Breakout Trading using Time and Sales

[amit1986]

Markets slightly flat the moment. Latest 5-minute candle has penetrated yesterday's high. Markets look to be heading up, but that could change. As for now though, if things continue as they are, I'll be favoring long positions as opposed to short positions. We'll see what happens around 10am. Got crude inventories data coming out at 10:30am EST which may provoke some market movement.

 

[amit1986]

Really fast turn around in the markets. S&P 500 futures and Nasdaq 100 futures have now made new lows. Shorts are now more favorable at this point in time.

 

[amit1986]

Got a few stocks to watch today. Markets are currently down a significant amount, but that could all change with the data we have coming out in about 4 minutes. If this trend continues, I will be favoring short positions.

Massive gap down on ASML. There was resistance at the $30 whole number (which is expected), and the current 5-minute candle is showing that support has now become resistance. Time and Sales not displaying enough momentum at the moment to confirm any entries, but will keep an eye on it in the event momentum changes and goes in my favor.

Semi-conductor stocks may also present good moves, along with ABX, MRVL, HD, GYMB, and STP. There are many others as well.

 

[amit1986]

No entry on ASML at the moment. Momentum was not there on the breakout. If you look at the chart, you can see it's now turned around and heading back up above the $30 whole number. Furthermore, data released on 10am EST showed positive news, which has resulted in a slight turnaround in the markets.

 

[amit1986]

CVS looking good for a break to the upside. Price currently hovering around the $31 whole number. Want to see the current 5-minute candle close above the whole number. A subsequent break of the high of the candle will trigger an entry, if Time and Sales confirm momentum.

 

[amit1986]

CVS did break out with some strong buying pressure, but T&S did not yet confirm an entry as there quite some selling pressure subsequent to each breakout. High of day now at 31.15. Still keep an eye on it.

 

[jaspertrademaster]

CVS is a definate yes

 

[amit1986]

I tried a couple of entries on CVS but constantly closed them out for breakeven as time and sales reversed momentum. It went up a good 20 cents on the break of 31.20, now it's reversed...

 

[amit1986]

Not many stocks to watch today - approximately 20. Markets fairly flat at the moment with no clear direction. Got some news coming out at 9:55am EST (Mich Sentiment-Rev), 10:00am EST (New Home Sales), and 10:30am EST (Crude Inventories) which may induce some market movement.

 

[amit1986]

It's going to be an interesting trading day today. Due to Dubai's debt re-payment status, the U.S. equity futures are trading down sharply.

I'm going to be keeping an eye on financial stocks (because they have exposure to Dubai's debt), Gold stocks (ABX), Energy stocks (CVX, XOM), DE, NEM, and a few more.

U.S. equity markets close early today, at 1:00pm EST.

 

[coopster]

Hi Amit,

Liking the thread, seems to have stopped though, hope all is ok.

Can i ask you where or how you find the stocks that you think might move? My issue is not the being in the trade and managing it, its finding the right stocks out of the thousands to choose from. What do you use as criteria for shortlisting a stock?

thanks

Coop

 

[amit1986]

Hi Coop,

Thank you for your nice comments regarding this thread. I haven't officially stopped this thread. But I have been really busy with my final semester of my undergraduate degree, so I haven't found much time to trade lately. However, with just over a month left, I should be able to start trading full-time and will post on here occasionally as well.

The question you ask is a good one - finding the right stocks is an integral part of trading. I use a strategy similar to Richard's (a.k.a. Mr. Charts) in that I read news stories prior to market opening and select stocks which, in my opinion, are likely to present some good moves on the day. If you think about, it should make sense. Stocks with important news are more likely to present good moves on the day and are also likely to have "one-sided" traders (a majority of them may be buying or selling). This adds further to the probability of a successful trading day, which is ultimately what I am trying to accomplish.

I read news off briefing.com. They are not cheap, but for the services and convenience they provide, you can usually cover a 2-year subscription in one or two good trades.

After reading the news, I usually have about 20 - 30 stocks on my list. From that, I eliminate stocks with large spreads (spreads greater than 3 cents), stocks with price greater than $100, and sometimes, stocks that trade historically low volume. The latter only happens after the market opens because trading volume is relative to any specific day - news stories can induce large volume even if in the past, the volume is too low.

