01 |
06:01:18 |
<TT0__Ken> |
ok next topic |
| 10/20/01 |
06:02:28 |
<TT0__Ken> |
Trading successfully depends
on two major factors: #1 Having all your market indicators and premarket/in
market charts set up correctly and #2) being able to enter specific trades
based on reacting to signals you're seeing |
| 10/20/01 |
06:02:37 |
<TT0__Ken> |
and we'll get into all the
details, throughout today's seminar |
| 10/20/01 |
06:03:00 |
<TT0__Ken> |
many people are clueless
when it comes to what indicators to use.. because there's so much conflicting
information out there |
| 10/20/01 |
06:03:18 |
<TT0__Ken> |
example: I only use stochastics
and candlestick patterns for trade Exit signals.. |
| 10/20/01 |
06:03:36 |
<TT0__Ken> |
I use time & sales,
sector charts, TRINQ, compq and chart pattern breakouts and bounces for
Entries |
| 10/20/01 |
06:04:02 |
<TT0__Ken> |
separating out the signals,
the application of ""when to use what signal, what indicator""
, is a challenge, that took me close to two years to figure out |
| 10/20/01 |
06:04:20 |
<TT0__Ken> |
I encourage all of you to
experiment heavily, this is important |
| 10/20/01 |
06:04:32 |
<TT0__Ken> |
don't take anyone's word
for anything in this business, be a skeptic |
| 10/20/01 |
06:04:59 |
<TT0__Ken> |
I am a longtime critic of
the trader training/chat industry, because like my colleague barry rudd
says, ""most of what's out there is bullshit"".. |
| 10/20/01 |
06:05:01 |
<TT0__Ken> |
and I agree |
| 10/20/01 |
06:05:11 |
<TT0__Ken> |
so, I had to experiment
, and so should you, Test everything.. |
| 10/20/01 |
06:05:17 |
<TT0__Ken> |
using a core basket of trading
stocks.. |
| 10/20/01 |
06:05:46 |
<TT0__Ken> |
* Setting Up Your Charts
for Daytrading - Technical Analysis Tips & Settings |
| 10/20/01 |
06:05:58 |
<TT0__Ken> |
see http://www.Daytrading-University.com/!!6mon.gif |
| 10/20/01 |
06:06:11 |
<TT0__Ken> |
this is my 6monitor pro
trading rig, the latest setup I'm currently using |
| 10/20/01 |
06:06:23 |
<TT0__Ken> |
you will see, by scrolling
over, all the different screens I use |
| 10/20/01 |
06:06:48 |
<TT0__Ken> |
a full screen each dedicated
to semis, software, and a ""mixed bag"" screen of
1-minute thumbnail 1/2 day charts |
| 10/20/01 |
06:07:10 |
<TT0__Ken> |
also I have big closeup
charts, a 2-day 2-minute candlestick chart, and a 1/2 day 1-minute candlestick
chart |
| 10/20/01 |
06:07:20 |
<TT0__Ken> |
if I'm using stochs, I use
15/5 K/D |
| 10/20/01 |
06:07:50 |
<TT0__Ken> |
I also use the nasdaq trin.. |
| 10/20/01 |
06:08:04 |
<TT0__Ken> |
see toni turner's book for
a lot of details, well written, on using the trin.. |
| 10/20/01 |
06:08:25 |
<TT0__Ken> |
It's an essential daytrading
tool, to have the Nasdaq TRIN on a 1-min line chart |
| 10/20/01 |
06:08:35 |
<TT0__Ken> |
""what's the trin,
ken?"" |
| 10/20/01 |
06:08:38 |
<TT0__Ken> |
glad you all asked.. |
| 10/20/01 |
06:08:53 |
<TT0__Ken> |
it's simply an index showing
the ratio of the advancers/decliners line to buy/sell volume |
| 10/20/01 |
06:09:23 |
<TT0__Ken> |
briefly, it's an inverse
indicator, 1 is equilibrium, less than 1 (especially say .8 and falling)
is Bullish .. over 1.5 and rising is Bearish |
| 10/20/01 |
06:09:28 |
<TT0__Ken> |
and I look at this before
every trade |
| 10/20/01 |
06:09:51 |
<TT0__Ken> |
to moderate things like,
""how loose are my stops on this?"", ""how
many shares am I trading, eg trading heavy 800-1K or light, 200-500?"" |
| 10/20/01 |
06:10:02 |
<TT0__Ken> |
