Prop Trader Journal

Quote from Shanb:

You said that you like to trade intraday trends ElecEquity? I have been doing something similar after the initial open. Just screening strong/weak stocks throughout the day with 1.5-2 relative volume, and that are up/down and have good risk reward(not down/up alot).Along with the above approach I have also have a list of stocks in play(earnings) for the day near key levels that could have follow through. I do look at overall S/R(daily/hourly etc) to see the risk reward of certain trades as well.

So my question for you is, how do you find the stocks you will trade throughout the day? Do you screen throughout the day or have stuff
before the open based off of a longer-term picture?
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Shan, let me offer you an idea. Back in the day, my best trades were what people call the good news/bad action or bad news good action trades. These were monster winners. And quite frankly, the closest thing you can get to a holy grail. Go through the news and look at stocks with good news and bad news and put them in separate columns on your quote board. Then when the market opens, look at all the stocks with bad news that has a strong bid and look at the stocks with good news that have a strong offer. Those stocks tend to have a lot of follow through as they have a lot of players on the wrong side that are caught.

I'm not saying to jump in on the open, just watch them. When they settle down and start to trend, get on board. They will trend all day into the close and usually will close near the high or low of the day.
 
Quote from Maverick74:

Shan, let me offer you an idea. Back in the day, my best trades were what people call the good news/bad action or bad news good action trades. These were monster winners. And quite frankly, the closest thing you can get to a holy grail. Go through the news and look at stocks with good news and bad news and put them in separate columns on your quote board. Then when the market opens, look at all the stocks with bad news that has a strong bid and look at the stocks with good news that have a strong offer. Those stocks tend to have a lot of follow through as they have a lot of players on the wrong side that are caught.

I'm not saying to jump in on the open, just watch them. When they settle down and start to trend, get on board. They will trend all day into the close and usually will close near the high or low of the day.
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Thanks for the suggestion...I'll do this tommorow. On the open I usually have a watchlist of stocks that are in play and I judge can have a decent move. I'll just have to group them between good news and bad news...shouldn't be too hard!

BTW...your comment that content/stock selection is everything has really rung true to me since going through my first couple months. I am finding that there are stocks with certain characteristics that tend to be the best things to trade throughout the day. Now I can flip through stocks before the open and throughout the day and spot some good movers just based off of the technicals on the longer term chart. Obviously taking into account if a certain news or event can effect them...Sobano has helped me with this. He is good at identifying catalysts that will have an effect versus some that most likely wont.
 
Quote from Shanb:

Thanks for the suggestion...I'll do this tommorow. On the open I usually have a watchlist of stocks that are in play and I judge can have a decent move. I'll just have to group them between good news and bad news...shouldn't be too hard!

BTW...your comment that content/stock selection is everything has really rung true to me since going through my first couple months. I am finding that there are stocks with certain characteristics that tend to be the best things to trade throughout the day. Now I can flip through stocks before the open and throughout the day and spot some good movers just based off of the technicals on the longer term chart. Obviously taking into account if a certain news or event can effect them...Sobano has helped me with this. He is good at identifying catalysts that will have an effect versus some that most likely wont.
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Yeah, a good one to avoid are upgrades and downgrades. More money has been lost by daytraders that think those are catalysts, they are not! However, when earnings get revised higher or lower, that usually is a very big deal.
 
Quote from Shanb:

You said that you like to trade intraday trends ElecEquity? I have been doing something similar after the initial open. Just screening strong/weak stocks throughout the day with 1.5-2 relative volume, and that are up/down and have good risk reward(not down/up alot).Along with the above approach I have also have a list of stocks in play(earnings) for the day near key levels that could have follow through. I do look at overall S/R(daily/hourly etc) to see the risk reward of certain trades as well.

So my question for you is, how do you find the stocks you will trade throughout the day? Do you screen throughout the day or have stuff
before the open based off of a longer-term picture?
More...

Trends? Not really. I maintain a list of stocks that appear to be leading stocks -- stocks that are leading the market (AAPL, GMCR, AMZN, LNKD etc..). Sometimes I maintain stocks on that list that no longer qualify b/c the daily chart gets rocked (i.e., RVBD - post-earnings). I keep those stocks on the list for sometime b/c I think they could still be tradeable intraday. My list typically has around 60 or so stocks on it.

I filter those stocks through various new high, new low, new hourly highs/lows filters that I have that filter through my list in real-time throughout the entire day. I do not hold anything for the entire day. I do my best to identify the momentum and hold it until it fizzles out. Pre-market/post-market, I go through my symbols and check their daily charts for relevant S/R. I set alerts for the relevant stocks and move on. I also play stocks not on my list that are moving as well if a setup presents itself on the chart (healthcare stocks today are a good example).

