Is it stupid to short the top % gainers of the day?

Quote from traderich:

I'd love to compare notes with the guys on here who were shorting the very same stocks I was long on this month.

Today, I was long TGX, CR, GYI, UNM, ITW, and KCI all at precisely 10:03-10:04 am.

I held all until 3:55 and sold off for a $1266 gain after commissions.

I didn't look at any charts, any news, NOTHING. I did one buy and one sell of each stock.


One thing about indicators, as you may or may not know, by nature indicators are lagging. I find it interesting that there are so many brilliant folks who talk from the couch.

I will post the exact stocks with the exact prices I am long on tomorrow. I would love for any of the brilliant folks on here to tell me at that time which ones were bad long choices and should have been shorts! I dare say that over any realistic time period, the results would be 50/50 or your guessing/indicators would be less than 50/50.
More...

I actually tested your strategy today on paper and it did phenomenal. Exactly as you described it. I can't understand why you are revealing this strategy so much. You are very generous and more people should be appreciative of what you are doing here... God bless you buddy.

one question: why did you leave out zmh?
 
Quote from SOESBandit94:

Here are the exact odds on a strategy that shorts a stock as soon as ithey hit up 5% and holding them until the close. I think the key is to avoid that set up.


370 / 691 = 53.55% down $0.01 at the close
Average winner = $0.4807
Average loser = $-0.4952 (bigger than winner)
Net winnings = $29.20, (only up because the system traded 691 times over the 15 days I tested)
Best = $5.09
Worst = $-5.70
Casino Factor = 84.15%


However the opposite is not true. If you are looking to short stocks that are down big % terms then you are in good shape.
I don't want to give away the exact numbers cause I am banking on this one right now but you get the idea.

27 / 44 = 61.36% down $0.01 at the close
Average winner = $1.9911
Average loser = $-0.4718
Net winnings = $45.74
Best = $22.35
Worst = $-1.45
Casino Factor = 97.37%
More...

You can't trust trade-ideas to give you decent numbers.

John
 
Yesterday I shorted MMM, the stock sudenly jumped $.70 in few mins. Hit me badly. But later on it gave everything back and ended up lower (of course I didn't take that trade). Did anyone else trade that stock?
Thanks to UPS I ended up $400 up.

I have decided that I will give up buying 3M products and buy of the internet and get it shipped by UPS! :)
 
Hey Scalper007,

I really appreciate your post. Very kind words sir.

The reason I posted my strategy is for one basic reason.

I was hoping that by sharing it, I would get some useful ideas or reasons why my strategy is flawed.

I had posted something about 1-2 years ago about this idea I was working on and talked with a handful of folks one on one.


Honestly, I do not think my strategy is that earth shattering and should be kept secret. Also, I may be wrong, but I don't think that by telling the ET public about it that it will hurt my results. Very few if any will trade like this.

I think that by sharing my thoughts with many others who are pursuing this kind of work will help me. I realize that by sharing it others will gain much more than I will but that is the chance I take.

One thing I have gained, albeit may seem little, is that by using IB instead of Scottrade, my results will improve and it opens up other approaches that wouldn't be possible by paying $7/trade.


One thing that some folks have sort of mentioned is this:

If buying the top gainers at 10am is better than 10:30am, why not do even better and buy them at 9:45am or even at the opening bell? One guy I had talked to gets a subscription for about $100/month that gives him streaming quotes of stocks that have gapped up on the opening.

Or, why limit it to the NYSE? Wouldn't the NASDAQ or AMEX do as well if not better?

Or, perhaps the most interesting thing to consider is this:

What makes these stocks (top 6 gainers) any better than a random selection of 6 other stocks, say the #7-12 gainers, or shorting the top 6 losers of the day?

It might just come down to that my strategy is able to eek out a small profit just because of one simple concept-letting the winners run.

If you notice with my strategy, I don't sell until the end of the day. Many daytraders look at trendlines, MACD's, 3 wizemen, etc. etc. to determine when to get in and out of a stock.

I have had some success doing this myself, but overall not as well as sticking to my simple approach.

One last thing-
Believe it or not, my most successful trades were just buying stocks that were hammered down to almost nothing, buying more and more as they dropped and getting gigantic returns as they recovered. I realize how crazy and stupid it may have been to buy these stocks at the time, but I made a ton of money with them. Here are some of them. Take a look at the charts on these and when I was buying them. Looking back now, I look like a genius.

I was buying AMR back in 03 when it dropped from 5 down to1.25.

I was buying ACF back in 03 when it dropped from around $3 down to 1.55.

I was buying TSO back in 03 when it was below $2.

I was buying GT back in 03 when it dropped from $7 down to $3.

I was buying HD when it was below$22/share in 03.

I was also buying MXT and S in 03 but they got bought out.
These are just a few, I have many others.

Notice on these stocks that when I started buying, they kept going lower on me! I kept buying more and was actually buying at or very near their absolute bottom. I guess I got very lucky they didnt goto zero, but that was the chance I was taking and I was ready to ride them into the ground if I had to.

One stock that I did get a little burned on was TWR (tower auto).
At one point I had 63000 shares of it when it traded at 1.21/share.

peace.
 
Quote from koonsdawg:

Do you guys think it is stupid to short the top % gainers? I have found a little strategy that I think works very well. But I am not a seasoned trader and wanted to get your opinions. I have been shorting the top % gainers of the day. I figure what goes up that fast must come down. At least a little. So what I have been doing is shorting the stocks when I think they are at their peak. What usually happens is the stock will end up somewhere in the middle. What I mean by that is this. If a stock closed at $5 and then the next day jumps to $10 it will end up usaully around $7.5 give or take. Does anyone else do this?

