Pullback Entry Strategy

"Another has to do with the swing point. Did it hit R of some sort, either a pivot level or the PDH or the day's average range (if you're trading eminis) or whatever? If so, you're more likely looking at a reversal setup than a pullback"

I has to be something obvious but it doesnt come to my mind.

What is PDH?

Hamb
 
Quote from Bankedout:

So which do you think is better for entry?

1. Trail buy stops along descending highs on daily chart

2. Change of trend entry on 15 minute chart

3. Cross of trend line or moving average on 15 minute chart

4. Something I haven't thought of yet.

I want to be able to set orders to enter, and attach the exit order to the entry order (no problem with TWS) while the market is closed in the evening.

I'm leaning towards a Teresa Lo style. I might try them all and pick whichever works best over time.

Banker
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I like the general idea here, and I've been working on incorporating something similar using the IBD100 stocks as my starting point. Many of them are way extended and you are forced to wait for some kind of reaction to buy.

I think you need to understand that different stocks react differently. It's a function of the sector, their size, their volatility adn who tends to own them. Stocks also tend to pull back for different reasons. There is a lot of difference in a pullback triggered by bad news and one caused by a general market consolidation.

Looking at your proposed approaches, I don't see how youcan implement the ones based on intraday charts if you plan to leave premarket resting orders on TWS. Also, I think you will get many premature entries using 15 minute bars if you are looking for a daily reversal. Personally, I would keep it simple and use a combination of oscillator divergences plus MA cross on the daily, or MA cross alone or perhaps something like Larry Connors Undeniable signal. That uses weekly daily and I believe the criteria for a buy are a six week low that closes higher than the prior week.

I think the key here will not be the entry method you choose, but rather will be the stock selection. Good luck and keep us informed how it goes.
 
Quote from dbphoenix:

Since I daytrade eminis rather than interdaytrade stocks, I don't know that I can help you much. I spent more time on T's stalking tactic than I care to admit, and I found it relatively useless. I'd rather find the trigger for the resumption and enter there than wind up getting triggered long before the price is actually ready to continue its trend.

The only way you can answer this is to look at pullbacks and see what works and when and where and why. You probably don't need to look at more than a few weeks' charts, particularly if you're looking at several stocks. You may find, for example, that the resumption is triggered by touching an MA of some sort, or by reaching the previous swing high or low level (though the point at which the price touches the MA ought to be about the same as the previous swing point if it's really going to move). Or you can look for some sort of divergence as the price nears the reversal point (assuming that it will actually reverse). An oscillator of some kind is good for this.
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I plan on placing my stop differently than T does. I think she would put it below the entry bar if memory serves. Or perhaps below the prior day's low (long). That was something which never appealed to me. Of course you are betting on the reversal happening right then, and it makes sense to get out if you are wrong, but it sounds like there would be a lot of whipsaws. At least that's what I saw when I would look at charts through "her eyes" and kind of mentally paper trade the stalking strategy.

My idea of stop placement changed when my Uncle gave me a book recently. It looked pretty cheesy, but then again Stan Weinstein's book looked pretty cheesy to me when I first saw it. Anyway I was looking at "How To Take Money From Wall Street" by Tony Oz. Pages 75-78 to be specific. Tony was talking about how he likes to play "head and shoulders" bottoms. He draws a trend line connecting the low of the head, and the low of the right shoulder once the neck line has been crossed (pattern breakout). He places limit orders on the line value to buy. He's looking for the stock to pull back and touch the trend line. If it does, he is filled.

The part that lit a light bulb in my head was where he placed his initial stop. He uses the low of the right shoulder (imagine just a single rally up from the neck line break and then a reaction which touches his trend line). So instead of thinking that his entry is THE reversal (like T does), he figures his entry is NEAR the potential reversal. This I feel is a big difference. So he is betting on the formation of a higher low. If that doesn't happen, he is gone.

I'm not interested in doing exactly what he proposed, but the idea of placing an initial stop at that place was what I took away from his strategy. I don't know if you ever tried T's strategy with a different type of exit point if you were wrong. Anyway, seeing Tony's exit idea is what triggered me to move further in developing my "pullback" strategy.

I will consider your entry ideas, thank you.

Happy New Year,

Banker
 
Quote from iriekity:

I use 25% and 75% pullbacks from highs and lows as well as Fib levels. Works very well.
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Thanks for the suggestion, I will look into it.

Banker
 
Quote from AAAintheBeltway:

I like the general idea here, and I've been working on incorporating something similar using the IBD100 stocks as my starting point. Many of them are way extended and you are forced to wait for some kind of reaction to buy.

I think you need to understand that different stocks react differently. It's a function of the sector, their size, their volatility adfn who tends to own them. Stocks also tend to pull back for different reasons. There is a lot of difference in a pullback triggered by bad news and one caused by a general market consolidation.

Looking at your proposed approaches, I don't see how you can implement the ones based on intraday charts if you plan to leave premarket resting orders on TWS. Also, I think you will get many premature entries using 15 minute bars if you are looking for a daily reversal. Personally, I would keep it simple and use a combination of oscillator divergences plus MA cross on the daily, or MA cross alone or perhaps something like Larry Connors Undeniable signal. That uses weekly daily and I believe the criteria for a buy are a six week low that closes higher than the prior week.

I think the key here will not be the entry method you choose, but rather will be the stock selection. Good luck and keep us informed how it goes.
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I definitely agree that different stocks react differently. I also agree that not all reactions are created equally.

I was kind of thinking I would get late entries with the 15 minute bars. Let's say I found a pullback I like on the daily chart. I then see this pullback as a down trend on the 15 minute chart. If I were using the trend line break entry, I would draw the down trend line I plan to enter on break of. Each evening I would take the value of that trend line and use that as my buy stop price. If price crosses that line to the upside, my stop would trigger. I know that won't be perfect. It might be "late" because the line value could potentially keep creeping down during the day. With the change of trend entry on the 15 minute chart, I would have to find the 3 of the 1-2-3 and place my stop there in the evening. A problem with that idea is that these changes of trend can happen during the day, with no trigger visible in the evening. It's all a tradeoff in my mind.

The MA cross would be similar to the trend line cross. I have never used an oscillator, so I wouldn't even know what a divergence would look like. 6 weeks seems like too large of a reaction for me to stalk. I was thinking more along the lines of a 6 day reaction. If I were to trade longer term trends, that 6 week idea might be worth exploring. Perhaps I can consider using it on the daily chart.

If I pick one way to enter, it would make sense to choose my candidates based on that particular entry criteria. If I decide to use multiple entry ideas in my strategy, I would have to focus on selecting the right entry idea for each stock I trade. It will probably take a while for me to get good at this. I'll keep you informed on the progress. Maybe I will make a Journal thread once I'm up and running.

Thanks for sharing your thoughts, and Happy New Year.

Banker
 
I trade ES completely opposite of the way Phoenix does. I have never been able to make anything work with daytrading ES except pullbacks, or fading really major supp/resis and gaps. Trading ES on breakouts, etc requires a big stop to make it work usually. Entering a trend based on a move back to a moving average is a retracement strategy that works well with most markets imo, although many people would not consider this a pullback (it is).

I use fibonacci, trendlines, and MA's, depending on the trade. I use 15, 5, and 2 min time frames.

I do trade breakouts in euros and bonds. Once they break, they break!

Jay
 
Quote from dbphoenix:

Whatever gave you the idea I traded breakouts?
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Well, if you don't trade retracements, thats what I assumed. Obviously, you are doing something else. What ever works for you is great.

At any rate, the point I was trying to make, is retracements are my absolute bread and butter.

Cheers,

Jay
 
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