I used to be mainly a volatility seller. Before that, I played dropped bids and lifted offers and then the specialists disappeared and I was barely a few months into this business. I grew tired of selling volatility b/c I'd get rocked one time and wipe out a few days of profits. Also, ever since I started trading I've wanted to trade with the trend. But when you first start out, and everyone around you is doing something and printing money, it's very hard to go the other way when all you really want to do is earn a paycheck and quit your nightjob.

I've done okay but for quite some time I've been trying to find something that makes sense to me. If you look back at my journal you can see that I was kind of all over the place trying to find my way. I did a lot of overtrading. I was doing too much. Anyways, playing leading stocks and trading the charts rings true for ME. I also wanted an approach that wouldn't disappear with some new change in the way the market is structured. Charts aren't going away any time soon. With the chart, I find it easier to manage risk much better. To be sure, I still play fades but instead of buying as it drops, I use the chart to signal when to enter the trade.

My best advice to you is to find an approach that works for you. Don't try to be great at everything. Some guys trade thin stocks very well. Some guys trade super thick stocks well. Some guys sell volatility very well. Some guys trade news very well. Some guys only trade pre- & post-market and so on. Figure out what fits the best for your personality and find your niche. Don't be a jack of all trades and master of none. Meanwhile keep your losses small while you're finding your way.
 
Quote from Maverick74:

Shan, how did you handle the volatility this week. Time for an update?
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Hey, I do think it is time for an update. Crazy times tho right...Haven't ever traded in this type of volatility. Looks like S&P has officially downgraded the US credit rating...I think some of this volatility is here to stay!

I have to say that I have had a difficult time adjusting to the volatility this week. My PnL has been volatile as has the market. I've had a problem with my stops and targets...finally sat down yesterday and decided that I need to be give some of my trades more room to breathe. I was hugging my stop the BE+1(bad habit I know) after being 1/3-1/2 to my target and I was being taken out repeatedly. Also my trading off of the open has been very volatile as well...getting hurt and taking 40-50 cent losers in some volatile names. I'm not holding anything back, I am putting it out there and admitting some of my setbacks.

I came in today knowing what I was doing wrong and adjusted. First off, I have been all over the board with my stock selection. Off of the open I have been trading stocks in play, and it has been mixed. I am finding that I am screening for stocks multiple times a day(rel vol>2, ATR>1, VOL ETC.) to find stuff in play. I've been trading my setups in these and trading with the overall market direction as I have noticed correlation tends to rise towards the end of the day.My basket of stocks that I am trading is too large and this causes me to be less patient with setups and try to grasp for straws.

Today I changed it up a little. I chose 5 liquids stocks showing relative strength and 5 showing weakness( on a swing basis). These are momentum names filtered for certain parameters and are show to be trending strongly. I am using this gentleman's persistence up/down lists...I researched it and gave it a go today.

http://daytrend.wordpress.com/

Most of the names I had in my basket...traded well today. Plenty of opportunities if one was patient! Today I traded only 2500 shares and had my best day thus far.

My weeks net Pnl:

-60, +65, -60, -140, +160


So going forward I need to improve/work on:

- Trade management
-no more BE+1 bullshit...I am trailing stops from the 1-minute chart, worked well today.

-Stock Selection/content
-Avoid being all over the board with this...focus on a basket of names that changes with volatility and trade them.

-Trading the open
-This is one of the tougher areas...I have had mixed results trading straight off of the open in some of in-play names. I have had my best results...waiting for things to settle down(first 20ish minutes) and trade based off of the PA. I think going forward I will stick with what is working for me
 
This is something I did early in my trading career that really help put some money in my pocket before I really knew what I was doing. It is right along the lines of Maverick74 (who is a great contributor to this forum) about trading news at the open.

At the end of each trading day, I would look at the ten top % gainers for the day on the Nasdaq. Then, I would look at the news story that caused the big jump (some of these would jump 40-50%) and try to determine which one I thought was the weakest. I would of course avoid buyouts and very positive news. Then, I would short the one I though was the weakest or most likely to pullback. I have to admit I did not have much analysis skills back then and this is a laughable strategy to me today but shorting a stock that had a 30%+ gain in one day is actually still not a bad strategy since a pullback is likely.

However, as I employed this strategy, I quickly learned that some have multi-day moves higher and this caused me some pain and loss. So, I decided to average into the trade over 3 different entries. 1/3 at the close, the other 1/3 at the next open and the last 1/3 at the close of the next day. This typically gave me a much better average entry and then I employed a 10% stop loss on the position.

I worked great over the next couple months and I put about 65K in my account at Maverick Trading. However, then the markets began to fall and I didn't see many stocks having runs like that and I had to find another strategy. I still use this strategy from time to time when I think the opportunity is there. The thing that makes it profitable is the multi-stage entry and the stop loss. Without it, you will make good money on 9 out of 10 and then the last one will wipe you out.

Hope this helps
 
I used a similar strategy, but on the long end . Since I had used the top 10 gainers to look at, and had very little experience at the time. my hats are off to you.

