Mags

Quote from Mecro:

Dude you're too funny.

You remind me of all the super investors and super swing traders of 1999 and 2000. They thought they were so great because they could pick up a copy of IBD and explain how they got into this interenet stock and that one at a low price. Problem is, they did not close out their positions properly since the stocks were "following a trend" until they collapsed.

No offense but your strategy is equivalent of picking out a few low priced Naz stocks that have some fundamentals behind them and waiting. One of them is bound to pop while the others will barely move.

The point is that you can throw out all your super swing trader thinking about MAGS. You are sitting on a momentum play from a very good price. Be smart, take your money and forget about it. You are not up anything and you did not make anything in MAGS, until you cash out. That stock could collapse to below what you paid for it in a matter of hours if some bad news comes out and the Naz momentum traders jump on it. There is no real trend, it's a bubbled up momentum play.

Seriously, just step back and take a look at your posts. It's like de ja vu of the super bull investors from the tech bubble.
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Hahah! Lol, you remind me of (the old) me man, the way you shoot off at the mouth about stuff you apparently don't know shit about.

No, you're the smart guy throwing cash down the shithole with your "prop trading". God you suckers are hilarious. Even more so because you don't even realize just how great suckers you are. You'll realize it one day. (Seriously, you will...but have fun with the fantasy...it is fun for a while.)

.No offense but your strategy is equivalent of picking out a few low priced Naz stocks that have some fundamentals behind them and waiting.

No offense, but it's nothing like that at all. Glad you think so, though.
 
bill,

Congrats on some nice trades. I think it's important for newbies to understand that there are two elements to what you're doing. One is the timing aspect, ie new 60 day high on triple volume, but the other is the stock selection itself. I can say pretty confidently that no traditional trend following system will make money over time in the broad stockmarket, say the S&P 500. Ditto for most individual stocks. There is too much backing and filling, and not enough trend runs. The key to success is picking stocks that really don't act like stocks at all, but rather act like commodities.

I noticed your list of references and was struck by the fact that most of them were primarily commodity traders. Trend following works in commodities because they are pure supply/demand markets. If dry weather destroys the bean crop, prices will inevitably rise. It doesn't matter what Greenspan says or who the president is. By contrast the stock market is somewhat different. The "supply" for most stocks is virtually infinite. If prices get high enough, supply will materialize in the form of IPO's and secondaries, plus profittaking. No one has to own GS. MER is a good substitute. By contrast, if you need OJ, wheat is not going to be much of a substitute.

Some stocks tend to trade like commodities. TASR, MAGS, the whole internet bubble thing, RIMM seems to be doing it. Either through short squeezes, artificially small floats or perceived need by investors to own a hot sector, demand overwhelms supply (and traditional concepts of value) and you get these huge runs.

Personally, I think it's an excellent way to make money in the market, provided one understands why it is happening and doesn't try to apply the same technique to stocks that trade like stocks.
 
nice post and I agree 100%

I look for "specific behavior" or "tendencies" towards such behavior in stocks, and the following are some of the criteria

- low shares outstanding (less than 50 million ideally)

- sudden huge volume (compared to hum drum every day volume)

- "B" or better group strength

- overall world/business climate could provide additional catalyst (oil, gold, terrorism, home prices, etc etc)

(as you know) the chart is merely a graphical representation of the trading. So if I see, visually, a flat line for 6+ months with "hum drum volume", then BOOM, one day the stock breaks upward, on huge volume (MAGS was 20K volume then traded 1 million shares its first day of what I call a clue), then I get real interested.

If the stock further meets the above conditions (MAGS and TASR both do), then I can be pretty darn confident when taking a position

see ya
 
Quote from SethArb:

in a way ... but if you buy stocks that make all time highs

or 3-5 yr highs on the break out

has anyone backtested to see what % of them go up

10 - 50 % etc as opposed to subsequently dropping

10 % ?

I have no tradestration of the equivalent

and thus have no clue as to how easy it is to test

even with tradestation or its equivalent
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Yes I have done that and even more of data mining on last 40 years.
There is a difference between all time high performance against all time high as against all time high for first time, second time and so on.
Odds improve if you take the first all time high or you vary the parameters of all time high after certain number of days.
There are also certain patterns which occur when a stock makes all time high. I have observed these differ for NYSE as against NASDAQ and AMEX. So one can work out tactics to enter and put stops based on that which improve results.