That's pretty much how I find my stocks. Keep in mind that as a trader, my job is not to form an opinion of what a stock might do during a day given the news. That, in my opinion, is trader suicide. Instead, I let the market do its thing and follow my strategies that I know work consistently.

Hope this helps,

Amit

 

[coopster]

Thanks for the quick reply Amit, good luck with your studies.

I'll look up the news service you mentioned.

What is your setup if i may ask. Which broker, data feed, platform etc? Only answer if you have time between studies obviously!

thanks

Coop

 

[Mr. Charts]

Hi Coop,

Thank you for your nice comments regarding this thread. I haven't officially stopped this thread. But I have been really busy with my final semester of my undergraduate degree, so I haven't found much time to trade lately. However, with just over a month left, I should be able to start trading full-time and will post on here occasionally as well.

The question you ask is a good one - finding the right stocks is an integral part of trading. I use a strategy similar to Richard's (a.k.a. Mr. Charts) in that I read news stories prior to market opening and select stocks which, in my opinion, are likely to present some good moves on the day. If you think about, it should make sense. Stocks with important news are more likely to present good moves on the day and are also likely to have "one-sided" traders (a majority of them may be buying or selling). This adds further to the probability of a successful trading day, which is ultimately what I am trying to accomplish.

I read news off briefing.com. They are not cheap, but for the services and convenience they provide, you can usually cover a 2-year subscription in one or two good trades.

After reading the news, I usually have about 20 - 30 stocks on my list. From that, I eliminate stocks with large spreads (spreads greater than 3 cents), stocks with price greater than $100, and sometimes, stocks that trade historically low volume. The latter only happens after the market opens because trading volume is relative to any specific day - news stories can induce large volume even if in the past, the volume is too low.

That's pretty much how I find my stocks. Keep in mind that as a trader, my job is not to form an opinion of what a stock might do during a day given the news. That, in my opinion, is trader suicide. Instead, I let the market do its thing and follow my strategies that I know work consistently.

Hope this helps,

Amit

Cracking good post, Amit
Good luck with the exams !
Best wishes,
Richard

 

[amit1986]

Hi Coop,

My primary setups include the one used in this thread and also the one used in Mr. Charts' thread. They are very similar, however, entry and exit criteria are different. If you haven't already, I'd advise you to go through Mr. Charts' thread and study his charts carefully. After that, proceed to paper-trade his system in live markets and then, after gaining confidence with the use of the method, try trading it using 100 share lots. It's an excellent system and if you stick to it as it is described in the thread, you should do well with it.

The strategy discussed in this journal is a little different, as it relies heavily on the use of Time and Sales, which is not something I can describe in this post. But to completely honest, I finding the success rate with Mr. Charts' method higher than the method used in this journal, even if you don't use level 2 as he does.

I do have a few other strategies I use, however, I'd rather not discuss them here for reasons I am sure you understand. I have designed this journal to be as much as a learning experience for myself and also for others. If I scramble it with a bunch of strategies, discussions can get sidetracked and the focus of this journal will also disappear.

I am not one to give advice on broker since there are a host of factors that influence the choice, but I find Interactive Brokers an excellent choice for my needs. Their executions are lightening fast and the link very nicely in eSignal, my trading platform. Also, their commissions are almost negligible, especially for U.S. and Canadian stocks!
eSignal also provides the intraday data for U.S. stocks, but you really do not need this if you are willing to trade off the API at Interactive Brokers. I find their API a little confusing and not user friendly, so I am willing to pay extra for the convenience eSignal provides through their excellent platform.

Not really sure what else I can advise you on, but if you have any other questions, don't hesitate to ask!

Amit

Thanks for the quick reply Amit, good luck with your studies.

I'll look up the news service you mentioned.

What is your setup if i may ask. Which broker, data feed, platform etc? Only answer if you have time between studies obviously!

thanks

Coop

 

[amit1986]

Thanks a lot Richard!

Hope the weather in the U.K. isn't as cold as it was when I was there. Toronto is having an excellent wave of Spring weather lately!

