Exponential growth
- Thread starter Neoxx
- Start date
You got some concepts correct but I value certain things far more than others.
1) A channelling stock isn't a bad thing but a channel can be a bit tricky. As much as many books would like to claim that there are certain places that you can draw trend lines, where to put them can be left completely up to the person reading the chart. If you see a channel, you have to be confident that everyone else sees the same channel. If noone else sees it then the stock will wander right through what you thought would be support or resistance.
2) I don't really look for long term neutrality. It just turns out that many of the setups that I like, fall into that category. Long term neutrality many times gives very established S/R by which you can base your entry and exits.
2) This is key! Count on the S/R to hold, but make sure that you aren't seeing S/R that isn't really there.
3) Yes, you need to know that if it decides to move in one direction, that it will likely continue in that direction. A setup like SHLD could possibly allow me to get in on both a bullish and bearish position.
4) My strategy isn't confined to higher priced stocks. But those above $30 generally lend more to this strategy. Lower priced stocks generally don't give me the credit that I look for because they aren't volatile enough.
A lot of it has to do with how much I stand to lose if the stock moves against me. The most critical factor is how close I have to get to S/R to get me the credit that I want. In th case of RIMM, I almost didn't trade it because I had to be right on support to get filled. That really decreases the odds for success.
Then I have to find a stock that has REAL (demonstrated) support or resistance. I don't like to be guessing as to whether or not others will be lining up to buy or sell at a given point.
I also factor into the equation, short interest, institutional buying/selling, and directional bias for the sector/market, dollar weighted put/call ratio, and to some extent relative strength.
GME might not be a bad play, but the support will be at the $38 level which is right between the 35 and 40 strikes. This will not allow for a good credit and therefore would ruin the trade for me.
INFY- I would have to give it some time for a good solid play. It is coming right off of a news related move. I need to see a new pattern to make a decision. Best to wait this one out. Also, I would like to see more volume. I really gravitate toward higher volume stocks. Average daily volume 1,500,000+
INFY- I would have to give it some time for a good solid play. It is coming right off of a news related move. I need to see a new pattern to make a decision. Best to wait this one out. Also, I would like to see more volume. I really gravitate toward higher volume stocks. Average daily volume 1,500,000+
I see what you mean about the subjectivity of S/R levels. In the case of GME, I was reading support at 36.75
By institutional buying/selling, do you mean institutional ownership, or active institutional participation in the current move.
As for dollar weighted put/call ratio, do you use special software to scan for this, or is it part of the TOS application?
Short interest... how do you determine this?
And as for volume, just to clarify, you look for an average daily volume of 1.5 MM?
I have the feeling every answer will generate at least as many questions, so feel free to quit while you're ahead!
You can say one thing, at least this thread is living up to it's name
Quote from Neoxx:
I see what you mean about the subjectivity of S/R levels. In the case of GME, I was reading support at 36.75
By institutional buying/selling, do you mean institutional ownership, or active institutional participation in the current move.
As for dollar weighted put/call ratio, do you use special software to scan for this, or is it part of the TOS application?
Short interest... how do you determine this?
And as for volume, just to clarify, you look for an average daily volume of 1.5 MM?
I have the feeling every answer will generate at least as many questions, so feel free to quit while you're ahead!
You can say one thing, at least this thread is living up to it's name
Not institutional ownership, active participation. It doesn't have to be institutions, just anyone that is dealing in high volume orders. Most of the time it is institutions like ML. I just want to mainly see where there is going to be pressure on the stock. Many institutions use the 50-day MA as a buy/sell indicator. You might be able to get a quick idea about institutional participation by looking at how the stock behaves when it approaches this line.
You can use sprecial software to scan for dollar weighted put/call, but I don't feel I need to. For me it is just going to support the choice I have already made on the stock. Once I've used my other criteria to narrow it down I can just look at the option chain and determine the weighted put/call ratio. This will help me choose which of the several stocks to get into.
Short interest can be found using something as simple as MSN deluxe stock screener if you want it for free.
Yes, I like stocks that have an ADV >1.5MM. But if I find one that I like that is below that, I will just judge it on the open interest and volume of the specific options that I want to trade.
You can ask as many questions as you want. The answers might not be as specific as you would like, but I'll do my best. If I was going to teach someone to trade options effectively it would take a good amount of time. Contrary to many seminars out there. Options aren't a 2-day course.
P.S. You could read support at 36.75 on GME, but it seems to me that the first support will be about $38. I wouldn't want it to test support at 36.75, have me get into a position and then have $38 turn into resistance.
Uh...Ohhhh....
Looks like someone might have been wrong about RIMM.
CACHE (raises his hand with a sheepish grin)
I knew I would probably get caught on this trade. It's a good thing I only played half the amount of a normal position.
Looks like someone might have been wrong about RIMM.
CACHE (raises his hand with a sheepish grin)
I knew I would probably get caught on this trade. It's a good thing I only played half the amount of a normal position.
Quote from Cache Landing:
Yes, I like stocks that have an ADV >1.5MM. But if I find one that I like that is below that, I will just judge it on the open interest and volume of the specific options that I want to trade.
You can ask as many questions as you want. The answers might not be as specific as you would like, but I'll do my best. If I was going to teach someone to trade options effectively it would take a good amount of time. Contrary to many seminars out there. Options aren't a 2-day course.
P.S. You could read support at 36.75 on GME, but it seems to me that the first support will be about $38. I wouldn't want it to test support at 36.75, have me get into a position and then have $38 turn into resistance.
Everything makes sense, in a deflating way ;-)
As far as S/R levels go, would you use candle charts or line charts? I'm inclined to think they would be more robust with line charts, but candle charts seem to offer definite S/R levels that would be impossible to infer otherwise
I've decided not to open any new positions until a few more of my positions have played out. Nothing like a little sensory acuity.
And I realise that with every question or new insight spawning many more of the same, this is not going to be a short ride.
And I'm counting on that.
I know this is going to be a lifelong journey.
I want to be as passionate and excited and inquisitive about this twenty, thirty, forty years down the line.
I use candle charts. They give me more detail into the minds of those trading the stock.
I hope you keep your enthusiasm. In the end it comes down to who can stay interested enough to keep making money.
I hope you keep your enthusiasm. In the end it comes down to who can stay interested enough to keep making money.
Decided to take profits on my DJX play. Not as high as I would've liked, but profit is profit. All said and done I made 40%. I was looking for 110% on this one but I didn't have the nerve to sit through the beige book coming out today. The CPI came in lower than expected already and if the beige book hints at no more tightening in the fed policy, I might get caught with my hand in the cookie jar. Maybe if I'm lucky the beige book will be so good that my long calls will end up being worth something. LOL