My simple, yet profitable trading strategy

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That link is gone Victor.


Your point is that you, like others would bock at making $225/day?

You have to realize though this too, I am not forced to sweat every position and watch it like a hawk.

I make one set of purchases, one sell per day.

I am looking for an even better method or to improve on this, but until I can find a better way, this is what I have been doing.

I realized when I posted this that I would get one of two responses: Folks like you who are naysayers, but cannot offer any better method or improvements (and who live in a dream that they actually make more than $225/day on average trading), and folks who are interested in understanding it and want to backtest the data.

peace
 
Ricter,

I have been looking at this for 2 years and have made some adjustments to my strategy over the course of the 2 years, and honestly, am constantly thinking of tweaking it or improving it all the time, so in a year from now, my method may be completely different from today.

Anyways, since you asked: I had originally started out with the idea that I would first look at the largest gainers at 10am, and then compare the largest % gainers again at 10:30. If a stock had made the list both times, then I would buy at 10:30.

My thought was that, as many others observed, many stocks gap up and then go on a tear only to then fade down.

I wanted to avoid getting into one of these stocks, such as BOW today. It happens all the time, so its nothing new to me.

Anyways, I then thought about the idea of "why not just buy the top winners at 10am?" It appeared that almost with certainty that the top stocks on the list at 10am were on the list at 10:30am, so I compared the overall pricing between buying them at 10am vs. 10:30am. The prices, overall were much better at 10am. So, what this meant was, just buy the lot at 10am and yes there will be duds such as BOW is today, but the stocks that take off will tend to carry the duds.

Also, if you PM me for the spreadsheet, you will see that I have not set stop losses on any of the days. This is something I have only recently been looking into.

I have noticed that overall, if the lot of 6 drops below $1800 or so, it never recovers and is going to be a losing day. So, rather than have a really bad day, I am looking at the stop loss of $1800.

On the other hand, I was looking at locking in some good days at $3000. There have been days when it was up $3000 but then went down again. Obviously Friday was a day that selling off at $3000 gain was a bad idea, as it went to over $6000 for the day.

peace.
 
Quote from traderich:

Today is a down day. Happens 50% of the time. I dare say that is why I can post this method and not be the least bit concerned that it would affect me because very few if any of you would be able to stomach the down days! lol.
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Alright, I have a lot to say after reading through this thread. I've been trading this strategy for a year with good results, but I have modified it quite a bit. I don't mind sharing my thoughts because no matter how you tell people to trade, their entries and stops will always be a little different, and this is a liquid strategy.

Rich, as you know Friday was great to be long only, but then days like today you will get crushed. There's no reason to be losing $1800 so often. There are things you can do to balance out your P&L.

First of all, the single best thing is to learn to recognize whether a top gainer has begun to look weak. I know you are thinking how do I do that??? Take a look at GWW vs. BOW today. GWW hardly sold off after the 10am peak, while BOW couldn't even catch an uptick. Same with MBI, the candlesticks are solid red after 10am, so why buy? (Yes I caught BOW and MBI short for nice gains). Why bother placing the same bet on both then. Why not buy GWW and sell BOW? And I don't mean taking full positions. It's good to average in and out of these. I usually start with 300-500 shares, and typically end up with 2000-4000 by the time the stock is ready to break out, unless they break out earlier in the day then I anticipated then I may not have a full position.

But any profit is good profit, especially when you can do it with low risk entries and tight stops. That's what averaging does for you.

The next thing you should look at is shorting the weakest, that have sold off then flatlined. Something like SEED today (if shorts are avail). At 10am the stock was in a pretty tight range, then fell off a cliff. It's the same concept of the long trade, and works exactly the same (or often better).

For those wondering why these trades work, there is a fundamental reason. When something moves hard and fast first thing in the morning (like GWW) then who is responsible for selling to the public? The specialist or MM. Now comes 10am, the buying has softened up and the specialist is short, or has low inventory and needs to replenish. If it starts to move up again after an hour or two and he hasn't been able to cover much then the real buying begins. Same theory for shorts. I have seen this pattern work since my first days of trading years ago. It works in any market as long as there is volatility and news.

Here's a screenshot from when I started typing this...
monday.JPG


As you can see I had just started buying TSO, now I have 1500 and have a 30c profit cushion. The trade may or may not work, but I will either make $1-2k or lose nothing. It's a beautiful thing :D

Here's some stats for the month:

$471 average winner
-$295 average loser
13 winning days
5 losing days
$1925 average winning day
-$1266 average losing day

Hope that gives you some ideas to tweak your system. Let me know if you have any questions.

p.s. I just covered the last of my MBI for a $1.50 gain. Got to be willing to sell these things!
 
Today at 10:00 (Live), QCharts showed these top six % gainers:
AMEX
OFI BPA NSU NXG PHO IWN

NYSE
FRC BOW ABY FBP PRX BMY

NASDAQ
MDCC SYGR SILC OCCX ATRS RFIL

Some of us can use trailing stops to enter falling stocks. That may be a good way to get a better price on the ones that dip before rising again. Also less pain for those that keep going down.
 
Quote from steinh:

Today at 10:00 (Live), QCharts showed these top six % gainers:
AMEX
OFI BPA NSU NXG PHO IWN

NYSE
FRC BOW ABY FBP PRX BMY

NASDAQ
MDCC SYGR SILC OCCX ATRS RFIL

Some of us can use trailing stops to enter falling stocks. That may be a good way to get a better price on the ones that dip before rising again. Also less pain for those that keep going down.
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I just looked at the NYSE list, and at this time only two of the six are showing additional gain after 10am. Losing day, typical day, or are you waiting on a surge towards eod?
 
Intraday market direction has a lot to do with the success of this strategy. The ES drop in the last hour killed some good longs, but also helped some good shorts like RDWR. That's why you have to play both sides. I've flipped that TSO long, nothing but selling in that stock now.
 
Quote from traderich:

That link is gone Victor.


Your point is that you, like others would bock at making $225/day?

You have to realize though this too, I am not forced to sweat every position and watch it like a hawk.

I make one set of purchases, one sell per day.

I am looking for an even better method or to improve on this, but until I can find a better way, this is what I have been doing.

I realized when I posted this that I would get one of two responses: Folks like you who are naysayers, but cannot offer any better method or improvements (and who live in a dream that they actually make more than $225/day on average trading), and folks who are interested in understanding it and want to backtest the data.

peace
More...

Was this directed to me? If so, for what reason? I think you may have misinterpreted my post.
 
All part of trading though.
After multiple days of actual trading losses (negative r/r) is when one should probably reevaluate a new strategy.
 
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