Techniques for Managing a Random Entry

hi guys,
i havent done yet, but i have (really!) written a ts6 strategy what was created for situations i cant really analyze.
thats what i would call 'random entry', or 'randomly hold' (instead of get out) or just to add (drawdown) cause i dont know the way it goes....

my function starts to 'scalp' it .
its no real scalp, i just call it 'scalper' cause of the small amount to be recognized and getting out half position.

my function looks after first entry for falling prices(that all in a certain range i would leave after falling below).

it adds position after a given falldown, lets say $1 .
after pulling back and giving a certain profit, position will be halfed again.
it falls again ?(in the tolerant range) ?
position is doubled again.
climbs up? reduces position again.

so, as long as position is below my expect, it will go in and out with small profit.

but i said.
i have never activated yet. hope i can do next week. i do not trade for living, just for passion. so my ideas take time to become true...
backtest was great!!


but usually my entries and exits are calculated. thats why i didnt use it yet.

but we are talking about 'random entries'. so i guess to have kind of 'tumbling trail' what is neccessary to handle a 'random trade'.
 
Ok ok, ill bite.

Random entry.... man..this gets crazy complex real fast.

Start with an immediate assessment of the stocks
relative strength to futures....but first...

If stock is following futures....
- If yes.... are futures currently going down?
- If yes...bail.
- If no...
-- Ride the stock if it follows.
-- Is the stock near any upper level resistence?
--- If yes...take small profit and bail, unless futures are ripping.
--- If no.... let it ride....
--- Exit when futures start to show any weakness, especially
--- if your stock is near any kind of previous top or resistence.

If stock is not following futures....
-Is it currently going down? if yes....
-- Is it near some crucial support level?
-- If yes... set stop below this...and see if it bounces.
--- Run with it until bounce is over...and you see weakness...
--- ...or futures turn on you.
-- If no...get the hell out.

Is stock currently going up? yes...
- Let it ride until....
- Nearning upper level resistence... set target there.
- You see serious weakness (fuzzy enough? )

Also.... watch the tape....
Spot any big sellers stepping in??? Get out....
Is that offer real or fake? Is it being flashed at you...
dodging getting lifted? Does it sit there and get chiseled away
buy people lifting the offer and then being re-freshed?
If so...bail.

Watch the spread.... does the bid fall away suddenly?
Watch out... very subtle game....may be time to bail.

Other stuff..... if stock has already had a long run....
chances its gonna keep running are getting low.
Has stock previously already way down and gone flat???
Maybe all sellers are gone....wait and see if it climbs... set stop
below lowest point.

What time of day is it?
If in the dead zone...ignore previous stuff....
and hope you got an entry at an extreme oversold spot,
sell immediately 10-20 cents higher the second you get the
chance. The specs are gonna mind-F*** you and shake you
out of every position.

Add in 100 more variables and context's and you may
be profitable. :D

In case you didnt notice.... this is for short timeframes.

peace

axeman
 
Since the stop is in place all you can do is manage the winning trade. After the trade is ahead by the amount of the stop I'd move the stop to breakeven (including costs). As the trade went in my favor, I'd trail the stop by the same distance as the initial stop.
 
Come to think of it...

Attempting to explain what to do with a
random entry is almost pointless.

There is far too much information missing.

You end up painting 1000 pictures, and an answer
to how you would handle each picture.

inandlong, maybe you could post an example entry
with a picture. Then let everyone respond with
where their targets and stops would be etc....

We could do a picture a day...now that would be fun :D

peace

axeman
 
Okay I see we're having a little trouble gettng started here.

The newbies aren't posting because they don't know what to do yet and they would like to learn without being reemed by the criticizers.

The criticizers aren't posting because there is nothing to criticize yet, and the newbies haven't posted anything worth reeming. Not that they ever do, but they get reemed regardless. As if losing money early on isn't bad enough...

The old timers are either asleep by now, relaxing in the easy chair reading the latest Tom Clancy bestseller, or maybe, if we're lucky, they are waiting for someone to post something worth offering guidance about.

All of that being said, here is what I would do to get started: for each test, we will presume the answer "it does".

First I would place a few orders away from the market and then canel them to be sure the order entry system is working. If it isn't working, the rest doesn't matter does it?

Next I want to see where my vehicle is traded. It is a three letter symbol so we will presume it is a listed stock, ie., trades on the NYSE. I type in the synbol and pull up any chart and it is.

Now I want to see where my stock is long term and compare it to the SP500 Index to see if there is correlation between the two. I pull up a 2 year daily chart of my stock, and a 2 year daily chart of the SP500 Index. Empirically, I see there is good correlation between the movement of the broad market and the movement of my stock.

Next I will overlay the three most commonly watched moving averages by both institutions - the big money, and private investors - the small potatoes. I want to determine where my stock is relative to these three major indicators. These are the 200, 50, and 20 period simple moving averages. They will help determine whether this stock is being bought or sold.

Then I will place the MACD and a slow Stochastic at the bottom of the chart to help determine the phase and momentum of the present cycle.

Now that I know where my stock is on the daily chart and relative to the broad market, I will look at the weekly-60m-30m-15m-5m-1m chart all with the same ma's and incdicators to get a picture in my mind where this stock is right now.

In less than 5 minutes, I am fully ready to make decisions about this stock and take action.

What next?

Newbies, this is the forum I moderate. Abusive replies, demeaning replies, etcetera will be deleted. Criticizers... make it constructive. Old timers...wake up and help here.

:)
 
acrary, axeman - your answers are right on it.

Axe I like the scenario approach you suggested as a daily kind of a thing. That really sounds like something very, very useful.

I will PM you for your thoughts on that.

:)
 
Didnt see your reply before I finished mine.

Yeah...they have some similarities.....
but I didnt see any mention of futures or
technical stops in your post.

peace

axeman


Quote from lippi4free:

great post axeman :)

thats what i typed...
isnt it :confused:
More...
 
ok, inandlong,

lets say, someone gave me his account to be managed.
thats the kind of random entry we are discussing, right?

so i understand we are talking about swing positions, not intraday positions.

well, i would compare this (long) position to the markets at all.
for sure, i would trade half position as described above!!!(where i am unsure of the way it goes)

but i would keep this position until certain circumstances become fact:

falling below a certain stop etc..

my fav watchmarks are ema 7 and ema 13.
in choppy situation also ema 26.
for the big picture, i also watch the 50 sma

i guess, certain stop is given, we discuss the handling of position, not the stop out.

i would look for previous highs to recognize given resistance(double top etc.).

i would half the position at latest high, but maybe add position after running beyond it.
but i would surely watch the volume which should confirm my impressions.

thats the way of post u wanted, inandlong?

as a german im sometimes unsure in understanding the posts

best luck to all
 
Gordon brought up the idea of taking partial profits at specified intervals. Despite the improved probability of a vehicle going half as far as the implied risk, I think this is probably not such a great idea. By taking profits at a "half-way" junction you end up carrying more potential risk for less potential gain.

I can't imagine why you would want to have a 2 point gain and a 2 point loss on a 50 / 50 type senario. But the only way I can think of to manage the senario would be to gradually raise the stop. If the position goes from 50 to 51 then bump the stop up to B/E. Alternatively, use a time based floating stop.

Gordon later said that someone pointed out why his logic was a bit off. I wondering if he could share his insights for the rest of us.?
 
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