TA Tips: |
| 10/20/01 |
06:10:26 |
<TT0__Ken> |
always learn cup breakouts
as the key indicator, this is simply the stock moving over a prev high
for longs, losing a prev low for shorts |
| 10/20/01 |
06:11:01 |
<TT0__Ken> |
the best cup patterns are
those that take the stock over the high of the previous day |
| 10/20/01 |
06:11:19 |
<TT0__Ken> |
you've probably read my
active trader magazine article, so I won't repeat the strategy here, a
reprint is at the site |
| 10/20/01 |
06:11:21 |
<TT0__Ken> |
what else.. |
| 10/20/01 |
06:11:40 |
<TT0__Ken> |
I don't find, especially
in choppy markets, that MA or stochastics are useful for entry signals |
| 10/20/01 |
06:11:47 |
<TT0__Ken> |
because they yield far too
many false entries |
| 10/20/01 |
06:12:06 |
<TT0__Ken> |
instead, we rely heavily
on the tape, eg using time & sales |
| 10/20/01 |
06:13:05 |
<TT0__Ken> |
I'll post a quick example
from yesterday.. |
| 10/20/01 |
06:13:21 |
<TT0__Ken> |
a note.. |
| 10/20/01 |
06:13:37 |
<TT0__Ken> |
I'll be posting many chart
patterns throughout the seminar, to illustrate techniques |
| 10/20/01 |
06:14:02 |
<TT0__Ken> |
see http://www.daytrading-university.com/emlxoct19s.gif |
| 10/20/01 |
06:14:13 |
<TT0__Ken> |
this is a two-day EMLX chart.. |
| 10/20/01 |
06:14:35 |
<TT0__Ken> |
in the live room yesterday
I posted 22.65+ as the buy trigger for this stock |
| 10/20/01 |
06:14:44 |
<TT0__Ken> |
many new traders are afraid
of buying breakouts.. |
| 10/20/01 |
06:14:52 |
<TT0__Ken> |
yet these should account
for 80%% of your trade entries |
| 10/20/01 |
06:15:05 |
<TT0__Ken> |
my first couple of years,
I'd always try to be clever and buy bottoms and short tops |
| 10/20/01 |
06:15:17 |
<TT0__Ken> |
this produced a lot of stops,
breakeven trades, and occasional wins |
| 10/20/01 |
06:15:38 |
<TT0__Ken> |
once I started going long
on breakout two day highs, and shorting two-day lows, my percentages improved
considerably |
| 10/20/01 |
06:15:58 |
<TT0__Ken> |
one key is filtering out
false breakouts, I'll show you how in a little while |
| 10/20/01 |
06:16:08 |
<TT0__Ken> |
for now, let's look at choppy
market trading techniques |
| 10/20/01 |
06:16:26 |
<TT0__Ken> |
How to Tell if It's a Chop
Day or Trend/Breakout Day? |
| 10/20/01 |
06:16:44 |
<TT0__Ken> |
http://www.daytrading-university.com/compqoct19s.gif |
| 10/20/01 |
06:16:50 |
<TT0__Ken> |
lets start with this 3-day
COMPQ chart.. |
| 10/20/01 |
06:17:17 |
<TT0__Ken> |
you can see we had what
I call a wide range day on the 17th, and two relatively narrow days this
past thursday and friday, right? |
| 10/20/01 |
06:17:56 |
<TT0__Ken> |
traders, you should always
decide on what trading strategy you'll be doing based on what the COMPQ
and sector charts are telling you as the market unfolds each day, during
the first 30 minutes |
| 10/20/01 |
06:18:26 |
<TT0__Ken> |
so, if the COMPQ is in a
tight 20-point trading range and it's getting close to 10am, you should
know there won't be much trading opportunity til the afternoon session
at earliest |
| 10/20/01 |
06:18:33 |
<TT0__Ken> |
you want to avoid overtrading
... |
| 10/20/01 |
06:18:47 |
<TT0__Ken> |
what indicators do we look
at, specifically? |
| 10/20/01 |
06:18:51 |
<TT0__Ken> |
let's start with... |
| 10/20/01 |
06:19:15 |
<TT0__Ken> |
Sector Percent Change from
Open ... comparing relative strength of each sector as the market begins
each day |
| 10/20/01 |
06:19:48 |
<TT0__Ken> |
I find it useful to have
