Help with Trade Entry Using TP

Trapper,

I use TP's basic BP1 and BP2 levels as key daily support/resistance levels to watch. The only other indicators I use are the S&P and NAZ futures to gauge short term market direction, and to help confirm a potential long or short position. These days I also am more liberal with my stops, allowing usually a point or so as leeway due to the whipsawing as previously mentioned.

That said, I also agree with the assessment that in times like these, sometimes the best position is no position at all. I still daytrade a bit, but much less than before. More often in this market, I've been waiting for the perfect setup, i.e. parabolic blowoff bottoms and oversold bounces for multiday swing trades.
 
I am a TP bigot and I have to agree with the previous posters. I trade mostly volatile stocks (Cien, Jnpr, HGSI, AMCC, etc.) and use the Major S/R's like the others. Today I traded BRCM, CIEN, CMVT and YHOO. I attempted to trade JNPR but cancelled my order. No options.

I'm a point off the curve, however. I will not trade based just upon breaches of DS, BP1, and BP2. I look at all the S/R's and look for reversals all the time. In this choppy market, stocks turn on a dime and reverse in mid-run every day. Thus, I will enter a position when the price crosses a major S/R, up or down, or has clearly reversed. But that is a very AGRESSIVE strategy and should not be undertaken unless you are very sure of what you are doing and that your tools are 'sharp'. IMHO, the stops are the most important aspect of the trade. It's usually not too difficult to identify a stock and an entry. The biggest trading errors that are made are not managing the stops. Also, I rarely enter a trade before 10:00am (or at least until after the morning madness is mostly over).

I also watch the futures constantly and really don't watch the indexes, but rather the TRIN associated with each index. I also watch the SOX and the BTK.

Lastly, re: brokers, I use cyberX2 and IB. I had some initial problems using IB (attributed to my learning curve), but now have no problems. Cyber has the occasional data problems, but everybody has them from time to time.
I use Cyber for equities and IB for options. I have never traded a single equity on IB. Cyber makes the most sense (from a cost standpoint) if you trade 1000 share or greater lots. Cyber has trailing stops, but they have to be constantly monitored since they fail about 10% of the time. Also, in this market, to pick stops or ranges, you have be to extremely clairvoyant. Also, it is very difficult to day trade options these days due to the very sloppy markets and the huge spreads since the markets are so choppy.

I also use QCHARTS and it is a great charting ans L2 tool, but the reliability there is probably the lowest of all 3.

:-)
 
kempo,

What I'm looking at with the futures with regard to the BPs is whether it looks like the cash markets will follow the direction of the futures, therefore confirming what type of position I should take as a stock approaches or is at one of its BPs. For instance, let's say a stock has a lower BP of 50, and is approaching that level. At the same time, the NAZ futures are moving lower. In all likelihood I would take a short position, looking for the stock to breach its 50 level and continue lower, as indicated by the futures. On the other side of the coin, let's say it's the same scenario, except the futures are now moving higher. I would be more inclined to go long around the 50 level, looking for the support to hold and bounce back up. In addition to this, I also watch the buying or selling volume in the stock as it approaches a BP for additional confirmation. If as it approaches the 50 level, selling volume remains steady or increases, that's a further confirmation for a short position. If volume subsides as it reaches 50, it's more of an indication that the the support could hold. As always, keep your stops in effect in case you read it wrong.
 
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