buying the highs

TheBigShort said:
It seems like a reasonable strategy to buy new all time highs on good volume on smaller companies with a stop below the previous day. For example I initiated a play on TUSK yesterday. Does anyone have experience with this/similar strategy? I have a trailing stop initiated and will hold until the stop is hit.

Theoretical question as well. Whose lunch am I eating by buying these all time highs? Thanks for your opinions and comments.
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There is no viable strategy without the concept behind it. What is your concept?

And you eat nobody's lunch since you buy from one trader, when you open position, and sell to another one, when you close it.
 
If a market is strong enough to set an ATH, then it's a strong market and for a breakout trader, that can be an entry signal. There are any number of ways to set stops and manage the BO trade. As a pullback trader, I would wait for the pb post-breakout. Sometimes, I won't get an entry and that's OK as I get plenty of signals. Often, my entry will be higher than the breakout entry, and that's also OK.
 
traider said:
Your strat sounds so easy to test, just go and test it instead of asking for random opinions
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I use R and not to sure how I would test this. It would take hundreds of lines of code using quantmod and performance analytics. Any other alternatives you recommend?
 
speedo said:
If a market is strong enough to set an ATH, then it's a strong market and for a breakout trader, that can be an entry signal. There are any number of ways to set stops and manage the BO trade. As a pullback trader, I would wait for the pb post-breakout. Sometimes, I won't get an entry and that's OK as I get plenty of signals. Often, my entry will be higher than the breakout entry, and that's also OK.
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I see you mention "markets" however do you find this is also true for companies? The main reason to support buying breakouts is because of human psycology and the asymetric flow of information. However it would seem that buying a ATH would be coming late to the party.
 
mushinseeker said:
I used to think buying the high was an inferior strategy vs. buying a low. Psychologically, I like getting things at a "discount". Bad move.. at least for the tickers I follow. I did a research on TLT and suprisingly, buying the high with a 5% profit/loss stop performed much better than buy low.TLT is a very liquid stock too.
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I think it is the illiquid stocks that will perform the best with this strategy. For the reason of slower information flow.
 
TheBigShort said:
I see you mention "markets" however do you find this is also true for companies? The main reason to support buying breakouts is because of human psycology and the asymetric flow of information. However it would seem that buying a ATH would be coming late to the party.
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'the party" is a relative variable. A trader wants a piece of a move, some larger than others but getting all of a move is a rare thing. Breaking an ATH can well signal the start of a new "party".
 
Handle123 said:
It depends on the reason of making new highs, if it was cause the "street" was wrong and it made a new high like a bullet, then I fade that, but if the bar's ranges were sort of evenly averaged on a milder angle and right after trend change or having a "thrust" bar then retracement that happens over several bars, then buying a high I would be a buyer.
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Sorry I do not understand the second part of this post. Can you explain? Thanks
 
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