a sector-only percentage quote box, that I sort every 10-15 minutes or
so during the day.. |
| 10/20/01 |
06:19:49 |
<TT0__Ken> |
http://www.daytrading-university.com/sectoroct19.gif |
| 10/20/01 |
06:20:23 |
<TT0__Ken> |
you can see that GHA, the
hardware sector, closed out strongest from the open yesterday, at +3.1%%,
with the internets, $GIN, weakest, due to EBAY's drop |
| 10/20/01 |
06:20:41 |
<TT0__Ken> |
you must become intimately
familiar with these tools, eg the nasdaq trin and the sector percentages |
| 10/20/01 |
06:20:52 |
<TT0__Ken> |
let's look at measurable
criteria.. and technique |
| 10/20/01 |
06:21:01 |
<TT0__Ken> |
Sector percent change during
the first 30 minutes |
| 10/20/01 |
06:21:08 |
<TT0__Ken> |
each ""phase""
of the trading day is distinct: |
| 10/20/01 |
06:21:25 |
<TT0__Ken> |
the first 30 minutes, which
we break down into what solly, SBSH, calls ABC waves: |
| 10/20/01 |
06:21:46 |
<TT0__Ken> |
the open order clear phase,
eg 9:30 til 9:40.. |
| 10/20/01 |
06:21:55 |
<TT0__Ken> |
overnight orders are being
worked by the mms |
| 10/20/01 |
06:22:13 |
<TT0__Ken> |
our reversals, eg the market
tends to reverse roughly every 8-10 minutes during the 9:30-10am time
window |
| 10/20/01 |
06:22:36 |
<TT0__Ken> |
so we anticipate reverals,
and start to lighten up or fade out of positions, eg at 9:40, 9:50, and
the 10am reversal |
| 10/20/01 |
06:22:40 |
<TT0__Ken> |
reversals.. |
| 10/20/01 |
06:22:51 |
<TT0__Ken> |
(sorry it's 3:30am here
in hawaii, on ""coffee time"" lol) |
| 10/20/01 |
06:23:31 |
<TT0__Ken> |
so within that first 30
minutes, it's an entire ""world into itself"" and
is for experienced, say 2years+ , traders only |
| 10/20/01 |
06:23:37 |
<TT0__Ken> |
why? because you need to
be effective at order routing |
| 10/20/01 |
06:24:01 |
<TT0__Ken> |
and you need to be able
to enter and exit quickly, based on TRINQ , futures, and sector chart
reversals |
| 10/20/01 |
06:24:05 |
<TT0__Ken> |
sector percentages.. |
| 10/20/01 |
06:24:35 |
<TT0__Ken> |
Trading Tip #82: Look for
which sectors pull ahead of (and lag) the rest of the pack, as the market
opens each day, from 9:30 through 9:50 |
| 10/20/01 |
06:25:08 |
<TT0__Ken> |
so if it's 9:35, and I see
$GSO up +.6 percent, while the rest of them are down at +/- .3%%, then
I'm now looking at.. |
| 10/20/01 |
06:25:14 |
<TT0__Ken> |
(GSO is software) |
| 10/20/01 |
06:25:18 |
<TT0__Ken> |
MSFT, the tier 1 lead |
| 10/20/01 |
06:25:35 |
<TT0__Ken> |
ADBE SEBL CHKP BEAS VRSN
(some of my core software stocks) |
| 10/20/01 |
06:25:42 |
<TT0__Ken> |
and see which of those has
buy pressure in it |
| 10/20/01 |
06:26:10 |
<TT0__Ken> |
let's say all the sectors
are down within +/- 0.5%% green or red, and it's 9:50... what does that
tell me? |
| 10/20/01 |
06:26:17 |
<TT0__Ken> |
like yesterday, for instance.. |
| 10/20/01 |
06:26:29 |
<TT0__Ken> |
it tells me the market is
doing squat, and I'm unlikely to put on a trade |
| 10/20/01 |
06:27:02 |
<TT0__Ken> |
Trading Tip #05: We are
always scanning for outliers, the lead and follow sectors, ""what's
moving the most relative to the pack"" each day, as daytraders.. |
| 10/20/01 |
06:27:15 |
<TT0__Ken> |
most new traders, myself
included the first 18 months or so, react too slowly |
| 10/20/01 |
06:27:40 |
<TT0__Ken> |
I am often done trading
early in the day, after nabbing what I assess to be most of the ""juice""
for the morning's session |
| 10/20/01 |
06:27:47 |
<TT0__Ken> |
you need to learn to react
quickly |
| 10/20/01 |
