Channel Trading

R

rtharp

I do a lot of different trading styles.

Tues was great in the morning and definitely near the later hours of the day as we sold off.

There are usually a few VERY slow hrs and it can stay this way for a few months as summer can be a slow time (appreciate that it hasn't been too much so far)

One of the strategies mentioned in Financial Freedom Through Electronic Daytrading which was written by my father and Brian June

(to address all of the negative reveiws saying how he shouldn't write a book about daytrading it was Co -authored with one of his clients)

Now that's not the subject.

I'd like to start a discussion about channel trading in general.

It involves NASDAQ stocks that are LIQUID MSFT, CSCO, and so forth. The really big names.

Waiting for the middle of the day.....

Finding that the stock is stuck in a small range and placing a bid when it gets near the low and an short offer when it gets near the high scalping over and over and over and over again for a few hours.

I got bored today and started to practice and found that I was doing rather well with it.


Not my usual style but works well during slow periods and normally I don't trade those at all.

Anyone care to comment on this style.

Robert
 
Originally posted by rtharp
I do a lot of different trading styles.

Tues was great in the morning and definitely near the later hours of the day as we sold off.

There are usually a few VERY slow hrs and it can stay this way for a few months as summer can be a slow time (appreciate that it hasn't been too much so far)

One of the strategies mentioned in Financial Freedom Through Electronic Daytrading which was written by my father and Brian June

(to address all of the negative reveiws saying how he shouldn't write a book about daytrading it was Co -authored with one of his clients)

Now that's not the subject.

I'd like to start a discussion about channel trading in general.

It involves NASDAQ stocks that are LIQUID MSFT, CSCO, and so forth. The really big names.

Waiting for the middle of the day.....

Finding that the stock is stuck in a small range and placing a bid when it gets near the low and an short offer when it gets near the high scalping over and over and over and over again for a few hours.

I got bored today and started to practice and found that I was doing rather well with it.


Not my usual style but works well during slow periods and normally I don't trade those at all.

Anyone care to comment on this style.

Robert
More...

"Playing" market maker" in the middle of the day is a good strategy, IMHO. It works particularly well in GE.

As an alternative, pairs is another goood candidate during "Dead Zone."

nitro
 
I use sometimes use channels as one of the factors in my entries and exits. It's not the end all be all, but it's something that I consider. But, I think that channel trading can be dangerous. I can almost guarantee that one or 2 trades will take away all of the small profits that are made from channeling.

I think that channels are best used as one of the factors in the decision making process for trades.
 
Originally posted by ANCHOR
How many shares are you guys talking about trading?
More...

IMHO, trading less than 500 shares is a waste of time.

nitro
 
Originally posted by ANCHOR
Only 500 shares? What kind of moves do you guys look for while scalping these channels?
More...
The share size you use is up to you based on your risk tolerance, and of course the liquidity of the stock. If you are trading GE, pick your size, 500,1000,2000, 5000, 10000, etc. If you are trading something that trades about a million shares a day, well obviously 10000 shares is 1% of the entire volume for that day...


nitro
 
Then I think you should wait for a channel with some decent moves. I do agree that one cannot / should not trade less then 500 shares (since you need a very big move to get some gain woth the trade)

But there's also the fact that once a stock diverges from it's channel, it usually does it fast so when you're trading 5000 shares and you get a fast move against you, you risk a lot more than you will be able to make during the channel.

Just my opinion.
 
I have never viewed these channels so my questions is what kind of moves do these stocks usually make in these channels? If it is only a couple cents how do you make money on 500 shares? Our are these moves more like .20 or .30 cents where you could make money just running 500 shares up and down?
 
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