Amit

Cracking good post, Amit
Good luck with the exams !
Best wishes,
Richard

 

[Mr. Charts]

Thanks a lot Richard!

Hope the weather in the U.K. isn't as cold as it was when I was there. Toronto is having an excellent wave of Spring weather lately!

Amit

Hi Amit,
It got much colder with thick snow and compressed ice. It was much more dangerous on the pavements (sidewalks) and roads than when you were here !
We couldn't walk on the grass without sinking 12 inches deep.
Very bright and sunny and crisp in Weybridge with blue skies but the trees are still bare and Spring still feels a long way off.
Take care,
Richard

 

[amit1986]

Even coming from a freezing cold country such as Canada, I can honestly say that the week I spent in the U.K. was one of the coldest weeks of my life!

Hope the trading is going well,

Amit

Hi Amit,
It got much colder with thick snow and compressed ice. It was much more dangerous on the pavements (sidewalks) and roads than when you were here !
We couldn't walk on the grass without sinking 12 inches deep.
Very bright and sunny and crisp in Weybridge with blue skies but the trees are still bare and Spring still feels a long way off.
Take care,
Richard

 

[coopster]

Hi Coop,

My primary setups include the one used in this thread and also the one used in Mr. Charts' thread. They are very similar, however, entry and exit criteria are different. If you haven't already, I'd advise you to go through Mr. Charts' thread and study his charts carefully. After that, proceed to paper-trade his system in live markets and then, after gaining confidence with the use of the method, try trading it using 100 share lots. It's an excellent system and if you stick to it as it is described in the thread, you should do well with it.

The strategy discussed in this journal is a little different, as it relies heavily on the use of Time and Sales, which is not something I can describe in this post. But to completely honest, I finding the success rate with Mr. Charts' method higher than the method used in this journal, even if you don't use level 2 as he does.

I do have a few other strategies I use, however, I'd rather not discuss them here for reasons I am sure you understand. I have designed this journal to be as much as a learning experience for myself and also for others. If I scramble it with a bunch of strategies, discussions can get sidetracked and the focus of this journal will also disappear.

I am not one to give advice on broker since there are a host of factors that influence the choice, but I find Interactive Brokers an excellent choice for my needs. Their executions are lightening fast and the link very nicely in eSignal, my trading platform. Also, their commissions are almost negligible, especially for U.S. and Canadian stocks!
eSignal also provides the intraday data for U.S. stocks, but you really do not need this if you are willing to trade off the API at Interactive Brokers. I find their API a little confusing and not user friendly, so I am willing to pay extra for the convenience eSignal provides through their excellent platform.

Not really sure what else I can advise you on, but if you have any other questions, don't hesitate to ask!

Amit

Thanks for the advice Amit, i will read the Mr charts thread and look at IB and e-signal.

I think the issue i have is reading the news and thinking "what the hell will that have an influence on?" OK some are obvious but what stocks would i choose when some seemingly unimportant government figure is released is at present beyond my understanding.

If you have any time, please give me an idea of the things to look out for. I am really coming unstuck with this. I think it comes from my engineering background. Everything should be black or white. Things like news and market mood i find very hazey and hard to comprehend.

Just ignore me if i am gatecrashing your thread. I'm sure with more reading, i can find my own way. PRobably most is already covered in the Mr Charts thread.

thanks anyway.

Coop.

 

[FXTrend240]

Thanks for the advice Amit, i will read the Mr charts thread and look at IB and e-signal.

I think the issue i have is reading the news and thinking "what the hell will that have an influence on?" OK some are obvious but what stocks would i choose when some seemingly unimportant government figure is released is at present beyond my understanding.

If you have any time, please give me an idea of the things to look out for. I am really coming unstuck with this. I think it comes from my engineering background. Everything should be black or white. Things like news and market mood i find very hazey and hard to comprehend.

Just ignore me if i am gatecrashing your thread. I'm sure with more reading, i can find my own way. PRobably most is already covered in the Mr Charts thread.

thanks anyway.

Coop.

i studied stocks/news for a couple of weeks and found that all you need to do is find which stocks the news effects. how do you know that? well wait for the data to be released and scan the market for big % movers and grab a share of those moves.