06:27:56 |
<TT0__Ken> |
sector percentages.. what
else.. |
| 10/20/01 |
06:29:17 |
<TT0__Ken> |
Scenario #1: It's 9:42 am
and you see that the $GSO (software) sector is up +.4%% and rising.. you
also see that the $GIN is 0.1%% and rising. If the chart patterns /tape
of ADBE and EBAY are the same, which do you go long in? |
| 10/20/01 |
06:29:28 |
<TT0__Ken> |
remember to learn discriminant
trading... |
| 10/20/01 |
06:29:48 |
<TT0__Ken> |
show of hands, I'm sure
many of you have to decide, ""ok the market's headed up, do
I choose stock A or stock B?"" |
| 10/20/01 |
06:29:53 |
<TT0__Ken> |
ok then.. |
| 10/20/01 |
06:30:03 |
<TT0__Ken> |
we look at the sector relative
strength for a clue.. |
| 10/20/01 |
06:30:29 |
<TT0__Ken> |
in the above scenario, all
else being equal, we flip long into ADBE, a software stock, over EBAY,
an internet, since it's underlying sector is stronger |
| 10/20/01 |
06:30:43 |
<TT0__Ken> |
you're always looking for
these micro-data points to support your putting on the trade |
| 10/20/01 |
06:31:20 |
<TT0__Ken> |
and look at the sector chart
patterns too... eg if the hardware chart, GHA, is making a new high of
day, and the internet chart, GIN, is chopping midrange .. you would be
more likely to trade long hardware |
| 10/20/01 |
06:31:35 |
<TT0__Ken> |
and yet, so many traders
completely fail to use these techniques, don't even know what the trinq
is ... |
| 10/20/01 |
06:31:47 |
<TT0__Ken> |
""Don't bring
a butter knife to a gun fight"" |
| 10/20/01 |
06:31:58 |
<TT0__Ken> |
eg you're trading against
guys like me, and market makers, who have all this down cold.. |
| 10/20/01 |
06:32:15 |
<TT0__Ken> |
and if you wonder why you
seem to buy tops, or get shaken out too often.. the answers are often
that.. |
| 10/20/01 |
06:32:17 |
<TT0__Ken> |
you're too slow |
| 10/20/01 |
06:32:23 |
<TT0__Ken> |
you failed to recognize
and integrate the signals |
| 10/20/01 |
06:32:42 |
<TT0__Ken> |
you had an unprofessional
rookie setup, eg aol and etrade or something |
| 10/20/01 |
06:32:53 |
<TT0__Ken> |
you didn't have a professional
data feed |
| 10/20/01 |
06:33:06 |
<TT0__Ken> |
all these things, are merely
the admission ticket, they don't address your trading skills |
| 10/20/01 |
06:33:18 |
<TT0__Ken> |
it's like going to the country
club, you need to Not have kmart golf clubs |
| 10/20/01 |
06:33:44 |
<TT0__Ken> |
you need to buy the Pings,
or whatever, and get training by , most likely, a variety of club pros,
who can shed light on the technniques you need |
| 10/20/01 |
06:33:53 |
<TT0__Ken> |
so anyways... be prepared
with the indicators.. |
| 10/20/01 |
06:33:55 |
<TT0__Ken> |
let's move on.. |
| 10/20/01 |
06:34:14 |
<TT0__Ken> |
Trading Choppy Markets,
Fibonacci Retracements Part I |
| 10/20/01 |
06:34:29 |
<TT0__Ken> |
fibonacci retracements are
one of the few indicators I use constantly... |
| 10/20/01 |
06:34:38 |
<TT0__Ken> |
and I'm not using them in
a software program.. |
| 10/20/01 |
06:34:48 |
<TT0__Ken> |
rather, you learn to break
the trading range into fibo regions.. |
| 10/20/01 |
06:35:13 |
<TT0__Ken> |
I use as a rule of thumb,
""after a stock makes a large move, say close to it's average
intraday trading range, it will often reverse to 1/3 to 50%% of the total
range"" |
| 10/20/01 |
06:35:17 |
<TT0__Ken> |
here's an example: |
| 10/20/01 |
06:35:26 |
<TT0__Ken> |
fibos http://www.daytrading-university.com/gmstoct19b.gif |
| 10/20/01 |
06:35:36 |
<TT0__Ken> |
from yesterday in the room..