One really good example of this that has happened recently is CPSL. It was on the top ten % gainers for the day and then the next day it dropped.

Any thoughts appreciated..
More...
==================
Koons;

Yes, agree under conditions following [a-200]especially since CPSL has spent most of the year under its 200DMA
[b-50 ] and most of the year under 50day moving average
[c] gaps like that tend to not hold[good small time frame shorts]

Personaly like to short stuff like DAL[Delta Air Lines, when it was NYSE ticker] and fundamentals line up with the above ABC pattern/ usually on percent decliners, not gainers.

Or with all the hedge funds , using above ABC pattern on a weak stock/weak markek in a strong sector.:cool:

Nice profit,be careful on some of those percent gainers that dont pull back much. Laugh out loud

Wisdom is profitable to direct:cool:
 
Quote from traderich:

Hey Scalper007,

I really appreciate your post. Very kind words sir.

The reason I posted my strategy is for one basic reason.

I was hoping that by sharing it, I would get some useful ideas or reasons why my strategy is flawed.

I had posted something about 1-2 years ago about this idea I was working on and talked with a handful of folks one on one.


Honestly, I do not think my strategy is that earth shattering and should be kept secret. Also, I may be wrong, but I don't think that by telling the ET public about it that it will hurt my results. Very few if any will trade like this.

I think that by sharing my thoughts with many others who are pursuing this kind of work will help me. I realize that by sharing it others will gain much more than I will but that is the chance I take.

One thing I have gained, albeit may seem little, is that by using IB instead of Scottrade, my results will improve and it opens up other approaches that wouldn't be possible by paying $7/trade.


One thing that some folks have sort of mentioned is this:

If buying the top gainers at 10am is better than 10:30am, why not do even better and buy them at 9:45am or even at the opening bell? One guy I had talked to gets a subscription for about $100/month that gives him streaming quotes of stocks that have gapped up on the opening.

Or, why limit it to the NYSE? Wouldn't the NASDAQ or AMEX do as well if not better?

Or, perhaps the most interesting thing to consider is this:

What makes these stocks (top 6 gainers) any better than a random selection of 6 other stocks, say the #7-12 gainers, or shorting the top 6 losers of the day?

It might just come down to that my strategy is able to eek out a small profit just because of one simple concept-letting the winners run.

If you notice with my strategy, I don't sell until the end of the day. Many daytraders look at trendlines, MACD's, 3 wizemen, etc. etc. to determine when to get in and out of a stock.

I have had some success doing this myself, but overall not as well as sticking to my simple approach.

One last thing-
Believe it or not, my most successful trades were just buying stocks that were hammered down to almost nothing, buying more and more as they dropped and getting gigantic returns as they recovered. I realize how crazy and stupid it may have been to buy these stocks at the time, but I made a ton of money with them. Here are some of them. Take a look at the charts on these and when I was buying them. Looking back now, I look like a genius.

I was buying AMR back in 03 when it dropped from 5 down to1.25.

I was buying ACF back in 03 when it dropped from around $3 down to 1.55.

I was buying TSO back in 03 when it was below $2.

I was buying GT back in 03 when it dropped from $7 down to $3.

I was buying HD when it was below$22/share in 03.

Hey traderich,
Can you repeat your strategy/trading setups? I guess I am not very clear just yet.
Thanks.
More...
 
Quote from jficquette:

You can't trust trade-ideas to give you decent numbers.

John
More...

I am a fairly new user and have been having good results thus far. What should I be looking out for?
 
hey traderich,

I am new to the elite trader forum and pretty much new to day trading (actually only paper day trading now) but anyway, I like the simplicity of your strategy and it seems like you have been doing well with it (congrats).

I have an observation, (please correct me if I am wrong) it seems that the focus of your strategy is Price % gainers that have a certain volume (over 100 k). And it seems that if you could identify just one bad seed your weekly gains would increase dramatically.

So I paper traded six stocks (like you said)

EL,
GBX,
SID,
PPC,
SIE,
LEV

not sure if those would have been your picks but they were mine this morning at 10:05 am based on your criteria.

Now at 10:30 I ran another yahoo % gainers list and all the stocks were in the list except for PPC . I guess what I am wondering is if you are getting the list really from 9:40 data and you are buying at 10 am some of the stocks (like PPC) could no longer be in the % gainers.

It just happens to be that PPC has not recover (and it may recover by the end of the day) but I was wondering it that is at all a consideration.

I just ran another yahoo % gainers are there are 3 others that are not on the list but clearly PPC was off right away this morning. Any thoughts ?? I will continue to paper trade/track this theory. Thanks
 
koonsdawg said:
Do you guys think it is stupid to short the top % gainers? I have found a little strategy that I think works very well. But I am not a seasoned trader and wanted to get your opinions. I have been shorting the top % gainers of the day. I figure what goes up that fast must come down. At least a little. So what I have been doing is shorting the stocks when I think they are at their peak. What usually happens is the stock will end up somewhere in the middle. What I mean by that is this. If a stock closed at $5 and then the next day jumps to $10 it will end up usaully around $7.5 give or take. Does anyone else do this?

One really good example of this that has happened recently is CPSL. It was on the top ten % gainers for the day and then the next day it dropped.

Any thoughts appreciated..
More...


Yes, it is not a good idea. I've made a backtest in the period of 2018-2023 and the results shows that there are sereval risks in doing it. For example it is to possible that one day you lose more that the 100% of your cash. This is becuase you are investing in short, so if the price continues growing the next sesion more than a hundred per cent you will lose all your money and you will have debt. It is true that while the strategy is working correctly, it makes high returns, but in one to another you can lose everything.
 
You must log in or register to reply here.
Back
Top