Who is on the other side of KM Trades?

what strike do you suppose he sell?
even if a $1 stock still had options - would strikes be offered in increments of .1? - probably not., even if they were, i doubt anyone would be willing to make a good market or is going to buy a put for about 10 cents when the reward is so small? exchange fees/comissions , would also kill the trade.
 
Originally posted by version77
rtharp

Have you ever seen the Power Scan strategy on Esignal where
a trader (R. Scales) pyramids into the bottom on cheap stocks?
He will take a $1 stock that has dumped to .50 and buy more
as it goes down.

Here is the link:

www.esignal.com/scanner/strategy/powerscan.asp

I was wondering if you think this a valid strategy or if it has
too much risk.
More...


As a daytrader with VERY cheap commissions why would you ever fight the trend. If you are wrong get out. The cost to get out is so low. I prefer to just make sure all of the trends are in my favor except the strongest one the daily. By having the 1 minute, 5 minute, 10 min, 15 min, 30 min, in my favor as well as the general market greatly increases my being right ratio. I find this much easier to trade than a system that is only right 40% of the time but has huge winners. (ie breakouts)

I wait for a positive market to play the long side
and the stock should be positive too.

On bloody days play the short side
with stocks that have had quite a run up
and are currently showing weakness by going below the close.

The short side I'll play with a lot more size than the long since it is much easier to keep a tight stop on the short side. (go up slowly but down quickly)


To give credit where credit is due I got part of this idea to trade this way from two different people Paul Tudor Jones and Tony Oz. I modified the system to fit me. I'm going to probably write an article for one of the magazines sooner or later on this.

Robert Tharp
 
I had an idea you wouldn't think R. Scales strategy was a great
one. I didn't either. I have wondered why Esignal puts this on
their website. You could get killed with this strategy.

I totally agree that the short side can be played with more size
since it is easier to keep a tighter stop.

And I thought your style of trading was similar to Tony Oz. His
Bottom Fisher scan and Sky Scraper scan come to mind.

I see Paul Tudor Jones has a new book coming out with
Mark B. Fisher in July 2002. Looks like it is going to be a
good one.

Hope to see your article when it is published. Give this board a
ring when it is.
 
I had an idea you wouldn't think R. Scales strategy was a great
one. I didn't either. I have wondered why Esignal puts this on
their website. You could get killed with this strategy.
...
More...

IMHO, the way to scale into a position is as the Phantom suggests.

See http://www.futuresmag.com/futuresclassroom/phantom/phantom.html

If I am going to buy cheap, I am going to want to do it the way Robert and Don/Bob did it, when NO ONE wants to buy, and the panic is near fanatical.

Sep. 11 comes to mind...

nitro
 
Ok Robert's Watch List for Monday

Ok

On Monday I'm doing my 30 open orders or so and coming into the office an early to check on news for all of them ( I usually only play about 15 and use a much wider envelope than Don uses --higher probability)

Afterwards I'll look at CNBC and see where the three indexes are trading.

If all red I only play short side

If all green I only play long side

If mixed than I either don't trade or trade with much smaller size.


If they change direction after I start trading I don't care too much.

I don't enter trades after first hour.

On my Short list

GCI below 70.95
NVS below 36.63
and WNC below 10.55


On my long list

PGO above 5.65
JWN above 23.06
EAT 30.95
and CMH above 14.72


The stocks MUST go above or below these prices to enter. Play with the trend.

Enter a nice position right off the bat.

Stop is near yesterday's closing price.

If you are stopped out don't reenter
let it go

Accept a small loss instead of a huge one.
Tomorrow is another day and there will be new stocks to choose from.

Profit target is about 30% of the daily bar's move up or down retracement. Don't expect it to go past this point.

Peel off your position as it is working.


That's one of my major systems.

I'll write about it sooner or later. Probably for my father's newsletter first than maybe a much shorter version in S&C or Active Trader.

Sometimes my watchlist is sent by morning email compliments of www.oneminutetrader.com

Robert Tharp
 
Originally posted by nitro



If I am going to buy cheap, I am going to want to do it the way Robert and Don/Bob did it, when NO ONE wants to buy, and the panic is near fanatical.

Sep. 11 comes to mind...

nitro
More...


There were over 700 stocks on my falling safe scan the week after sept 11 th. Usually there are 5-15.


One of the biggest sayings on Wall Street is buy low and sell high.


Think like a professional. If everyone is doing something and you are forced to take the trade what price do you want it at? Where are the majority/ the public? I want to trade against them like Market Makers and Specialist do.

Robert Tharp
 
Originally posted by esc_trader
I've heard about adding to a position when it's going your way.
Anyone do this? I'm usually too anxious to take some profit.
More...


On any type of trend following strategy it's how to turn a big winner into a huge one. On anti trend following strategies it can absolutely kill you. This strategy is anti trend where at any moment it can turn around. By constantly adding to it as the stock goes higher it makes your average cost near the top so that you can't afford the correction that will happen.
 
Robert,

Thanks for the above posts. I will monitor this system on these stocks Monday. I may even take a very small postion on them to get the "feeling" for it.

I am not a chartist, but here are my (naive) comments anyway.

CGI - Looks like it's trading range bound. "Perfect" play.

NVS - Looks like it gets batted down any time it rallies. "Perfect" play.

WNC - This one worries me. That is not a trivial move, and on top of it it came out an extended period in consolidation. Though, it does seem to have lost some steam. I am worried, but the stops are tight.

PGO - This stock looks like it's in trouble, but looks like there is real support around 4.95, and resistance at 8.

EAT This looks like a great stock to play on the long side. The trendline has not been broken, and it wiggles like crazy on its nearly vertical ascent. Still, would rather wait for this one to turn then buy it.

JWN I have seen stocks that move like this before - very weird. Looks like a great play for Opening Only orders, as the speicalist seems particularly fond of taking this one up only to take it down.

CMH This one worries me. Looks like it has broken its trendline. This may be a repeat of its' Aug -> late Sep debacle.


nitro
 
Originally posted by rtharp



There were over 700 stocks on my falling safe scan the week after sept 11 th. Usually there are 5-15.
More...

Can I ask what scan you are using to find these stocks?
Your candiadates for tommorow look pretty good to me.

:)
 
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