I also had the same problem i could only find 5 opportunities a year but profits per trade were high 25-35% a trade.. I think one that broke even was the exception. It will be something i will look at again.

Starting without experience and going to the same source (top 10 gainers and news) shows that we had a similar mind frame.. high profits, now knowledge and most of all the ability to know exactly where to go for the best information that would match our style.

I wonder where it led you as opposed to where it led me. I know what i learn now is seen by many to be contradictory to that style.




Quote from mavericktrader:

This is something I did early in my trading career that really help put some money in my pocket before I really knew what I was doing. It is right along the lines of Maverick74 (who is a great contributor to this forum) about trading news at the open.

At the end of each trading day, I would look at the ten top % gainers for the day on the Nasdaq. Then, I would look at the news story that caused the big jump (some of these would jump 40-50%) and try to determine which one I thought was the weakest. I would of course avoid buyouts and very positive news. Then, I would short the one I though was the weakest or most likely to pullback. I have to admit I did not have much analysis skills back then and this is a laughable strategy to me today but shorting a stock that had a 30%+ gain in one day is actually still not a bad strategy since a pullback is likely.

However, as I employed this strategy, I quickly learned that some have multi-day moves higher and this caused me some pain and loss. So, I decided to average into the trade over 3 different entries. 1/3 at the close, the other 1/3 at the next open and the last 1/3 at the close of the next day. This typically gave me a much better average entry and then I employed a 10% stop loss on the position.

I worked great over the next couple months and I put about 65K in my account at Maverick Trading. However, then the markets began to fall and I didn't see many stocks having runs like that and I had to find another strategy. I still use this strategy from time to time when I think the opportunity is there. The thing that makes it profitable is the multi-stage entry and the stop loss. Without it, you will make good money on 9 out of 10 and then the last one will wipe you out.

Hope this helps
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Quote from mavericktrader:


I worked great over the next couple months and I put about 65K in my account at Maverick Trading.
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Is Maverick Trading based in the Philly area ?
I see some sort of offer on CL.
Never heard of them before.
 
So been away from this journal for a while. I am back, because I feel like articulating my thoughts on here and having a written form of my trading in some form will greatly help me! I've definitely noticed that one can make alot of the same mistakes over and over again and not know about it! Writing shit out will help me see consistencies and inconsistencies in my trading.
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So I do have a trading plan of some sort. I am generally looking for two types setups. One setup trading with the intraday trend. Looking for pullbacks in healthy trends( no climax, volume, etc.) Looking for things to hold with with price showing there are buyers and sellers in an area. I look at the 5-minute and 1-minute for volume and micro S/R. Bar closes/patterns and volume are what I look at here. Volume divergence on tests is one of they key things. Also for bullish and bearish volume to start to come in before a move happens. What I have been doing is if something is holding to put on an initial position and hug the stop and wait for confirmation. I then add to it after I get some kind of confirmation, usually the break of a bar or a level. After the break and watch the 5-minute and start taking off portions at key levels or let it run if PA suggests so.

If I miss a move with the above setup, will simply get in off of a pullback on the 1-minute as in an area where I would trail my stop or looking to add.

The other setup is usually the first bull/bear flag after break. I wait for a break in the direction of a trend or a break of a level or trendline. I wait for the first pullback that will break the intial micro trendline. This is Al Brooks talk, but I find this setup works pretty well. I take the break of the bar on the 5-minute and hug the stop pretty tightly as if the trade works it usually will immediately work and otherwise it will fail and you need to GTFO.

On both of these types of trades, if I get in and get shaken out I will simply reenter as necessary.
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So.....yea! My read of price action has got better and so has my trading. this week has been decent and I have learned alot about myself and my trading.
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I have been finding that I do well with a flexible approach like the above instead of setting a stop and and entry and letting it hit one or b/e etc. With the presence of bots in the market it is so hard to have a perfect entry and not always getting shaken out and taking the full stop losses. The way I'm trading I have some small losses but when the trade works I will make alot more on more winners.

Also I am finding that I trade the first half of the day alot better than the close. After the first part of the day, the rest of the day is dedicated to either attempting to finish well and just losing more money or just grinding things out and not making alot of headway. Alot of moves in the afternoon just don't have the follow through or cleaness that the open tends to have. This is just IMO. Maybe I will find a way of trading mid-day and the close with more success, but as of right now it isn't working for me.
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So going forward I am going to trade as I have, but significantly cut back activity in the afternoon. The only reason I am going to trade the close is if there is a significant move or break and the volume is there to show some follow through. Also continue to be disciplined in my setup and just keep makin progress.

My pnl which doesn't matter much at this point, more trying to have my process down as I know I can scale up as I become more consistent and can execute. My pnl was 150+ everyday in the morning except today. I kept it on some days and give alot of it away on others.
 
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