Spydertrader's Jack Hershey Equities Journal

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Quote from Spydertrader:

If one had an interest in shorting RADS this morning, The System triggered a short at 9:44 AM Eastern time. With a short trade, you look for 25% pro-rata volume before 10:00 AM. (Pro-rata uses Average Dry Up Volume and not Low Band for its calculations.) Price had already fallen and held at $11.74 USD. MACD showed a negative return ( -.0557), and The Stochastic Indicator also fell within our desired negative parameters (3.23). Lastly, RADS did not appear on the NASDAQ Reg SHO Threshold List this morning.

- Spydertrader
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I've been following your journal with great interest and find the information provided extremely useful. Great job in a fine journal.

I've read everything and I'm under the impression your long entries are based on the lower band trigger, but yet on shorts you use prorata not on the lower band but the Avg DU?

Please explain and thanks for your great contribution to the forum.
 
Quote from WilliamV:

Please explain and thanks for your great contribution to the forum.
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During a discussion with a trader from Belgium (Superfly) last summer, we stumbled onto the discover which led to the development of the methodology for shorting Hershey Equities. At that time, we discussed our observations that the most profitable shorts appeared to move a great deal during the first half hour of trading - well before volume reached the Dry Up Threshold which signaled a possible long opportunity. As a result of those discussions, I looked into the various levels of pro-rata volume Jack had explained he often used (25%, 50% & 75%). The analysis revealed (and others have since confirmed) 25% pro-rata volume (25% of the Average Dry Up Volume) provided the greatest opportunity for profit. Earlier in the Journal I used these various levels to trigger long trades as well.

I also had experimented with various forms of Dry Up Volume calculation (an endeavor acesheet currently studies as well) in an effort to determine the 'best' formula for Dry Up Volume calculation. Unfortunately, no one method proved superior. The development of the Dry Up Volume Range Theory permitted the use of statistical analysis to provide us our Dry Up Numbers. By creating Low & High Band Dry Up levels, we now use three standard deviations from our mean to capture 99% of the data points across a statistical average.

With long trades, we look to FRV to indicate continued price improvement. We still use Average Dry Up Volume to calculate FRV and Peak Volume levels. We simply use Low band as a means by which we can enter the trade faster with an acceptable risk of False Break Out (FBO). Using 25% pro-rata volume with long positions simply increases the number of FBO occurrence beyond acceptable levels (for me). With shorts, we want to make a few dollars quickly and then exit. While I often hold overnight with long trades (up to a 4 day maximum), I never hold the short trades longer than the end of the trading day. Most short trades (RADS today for an example) last less than a few hours.

Which levels of Dry Up Volume a trader ultimately chooses to use remains a matter of risk tolerability. For me, the combination of 25% pro-rata volume for shorts and Low band Dry Up Volume for Longs strikes a balance between profit and acceptable levels of risk. Of course, your mileage may vary.

- Spydertrader
 
2005-08-15, Monday - Lists

Hershey Wealth-Lab Chartscript Culling Methodology
Hershey Equities Rank V 3.0.0 / Qcharts Culling / Stocktables.com Sort

Hot List

DPTR FORD NETL SNHY

Dry Up Stocks

CMT DCAI ENER FORD

Hot List Stocks Scores

DPTR - 5
FORD - 0
NETL - 1
SNHY - 0

Dry Up Stocks Scores

CMT - 0
DCAI - 0
ENER - 0
FORD - 0

Keep an Eye on These Stocks

RTSX (Attached)

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=815391>
 

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For those just starting to read this thread, here is a compilation of the original Jack Hershey posts and the relevant (in my humble opinion) posts from this thread. Hope this helps.
 

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Quote from keebee57:

For those just starting to read this thread, here is a compilation of the original Jack Hershey posts and the relevant (in my humble opinion) posts from this thread. Hope this helps.
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And for those who want to REALLY be able to download a .doc as a .doc instead of a misnamed .doc as a .xls...


:p


cj...


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