A Question of Strategy

J

jlcarey1

I am stuck in a bad streak lately and my thoughts are going in two different directions. So, I would like your thoughts on this dilemma. I only trade the NYSE. Which strategy do you think is best:

A) Trade only a few stocks, stick to them and try to become a "specialist" on those stocks only.

B) Follow the sector Indexes and basket trade the sectors that are doing well each day.

This dilemma was highlighted perfectly today, because I started off trading IBM, HAL, and AET. I caught the bottom on AET perfectly and did well on that one!!! But, I got chopped to death on IBM and HAL.

However, if you take a look at the sector Indexes, I clearly should have been involved with the Airlines and Utilities. Both of which had nice moves.

My gut feeling is to sit back and watch the sector Indexes. What are your thoughts??
 
Quote from jlcarey1:

I am stuck in a bad streak lately and my thoughts are going in two different directions. So, I would like your thoughts on this dilemma. I only trade the NYSE. Which strategy do you think is best:

A) Trade only a few stocks, stick to them and try to become a "specialist" on those stocks only.

B) Follow the sector Indexes and basket trade the sectors that are doing well each day.
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Just a thought ... but have you ever thought of trading NASDAQ stocks? I always hated to trade NYSE stocks due to slower confirm times due to the specialist being a middleman of sorts. In past years I "specialized" for a while and traded just 2 stocks (SUNW and ASND ... good old Ascend Communications). Whereas I think you can "learn" a NASDAQ stock and determine who the ax is I'm not so sure you can get as good a read on NYSE stocks. Just my 2 cents.
 
Trade relative strength or weakness and use a futures stocks index as your trigger. If the futures pulls back, but the stock just goes down a lower % retracement, goes sideways or even up.. then look for entries on the index and then go long on the stock. You can figure out the relatively weak or strong based on comparisons of the first hour.
 
Prox, that is my game as well. Problem is there is alot less relative strength/weakness this year in stocks versus futures. I did great with this strategy last year, and have been getting my butt kicked this year. Because there hasn't been enough volatility in the stocks relative to futures.

It seems like much of the relative strength/weakness of individual stocks/sectors versus the futures is random and meandering. Especially after 10:45. Follow through just hasn't been there. Relative weakness is rarely leading to the big score. But often it leads to a reversal of sorts.

There are still plenty of opportunities, and i think this is one of the best ways to trade. But the key is to be more selective than in the past.

Last year i would run this strategy daily, trade many differenent sectors and stcoks each and every day. Now if i try to do that i churn myself to death.

I think the key to day trading stocks right now is to look for only a few trades each day. If you trade too much, there just isn't enough volatility in the mediocre plays to cover slippage and mistakes.
 
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