we were in and out in the range indicated |
| 10/20/01 |
06:36:01 |
<TT0__Ken> |
that's a two-day chart.. |
| 10/20/01 |
06:36:07 |
<TT0__Ken> |
what I want you to see is.. |
| 10/20/01 |
06:36:22 |
<TT0__Ken> |
see the sharp selloff, in
the second day? |
| 10/20/01 |
06:36:49 |
<TT0__Ken> |
bounce trades, again should
be <20%% of your trades, we like following sharp over-1 point moves,
after a micro-cup breakout |
| 10/20/01 |
06:37:03 |
<TT0__Ken> |
so we were in after it chopped
and buyers started to come back.. |
| 10/20/01 |
06:37:13 |
<TT0__Ken> |
and out at roughly 50%%
of the total range that it had dropped |
| 10/20/01 |
06:37:15 |
<TT0__Ken> |
learn that pattern |
| 10/20/01 |
06:37:29 |
<TT0__Ken> |
and we were out early in
the bounce, eg on the way up.. |
| 10/20/01 |
06:38:01 |
<TT0__Ken> |
Trading Tip #107: In this
market, make sure to work out of your positions early, at the first sign
of the time & sales getting back to even.. |
| 10/20/01 |
06:38:31 |
<TT0__Ken> |
eg you're in the direction
of the tape, let's say it's 70%% people hitting the ask.. the price goes
up.. as soon as it starts to get xmas tree on the tape.. |
| 10/20/01 |
06:38:33 |
<TT0__Ken> |
green and red.. |
| 10/20/01 |
06:38:48 |
<TT0__Ken> |
you start to trail a close
stop, say 3-4 spreads, max .2 back from the current inside market |
| 10/20/01 |
06:39:06 |
<TT0__Ken> |
my max stop loss on all
daytrades is .4, however 80%%+ are from ""even to .2"" |
| 10/20/01 |
06:39:10 |
<TT0__Ken> |
I tend to be very risk averse.. |
| 10/20/01 |
06:39:25 |
<TT0__Ken> |
average daytrading timing
should be 2 to 15 minutes |
| 10/20/01 |
06:39:28 |
<TT0__Ken> |
roundtrip.. |
| 10/20/01 |
06:39:33 |
<TT0__Ken> |
almost always less than
10 minutes |
| 10/20/01 |
06:40:01 |
<TT0__Ken> |
in a breakout market, I
may well stay in the position a few extra minutes, trailing an ever-closer
stop, to max the profit before a reversal or chop occurs |
| 10/20/01 |
06:40:08 |
<TT0__Ken> |
I do Not sit through consolidation
periods |
| 10/20/01 |
06:40:17 |
<TT0__Ken> |
much less reversals against
my trade :0 lol |
| 10/20/01 |
06:40:23 |
<TT0__Ken> |
be in and out fast.. |
| 10/20/01 |
06:40:33 |
<TT0__Ken> |
daytrading like ""3
fs"".. eg find it, (trade) it, and forget it.. move on.. be
fast |
| 10/20/01 |
06:40:46 |
<TT0__Ken> |
examples of the types of
stocks to daytrade.. |
| 10/20/01 |
06:41:07 |
<TT0__Ken> |
I find that many new traders
(myself included at first) liked to trade cheap stocks that were under
$20/share |
| 10/20/01 |
06:41:10 |
<TT0__Ken> |
this is a Big mistake |
| 10/20/01 |
06:41:29 |
<TT0__Ken> |
because it's much harder
to correctly take +1/2 or better out of sub-$20 stocks for fast daytrades |
| 10/20/01 |
06:41:41 |
<TT0__Ken> |
these are examples of charts
from yesterday I want you to check out.. |
| 10/20/01 |
06:41:43 |
<TT0__Ken> |
wide range: AMAT EBAY EMLX
IDTI SYMC |
| 10/20/01 |
06:41:57 |
<TT0__Ken> |
these stocks are all priced
$20-$60 and have nice 3-4 point trading ranges |
| 10/20/01 |
06:42:05 |
<TT0__Ken> |
in other words, it's ""easier
to get it right"" |
| 10/20/01 |
06:42:29 |
<TT0__Ken> |
than with the cheap stocks,
which often chop, and run a max of 1 pt in a single direction, usually
chop in a 1/2 to 3/4 point range.. |
| 10/20/01 |
06:42:36 |
<TT0__Ken> |
making risk:reward ratio
not as powerful |
| 10/20/01 |
06:43:00 |
<TT0__Ken> |
