Entering stocks in strong uptrends...

monkey · Dec 17, 2003

I have developed filters which give me stocks in nice, strong uptrends. I am now having a bit of trouble perfecting my entry strategy now that the entry candidates are identified.

I am hoping people with experience in this area would be willing to share some of their techniques for entering uptrending stocks, whether they be pullbacks, breakouts, or whatever. I am looking to hold for a couple of days to a week or so, or whenever my profit target or stop is hit.

I very much appreciate any replies.

iriekity · Dec 17, 2003

There is no magic thing to perfect. Get into the position and then only worry about P/L have an amount you will lose or the level that you think counteracts the trend. Set either as stops and that is it. Let money management deal with imperfection.

easyguru · Dec 17, 2003

Quote from monkey:

I have developed filters which give me stocks in nice, strong uptrends. I am now having a bit of trouble perfecting my entry strategy now that the entry candidates are identified.

I am hoping people with experience in this area would be willing to share some of their techniques for entering uptrending stocks, whether they be pullbacks, breakouts, or whatever. I am looking to hold for a couple of days to a week or so, or whenever my profit target or stop is hit.

I very much appreciate any replies.

Some of the ways in which you can enter strong uptrend is
1 one day reversal
2 narrow range days
3 on achieving an additional mile stone like 2 or 3 year high or all time high

ges · Dec 17, 2003

Quote from monkey:

I have developed filters which give me stocks in nice, strong uptrends. I am now having a bit of trouble perfecting my entry strategy now that the entry candidates are identified.

I am hoping people with experience in this area would be willing to share some of their techniques for entering uptrending stocks, whether they be pullbacks, breakouts, or whatever. I am looking to hold for a couple of days to a week or so, or whenever my profit target or stop is hit.

I very much appreciate any replies.

This works: Wait until there is a pullback...many ways to gauge this; then enter on a limit somewhere between 5% and 10% below yesterday's close. This will give you few hits, so you need to have a lot of symbols to work with, but it really puts the odds in your favor. I say this based on lots of testing and trading of the method.

g

lindq · Dec 17, 2003

If you are going to enter on pullbacks - which you should - it will improve your trading results if you are always aware of the overall position of the market relative to it's moving average. Simply chart the S&P and run a 10 day EMA. Enter pullback trades only on those days when the S&P is below the daily MA. This will put you in long positions when overall market is most likely to reverse and give you a boost, as the market itself will often have a large impact on your individual trades. You will note that nearly every month the S&P pulls back to set up nice trades, and that is your prime time. Yes, you will give up a number of trades, but you will also escape the frustration of going long just before the market drops out under you.

It is also important to handle as many trades as possible at the same time, because there is safety in diversity. The only downside to trading pullbacks is that you will sometimes get hit with a serious falling knife, and having other longs in your portfolio will soften the blow. You never want to put too much of your equity in any one pullback trade, no matter how much you love the setup.

Trading pullbacks requires more than TA. You need to monitor the news and fundamentals as well, to avoid getting into a falling stock that for good reason may not recover quickly. Stay away from drug stocks, any stock that can be impacted by legislation, or any stocks that have given serious warnings that impact their fundamentals. Trade only those with solid EPS and growth, as even the best companies pullback from time to time and offer good trading opportunities.

Bankedout · Dec 17, 2003

If you are going to be holding for such a short period of time, I think it's best to trade on either 15 minute or 30 minute charts. If you want to enter on 'pullback' on the daily chart, find the pullback on your intraday chart of choice. It will show up as a down trend. Enter on reversal of that trend from down to up. Follow the new up trend with whatever trend following strategy you use.

I agree that it is best to do this when the indices are doing exactly the same thing. One thing to keep in mind is that the 'best' stocks will turn up before the indices. So you might want to front run your favorite index a bit.

Good luck,

Banker

Quote from monkey:

I have developed filters which give me stocks in nice, strong uptrends. I am now having a bit of trouble perfecting my entry strategy now that the entry candidates are identified.

I am hoping people with experience in this area would be willing to share some of their techniques for entering uptrending stocks, whether they be pullbacks, breakouts, or whatever. I am looking to hold for a couple of days to a week or so, or whenever my profit target or stop is hit.

I very much appreciate any replies.

gms · Dec 19, 2003

Quote from lindq:

it will improve your trading results if you are always aware of the overall position of the market relative to it's moving average. Simply chart the S&P and run a 10 day EMA. Enter pullback trades only on those days when the S&P is below the daily MA. This will put you in long positions when overall market is most likely to reverse and give you a boost, as the market itself will often have a large impact on your individual trades

I'm just curious if similarly tracking the Wilshire Total Market (TMW) index is more advantageous or not (probably just the same). I can think of pros and cons both ways, but I'm posting this to glean your observation, lindq.

lindq · Dec 19, 2003

IMO, that's just splitting hairs. Any broad based index will do. You just want a general feeling for where the market is before going long, in relation to it's MA.

monkey · Dec 19, 2003

Thank you all for your replies. There are some great ideas here. I will be spending the holiday week assimilating this information into my trading methodology.

T-REX · Dec 19, 2003

Quote from monkey:

I have developed filters which give me stocks in nice, strong uptrends. I am now having a bit of trouble perfecting my entry strategy now that the entry candidates are identified.

I am hoping people with experience in this area would be willing to share some of their techniques for entering uptrending stocks, whether they be pullbacks, breakouts, or whatever. I am looking to hold for a couple of days to a week or so, or whenever my profit target or stop is hit.

I very much appreciate any replies.

Great job youre on the right track.

If you have identified a stock that is in an strong uptrend then CONGRATULATIONS!
you have just discovered the "Holy Grail".

You have two choices:

1.) Buy every Breakout into new highs! (Best Strategy)

2.) Buy every pullback into the 10 day EMA of closing prices.
(this includes pullbacks toward the 40 day EMA as well.)
NOTE: buying pullbacks can be risky because you have no way of verifying if the pullback is do to light profit taking or worse---
TOTAL DISTRIBUTION! .....which marks the end of the uptrend!

Good Luck.

T-REX