Trading stocks with the 15 min chart

'Jinx - as always, my methods are simple. Stock selection involves putting up a 15 min 200sma chart and running thru a bunch of stocks. I want to see how much they fluctuate, how smooth it looks, the profit potential. All of it is subjective, but trying to look at it with an objective view that has been shaped by looking at a bazillion charts.

Now Girlpower on the other hand, she probably has some standard deviation thing going that selects out qualified candidiates based on maximum excursion from the mean, and then ranks them again based on the number of times price reaches a percentage of maximum excursion over a selected period of time. This would bring to the forefront candidates that offer nice profit oportunities frequently. Or at least tell you the frequency that opportunities should exist with that candidate. Certainly she would have code that measures the average duration of each trade, as well as providing another standard deviation thing.

I am too lazy to do that. I just look at the charts.
 
Today has been kind and illustrated this thought about preventing repeated whipsaws. And it also has illustrated what I mentioned early on about ignoring very small breaks, ie., show me some commitment.

The channel was drawn with the lower boundary at 19.09. The upper boundary was 19.18. The channel was penetrated on the close twice, 1 cent short, 3 cents long. C'mon. Maybe I'll miss some moves, or take a bigger loss, but I am not biting on a few cents. That's not even a 'steenth! Bottom line, the position is still long from this morning.

However, mechanically the position absorbed a number of reversals but is long now, mechanically, at 19.25
 
Setting up for a disappointing start it appears right now. But that could change in the next 5 minutes as we all know.

That last bar closed just 3 cents below the channel which I have said is not much commitment, so the position remains long at 19.25 from yesterday.

There are plenty of reasons to close or reverse the position. But for simplicity and consistency, I'll just stick with the basic stuff posted so far.

Personally, I'd like to add.... I never did this drill when I started out. Having done so now for a couple of weeks, there is no doubt in my mind whatsoever that trading 100 shares is the best way to start a career in this business. Regardless of the method you are using, 1 lots are the way to go when you start out. And of course I always recommend using longer time periods than the 1 and 5 moment charts.

I see CSCO breaking down right now, I don't care, it's 30 bux against me. I'd bet that less than 2% of the members of EliteTrader cannot afford to lose $30 on a trade. And look how long you would have been playing so far, and on the house's money too. No sweats, no clinches, no puckering.

So if CSCO closes at 10:45 below 19 the trade reverses.
 
LOL... so right now I'm lookin' brave huh?

I just wanted to be sure that it is obvious why I said a close below 19 would reverse the trade. The previous lower boundary is drawn at 19.08. I like about 6-7 cents of commitment to take a trade. And CSCO is sitting at a whole number which typically will provide some support. So I think the best thing to do in this case is make the price close below 19 before reversing the trade.


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Edit: Now short @ 18.98 -.27
 
LOLOL! So it works just that way and I have seen it time and time again. You are short by the average, and later boom something happens and you get a nice windfall.

Another excellent illustration of this is found in the airlines. Put up a 40 day sma on UAL, AMR, etc., and see where they were prior to 9/11! I'll save you the effort and tell you now.... they were short, and had been for weeks already.

Hey, believe me, I am just as tickled as anyone to make $100. Which brings me to my point. Rocket moves like this are incredibly tempting to take profits on. It "seems" to me that the likely price action from here would be sideways, or rocket back up. If I take the profit here, I am out near the low, and won't miss much if price breaks down again and I re-enter.
 
Looking at the 15 minute chart now gives a good example of what I meant by a rocket move followed by a sideways move. We all have seen it, but when you talk about it first, then it happens and you can look at it real time, it increases the validity of the observation, and perhaps the validity of taking pofits just after the rocket move.

Mechanically the position is still short from 18.96

Truthfully I couldn't be happier that these trades have worked out this way. So far there have been small losses, large gains, whipsaws, gaps, etc. There is plenty of time to digest the market movement without the trader needing to make split-second decisions.

If there are any newer traders reading this thread, start thinking about what it would be like to carry 4-5 of these at the same time. Low margin requirements, low transaction costs, low stress level. For the newer traders who still work you can see how this can be a way to learn to trade and maybe put an extra steak or two on the table.
 
Quote from inandlong:

Looking at the 15 minute chart now gives a good example of what I meant by a rocket move followed by a sideways move. We all have seen it, but when you talk about it first, then it happens and you can look at it real time, it increases the validity of the observation, and perhaps the validity of taking pofits just after the rocket move.

Mechanically the position is still short from 18.96

Truthfully I couldn't be happier that these trades have worked out this way. So far there have been small losses, large gains, whipsaws, gaps, etc. There is plenty of time to digest the market movement without the trader needing to make split-second decisions.

If there are any newer traders reading this thread, start thinking about what it would be like to carry 4-5 of these at the same time. Low margin requirements, low transaction costs, low stress level. For the newer traders who still work you can see how this can be a way to learn to trade and maybe put an extra steak or two on the table.
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Inandlong

These are excellent observations, and a very instructive thread indeed.

Looking back through a few 15 min charts quickly, this pattern occurs over and over - or so it seems anyway. :)

Thank you for taking the time to do this.

Best

Natalie
 
In:

Tx for the post. Great stuff as always.

Something for the wish list: Once exited, it'd be nice to see a chart w/ full post-mortem (i.e., "Entered here, lost X on Whip 1, re-entered, lost X on Whip 2, then the rocket move for +X." Total profit/loss: X."). I think seeing the whole trade unfold in sequence would be a great aid for the visually-oriented among us.

GP:

Would you be open to sharing more about what you're doing w/ spreadsheet?

Thanks again.
 
Inandlong,

hey,

hate to say it, but this thread looks like you're talking to yourself again.

My only advise is, leave the room when you start loosing the argument.

:cool: :D :)
 
Quote from limitdown:

Inandlong,

hey,

hate to say it, but this thread looks like you're talking to yourself again.

My only advise is, leave the room when you start loosing the argument.

:cool: :D :)
More...


lol , no, there's alot of us reading and watching along with him. and even if he is helping just one person he is doing a great job.
 
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