Trading Choppy Markets
Part II: Bounce Trades - Time & Sales Signals and Chart Patterns.. |
| 10/20/01 |
06:43:16 |
<TT0__Ken> |
we'll pretty much stay on
track throughout the session, re the timing.. |
| 10/20/01 |
06:43:36 |
<TT0__Ken> |
wondering where the other
400 who signed up were.. ah well I guess the _ underline was too tough
to understand ..lol |
| 10/20/01 |
06:44:03 |
<TT0__Ken> |
if any of the charts dont
come up, let me know.. may be everyone's hitting the server at once |
| 10/20/01 |
06:44:31 |
<TT0__Ken> |
time & sales.. |
| 10/20/01 |
06:44:47 |
<TT0__Ken> |
Traders, understanding
how to use Time & Sales Correctly is Critical to Success as a daytrader |
| 10/20/01 |
06:45:11 |
<TT0__Ken> |
unfortunately, there's a
lot of misinformation out there, bs sites that tried to copy me, and don't
really understand the techniques.. |
| 10/20/01 |
06:45:28 |
<TT0__Ken> |
so, let's start with the
most important ideas.. |
| 10/20/01 |
06:46:03 |
<TT0__Ken> |
1) Time & sales has
a lot of noise in it. To be successful, you need to be able to read the
timing, when the buy/sell ratio starts to shift |
| 10/20/01 |
06:46:29 |
<TT0__Ken> |
the only way to master this
is to study the tape, don't choose a high volume most active, choose a
tier two stock, like the ones I've mentioned |
| 10/20/01 |
06:47:15 |
<TT0__Ken> |
Traders' Tape Reading Exercise:
Choose one of your core basket trading stocks. For one day each week,
study the tape, the time & sales, for the 9:40-10:10 time period,
closely. |
| 10/20/01 |
06:47:26 |
<TT0__Ken> |
that's 30 minutes, once
a week |
| 10/20/01 |
06:47:49 |
<TT0__Ken> |
I'm your drill sergeant,
this is an exercise that should help you develop 'the eye' for detecting
reversals |
| 10/20/01 |
06:48:05 |
<TT0__Ken> |
here's what to look for: |
| 10/20/01 |
06:48:30 |
<TT0__Ken> |
2) Block trades (over 10K)
and out-of-market trades are unimportant by themselves. |
| 10/20/01 |
06:48:44 |
<TT0__Ken> |
what's important is, the
crowd's reaction, if there is one.. |
| 10/20/01 |
06:49:17 |
<TT0__Ken> |
so, lets say the tape is
ticking by... something occurs, let's say a 50K out of market trade 3
spreads short (down from inside market).. |
| 10/20/01 |
06:49:26 |
<TT0__Ken> |
this is for, say BRCD.. |
| 10/20/01 |
06:49:32 |
<TT0__Ken> |
by itself, it's a ""so
what"".. |
| 10/20/01 |
06:49:59 |
<TT0__Ken> |
what counts is, lets say
starting 20-30 transactions later, does what ""had been a run
up"" start to fade, and traders get nervous, and start hitting
the bid? |
| 10/20/01 |
06:50:20 |
<TT0__Ken> |
if this occurs, you can
either a) exit a long you were in, or b) fire off a short |
| 10/20/01 |
06:50:47 |
<TT0__Ken> |
and of course, when it comes
to shorting, make sure to keep the bid tick arrow and your trade execution
software side by side so you can try repeatedly if need be for a fill |
| 10/20/01 |
06:50:56 |
<TT0__Ken> |
it's tough to get an uptick
in this market, it's much more volatile |
| 10/20/01 |
06:51:04 |
<TT0__Ken> |
that's great though, from
an overall trading standpoint |
| 10/20/01 |
06:51:20 |
<TT0__Ken> |
Trading right now is Much
more exciting since the SEC 25K rule, less liquidity and more volatility |
| 10/20/01 |
06:51:50 |
<TT0__Ken> |
I said this would occur,
eg ""once the SEC shuts out small traders, daytrading opportunities
will all of a sudden get much better"" |
| 10/20/01 |
06:51:57 |
<TT0__Ken> |
