The Opening Orders Thread

I have been following this thread for some time and just wanted to post a few things I have discovered that might help others:

1.) By using envelopes no less than .5, I have found that the number of my profitable opening orders has gone from 54% to 69% and my average daily production doubled from an average of 9 points to 18 points per day. These settings result in 0-4 fills per trade day, or an average of 1.5 fills per trade day.

2.) In conjunction with the .5 envelope, I also ensure at least a .20 difference between my order and the stocks last trade. I verify that all buy orders are below the last and all sell orders are above it. I avoid any stocks with earnings announcements within the current 2-3 days as well any stock with significant news.

3.) On this thread I have read repeatedly that traders closed out their orders too quickly. I avoid this because as soon as I get filled, I put a stop .10 below my entry for buys and above my entries for shorts. If the stock moves against me, I am obviously stopped out. If it moves favorably, I then manually ratchet up the stop, creating a "manual" trailing stop of roughly .05 or hiding just below major/minor lines of support or resistance. This method works well because if I am filled with multiple orders within a narrow timeframe, I can put on a stop and not worry about them going against me and incurring massive losses while I am attending to another stock (a problem I used to have). I would not trade openings without using stops, but that is just me.

4.) I struggled with opening trades while in Bright bootcamp. So when I returned to my remote trading home office, I took a break from openings. A few months later, I started trading them again but limited the share sizes to 100 shares. My thought was that they had to earn my trust. I kept them like that for almost a month and then went to 200 shares for awhile. Next week I will jump to 400 shares and so on. My point is to simply get openings down before jumping into trading large lot sizes.

I wish you all continued success in your trading.

Daryl
 
Quote from Worldcrusher:

I have been following this thread for some time and just wanted to post a few things I have discovered that might help others:

1.) By using envelopes no less than .5, I have found that the number of my profitable opening orders has gone from 54% to 69% and my average daily production doubled from an average of 9 points to 18 points per day. These settings result in 0-4 fills per trade day, or an average of 1.5 fills per trade day.

2.) In conjunction with the .5 envelope, I also ensure at least a .20 difference between my order and the stocks last trade. I verify that all buy orders are below the last and all sell orders are above it. I avoid any stocks with earnings announcements within the current 2-3 days as well any stock with significant news.

3.) On this thread I have read repeatedly that traders closed out their orders too quickly. I avoid this because as soon as I get filled, I put a stop .10 below my entry for buys and above my entries for shorts. If the stock moves against me, I am obviously stopped out. If it moves favorably, I then manually ratchet up the stop, creating a "manual" trailing stop of roughly .05 or hiding just below major/minor lines of support or resistance. This method works well because if I am filled with multiple orders within a narrow timeframe, I can put on a stop and not worry about them going against me and incurring massive losses while I am attending to another stock (a problem I used to have). I would not trade openings without using stops, but that is just me.

4.) I struggled with opening trades while in Bright bootcamp. So when I returned to my remote trading home office, I took a break from openings. A few months later, I started trading them again but limited the share sizes to 100 shares. My thought was that they had to earn my trust. I kept them like that for almost a month and then went to 200 shares for awhile. Next week I will jump to 400 shares and so on. My point is to simply get openings down before jumping into trading large lot sizes.

I wish you all continued success in your trading.

Daryl
More...

One thing I forgot to mention, I submit an average of 29 stocks per trading day.

Thanks,
Daryl
 
Your 10 cent stop might work ok on low volatility stocks with 200 shares on. You'll need to do some serious adjustements by the time you get up to a few thousand shares per trade. You'll get destroyed by the slippage.

The way you're approaching it is right though, start small, keep good stats and size up slowly.
 
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2 short wins, 1 long small win, +1037, 7000 shares

Worldcrusher - I do the same thing with each stock I test out. I start with 100 shares and make sure I can be consistently profitable (usually around 10 fills, less if the stock shows a perfect record) before I bump up to 1000, and then 2000 on up. One problem with only 100 shares is I tend to treat the position differently than if it was larger, which defeats the purpose of the trial. Depending on the stock, it can take a long time to get enough fills to build confidence, but it's good to see a wide range so you can see what a "bad" day looks like in the stock, as well as a good day, in order to determine how large a position you eventually want to reach.
 
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