Those interested in researching this further could benefit by reading following books
1 How to trade in stocks By Livermore
2 Ed Seykota interview that appeared in Stocks and Commodities Magazine in 1992
3 How Charts can help you in the stock Market By William L Jiler
4 Superperformance stocks by Richard love
5 Mark Minervini interview in Stock Market Wizards.
6 The Hedge fund edge by Boucher
 
My apologies for not knowing what an ATR is Bill. I feel especially sorry given the arrogant and presumptuous nature of your reply to a simple and humble question. Apparently Ed Seykota is a role model to you. Well have you ever noticed that on Ed’s Trading Tribe FAQ's one thing he never seems to display is arrogance.

In some of my filters I use a measure called Avg20DRng, and Avg2DRng...etc. How those are calculated is pretty self explanatory. But as for ATR, I never heard it put that way. Just semantics perhaps. What I call a liquidity dip, others call stop gunning, an upspring or a failed breakout. But each name makes reference to the same chart pattern.

At any rate, I am indeed an equity trader, a professional and profitable one at that. How can I call myself an equity trader and not know what an ATR is? Frankly Bill, plenty of extremely profitable equity traders (millionaires several times over) know far less TA jargon than I. You don't need to know much TA jargon to make money my friend. Hard fought for experience and boat load of discipline is enough. Keep it simple.

As Ed said: "Trade the Trend and Manage your risk, I know of no other enhancements." People tend to fail as traders because they fail to do one of the above. Not because they don't know what an ATR is.

Bill you are obviously on a high right now. But remember this one; I'm sure you do: "I sometimes think that no price is too high for a speculator to pay to learn that which will keep him from getting the swelled head. A great many smashes by brilliant men can be traced directly to the swelled head..." Reminiscences, P. 160

I've read:

Logical Trader, all of Schwagers books on TA, All 3 Mrkt Wizrard books, Nison's Candle Sticks book, Reminicences, Zweig's winning on wall street, Trading in the Zone, Pit Bull, Market Makers Edge, Referenced the Turtle site many times, yes I know who Donchian is, I'm aware of his techniques and how much Seykota was influenced by him. But I don't ever recall reading anything about ATR's. Again, sorry I missed it. Good think I don’t have to write an exam on TA tomorrow. I just have to get on the right side and manage my risk.
 
by the way ... ASKJ did not hit ALL TIME HIGH in feb 2003

and neither did RIMM hit ALL TIME HIGH in Sept 2003

maybe you meant multi yr high on these two ?
 
thanks for your post and your book list

Ed is not a "hero" by any stretch however he is a good trader who can teach all of us. You stated that Ed "never seems to display'' arrogance. Some of the Elite Trader veterans have their own private opinions that might differ.

ATR is pretty standard terminology and is not "semantics perhaps", nor does ATR refer to a "chart pattern", like your post stated. ATR has nothing to do with a chart. As a matter of fact, ATR is a mathematical calculation and has NOTHING to do with a chart. Nor is ATR a "filter", which you seem to have alluded to.

It does not matter, since you appear to be non-receptive to learning about ATR, and thats cool too

You also stated that "you don't need to know much TA jargon to make money my friend."

You are right. Learn the minimum. That is the sure way to success in trading, or life

You mentioned "keep it simple." This comment is what my strategy is all about. Simple-ness. (thanks)

Additionally, you said I was on a high. Actually my man, I am just riding the trend. Of course I am happy to be UP in my account, but high? Nah. Just with the trend (up). Monitoring the trend, using close of day data. I am in MAGS till I am not in MAGS. Does that make sense?

Eventually everyone figures out the best system for THEMSELVES, I think the Wizards books pretty much made that clear. Trader A's system may not be right for Trader B. My system, pretty simple, is best for me. I offered ATR as a learning point but for some reason you are a defensive guy and got bent out of shape pretty quick. Hey man, sorry.

My equipment, as discussed earlier, is a 266 Pentium computer with a monitor whose tubes are about to die. I trade using end of day data, since I have a full time job. Thats it. I run scans each night on stockcharts.com and check charts and other stuff, for maybe 1 hour, 1:30 each night. Thats it.

good luck in your trading
 
Average True Range (ATR) of the past 10 days.
It's used in some of the Systems in ActiveTrader magazine

True Range is max. abs. diff. of
a. today's high - today's low
b. today's high - yesterday's low
c. yesterday's close - today's low
 
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