not that I'm a cynic or
anything, mind ya |
| 10/20/01 |
06:52:30 |
<TT0__Ken> |
so, now is a good time for
experienced traders, but Much more risky for new traders |
| 10/20/01 |
06:53:06 |
<TT0__Ken> |
I enabled close to 700 passwords
last night, burned the midnight oil, and 1/3 show up.. ah well, c'est
la vie |
| 10/20/01 |
06:53:15 |
<TT0__Ken> |
ok moving right along.. |
| 10/20/01 |
06:53:22 |
<TT0__Ken> |
Bounce signals .. |
| 10/20/01 |
06:53:39 |
<TT0__Ken> |
bounces, reversals, again
should be <20%% of your total trades.. |
| 10/20/01 |
06:53:54 |
<TT0__Ken> |
ignore Totally that ""stochastics
bouncing noodles cranks uptick"" crap you may see |
| 10/20/01 |
06:54:00 |
<TT0__Ken> |
that is erroneous.. |
| 10/20/01 |
06:54:29 |
<TT0__Ken> |
do a study yourself, eg
look at how many ""false positives"" a 10%% or 20%%
stoch crossover yields, for a group of your favorite 10 trading stocks.. |
| 10/20/01 |
06:54:42 |
<TT0__Ken> |
you need to use the sector
strength, the time & sales, the TRINQ, and specific chart patterns |
| 10/20/01 |
06:54:44 |
<TT0__Ken> |
that's what counts |
| 10/20/01 |
06:54:50 |
<TT0__Ken> |
bounce trade guidelines: |
| 10/20/01 |
06:55:17 |
<TT0__Ken> |
Bounce trades: make sure
it's a multipoint, or at least over 1 point , drop and volume reversal
for a long bounce.. |
| 10/20/01 |
06:55:41 |
<TT0__Ken> |
eg look at the volume bars..
need to have higher volume on the reversal than preceding it, on the way
down, to confirm a bounce entry |
| 10/20/01 |
06:55:53 |
<TT0__Ken> |
best bounce trades are those
that occur off a previous day's low support |
| 10/20/01 |
06:56:21 |
<_Walter6> |
The _ in the name keep me
out for awhile Walter6 |
| 10/20/01 |
06:56:24 |
<TT0__Ken> |
eg the AMAT drops 1.4 points
to near the previous day's low and then consolidates, quickly starts to
get short covering, and ""a bounce is born"" |
| 10/20/01 |
06:56:39 |
<TT0__Ken> |
which you get into long,
and get out of, at the fibo retrace, or first sign o trouble |
| 10/20/01 |
06:56:47 |
<TT0__Ken> |
we'll look at more later.. |
| 10/20/01 |
06:56:52 |
<TT0__Ken> |
let's move on.. |
| 10/20/01 |
06:57:07 |
<TT0__Ken> |
Daytrading Breakout and
Trending Market Days ... What to Look for |
| 10/20/01 |
06:57:26 |
<TT0__Ken> |
a breakout day is simply
any day where the stock is moving above the previous days high or below
the previous days low |
| 10/20/01 |
06:57:34 |
<TT0__Ken> |
see http://www.Daytrading-University.com/dtuliveroomstrategy.htm |
| 10/20/01 |
06:57:40 |
<TT0__Ken> |
the top chart, the COMPQ.. |
| 10/20/01 |
06:58:00 |
<TT0__Ken> |
what you're looking for
is a true breakout, not a chop near a prev high |
| 10/20/01 |
06:58:20 |
<TT0__Ken> |
the strategy I like to use
is to set a conservative entry .3 to .6 above the whole number over the
previous day's high |
| 10/20/01 |
06:58:33 |
<TT0__Ken> |
like our EMLX entry, didn't
occur til later in the session, was good for a nice move |
| 10/20/01 |
06:58:47 |
<TT0__Ken> |
http://www.daytrading-university.com/bgenoct19.gif |
| 10/20/01 |
06:59:02 |
<TT0__Ken> |
that's another fibonacci
example chart.. the bgen one.. |
| 10/20/01 |
06:59:29 |
<TT0__Ken> |
the point is, the exit is
about midrange from the total drop, for a bounce |
| 10/20/01 |
06:59:42 |
<TT0__Ken> |
ok so for breakouts, let's
look at our sector tier stocks.. |
| 10/20/01 |
07:00:09 |
<TT0__Ken> |
we do not trade stocks like
INTC MSFT for daytrades, since the intraday ranges are less favorable
than other stocks in their sectors |
| 10/20/01 |
07:00:30 |
<TT0__Ken> |
they Are used, however ,
as indicators, along with the sector chart, eg $SOX $GSO , and compq,
trinq , nas futs etc |
| 10/20/01 |
07:01:02 |
<TT0__Ken> |
tier I stocks are simply
the big caps, the ones that tend to move the sectors the most |
| 10/20/01 |
07:01:26 |
<TT0__Ken> |
we use them as a type of
confirming/leading indicator, for entries in our trading stocks, which
are often called the tier 2s.. |
| 10/20/01 |
07:01:44 |
<TT0__Ken> |
sometimes we trade the lead
tier 1s eg AMAT KLAC in semis, AMGN BGEN in biotechs, ADBE in software |
| 10/20/01 |
07:02:02 |
<TT0__Ken> |
the main point is, learn
how to read the signals that the tier lead stocks are generating.. |
| 10/20/01 |
07:02:16 |
<TT0__Ken> |
eg are they making a new
high for the day, or just chopping around? |
| 10/20/01 |
07:02:47 |
<TT0__Ken> |
http://www.daytrading-university.com/emlxoct19s.gif
is a great example of breakout trading |
| 10/20/01 |
07:03:13 |
<TT0__Ken> |
by contrast, the http://www.daytrading-university.com/gmstoct19b.gif |
| 10/20/01 |
07:03:19 |
<TT0__Ken> |
provides a good example
of bounce trading |
| 10/20/01 |
07:03:33 |
<TT0__Ken> |
both alerts from yesterday
in the live room.. Which one yielded better profit? |
| 10/20/01 |
07:03:46 |
<TT0__Ken> |
the gmst, was good for say
+1/2 or 5/8 |
| 10/20/01 |
07:03:50 |
<TT0__Ken> |
the EMLX, much more.. |
| 10/20/01 |
07:04:07 |
<TT0__Ken> |
which is why breakout trading
is preferred, and what most of us who are professionals like to trade
heavy |
| 10/20/01 |
07:04:31 |
<TT0__Ken> |
eg for those two trades,
I might do say 400 shares on the GMST, but 600-800 shares on the EMLX |
| 10/20/01 |
07:04:43 |
<TT0__Ken> |
so, weight your share/trade
size accordingly, by the ""type of chart pattern"" |
| 10/20/01 |
07:04:49 |
<TT0__Ken> |
also, the time of day is
critical... |
| 10/20/01 |
07:05:01 |
<TT0__Ken> |
I tend to trade heaviest
from 9:40 til 11am.. tue wed thur.. |
| 10/20/01 |
07:05:16 |
<TT0__Ken> |
secondary strong time is
friday afternoons, esp triple witching (like yesterday) |
| 10/20/01 |
07:05:52 |
<TT0__Ken> |
If I were to choose the
'gold hours' that I make most of my trades in, that I would concentrate
on, they are: |
| 10/20/01 |
07:06:10 |
<TT0__Ken> |
the 9:40 til 11am, Tue Wed
Thur and 2:30-3:30 fri afternoon |
| 10/20/01 |
07:06:16 |
<TT0__Ken> |
time of day effects are
important.. |
| 10/20/01 |
07:06:22 |
<TT0__Ken> |
and they gate my trading
behavior.. |
| 10/20/01 |
07:06:39 |
<TT0__Ken> |
eg I'd trade lighter at
11:30 unless there's a compelling reason, eg strong compq breakout.. |
| 10/20/01 |
07:07:00 |
<TT0__Ken> |
Traders, always assess
where your stock is, relative to the previous day's trading range |
| 10/20/01 |
07:07:08 |
<TT0__Ken> |
and the micro support/resistance
levels within the range |
| 10/20/01 |
07:07:19 |
<TT0__Ken> |
as I said in my Active Trader
mag article, pro money looks at OHLC |
| 10/20/01 |
07:07:36 |
<TT0__Ken> |
the open high low close..
and buy/sell progs are triggered at highs/lows from the previous day |
| 10/20/01 |
07:07:48 |
<TT0__Ken> |
I have found that these
are the trades that follow through the best |
| 10/20/01 |
07:08:00 |
<TT0__Ken> |
and this is the most important
factor in daytrading, from what I've found.. |
