Daytrading US Stocks/ETF's - Shares & Options

[Lúidín]

This thread is to discuss the daytrading of US stocks only, for anyone who is interested. It will cover shares and options trading on US stocks and major ETF's such as SPY and VXX.

I will not be posting to myself, as I do not believe in wasting time, so if others contribute then I will keep posting.

The purpose is to look at what others are doing, discuss with others, and see if it can help those who join in any way to improve on what we are doing.

No smart or silly posts please, for those of you who engage in such.

Lúidín

 

[Lúidín]

No predictions, as it is not much use guessing what might happen, but I think it is good to know where the broad market is currently at when daytrading.

I look at SPX for the big picture.

The charts speak for themselves, so no need to explain what is obvious.

Bias is short and I would not be surprised to see a bounce before Fed meeting, but that is just my personal feeling right now, which may or may not materialize.

Feel free to join in and post your charts / comments if you daytrade US stocks.

Lúidín

 

[Lúidín]

Not a prediction, but a factual event that confirms fear has entered the minds of many people, and one should be extra careful trading over the coming week, which of course means there may be some big opportunities for those willing to take on the risk.

Lúidín


http://www.wsj.com/articles/ahead-of-the-fed-tectonic-shifts-in-bonds-oil-and-the-dollar-1449933152

The VIX, which is based on prices of S&P 500 options that investors tend to rush to when stocks decline, ended above its 10-year average of 20 and at its highest level since Sept. 30, signaling expectations for heightened stock swings over the next 30 days.

Futures contracts tied to the VIX also rose as stocks tumbled Friday. Analysts said they are signaling greater concerns about the near term than about periods further in the future.

VIX futures expiring a few months out are typically more expensive than VIX futures expiring in the current month, reflecting the rising chance of large stock swings or many other events over a longer period.

But contracts expiring this month are sharply higher than longer-dated futures. The VIX futures contract expiring next week rose to 23.65 on Friday, higher than the April VIX futures contract, which rose to 21.55.

That makes for a downward sloping futures curve, a phenomenon known as “backwardation” that is “a signal of short-term fear,” said Ilya Feygin, managing director at WallachBeth Capital.

Friday’s backwardation is the first since early October, said Michael Purves, head of equity derivatives research at Weeden & Co., following the stock-market tumult of August and September. This condition isn’t unheard of and can last for a few days or a few weeks. But it’s something that puts many market watchers on edge. “I wouldn’t be rushing in to buy the market today,” Mr. Purves said.

Another signal of stress: investors are betting that large U.S. companies will post bigger stock swings than their smaller peers. Typically, big companies are seen as more stable as they have several sources of revenue that could offset each other in different environments.

The VIX was higher on Friday following its 26% leap than the CBOE Russell 2000 Volatility Index, which gained 15% to 23.64 on Friday. The last time that happened was late September.

 

[danjuma]

Will be following with much interest and hopefully start participating soon

 

[techite]

Lets see if SPX moves up with the FOMC decision on interest rate. I am expecting so!

 

[Lúidín]

Up..and Down

These stupid fib levels have an uncanny way of stopping price moving, I wonder has it anything to do with the Algo brothers:?:

 

[Lúidín]

This one is little short..will be interesting to see what happens tomorrow?

If it hits the line and bounces up, I will eat my hat, if I can find it that is

 

[Lúidín]

well..it looks like i have to eat 1 hat..what about the next one?

 

[Lúidín]

gona chance a long on IWM

order in..buy 2 x dec18 111 calls @ 0.75 limit

filled on 2 calls..iwm @ 111.60

 

[Lúidín]

profit taker added @ 1.00

 

[Lúidín]

filled @ 1.00..iwm @ 111.98

 

[Lúidín]

Will be following with much interest and hopefully start participating soon

typical example of what i have been saying..there is no need to risk too much money as you learn..take it easy..do small size..100 to 200 shares..or 1 to 2 option contracts..get used to looking at charts..whatever ones you decide to use..get used to placing target profit orders..and stops..

i did not place a stop as i was watching the charts..if price had dropped back and tested the low i would get ready to exit..or even reverse trade..it all depends on what happens after i am filled

i would advise you to use stops for now..as you need to get used to using them..it takes a while to be able to trade without stops..of course..with the options..my max loss was capped at 2 x 0.75 on this trade..or $150 plus commissions..but i would have bailed out or reversed if market dropped..

also..as i am posting on t2w..i would not risk any more than 2 contracts..as i am typing now and not looking at markets..and anything can happen at any time

there is nothing wrong with $48 profit for just over half hour work..if you want to call it working

point worth noting..if you look at the commissions..you will see some are more expensive than others..it varies by exchange and by the type of order you use..i am no expert on it..yet..but when i get into more serious option trading next year..i will be using whatever is the best order entry methods to get the best commissions..as if you are doing a good few trades..it all adds up..ib have a link to all the info on order types and adding/removing liquidity with different exchanges..which can be found on their website easily enough

 

[Lúidín]

this is the option screen i used..note the strike i chose was close to delta 1..at 1 now..which means the price of the option will move the same as the iwm..that is..for 1 cent move in iwm the option strike price will also move 1 cent..basic stuff..but you need to know the delta..as if you pick delta 0.5 then the strike price will only move 0.5 cent per 1 cent iwm move..until such time as the strike price is reached and exceeded..no need to guess..as the software will tell you

if you want point for point move..then you must choose delta 0.9xxxx to 1..but the further ITM you go..the wider the spread..so check the spread first to make sure it is not too wide..which is why you are better off daytrading highly liquid stocks and etf's..and forget about the low priced stocks..the spreads will catch you..

only trade the best..forget the rest

 

[Lúidín]

some additional thoughts..i would not just use the main charts as i did today if trading seriously..as the more money you risk the more serious you have to be

when you are serious..it is beneficial to watch booktrader..when keeping an eye on NYSE TICK..as well as charts for symbol you are trading

this is a section of the setup i use..the main thing to remember is..the more things that line up the better..but i do not mean lagging indicators..i mean market dynamics..as in..if the TICK is at around 1000..and we are in a range..then do not look for a breakout..as you will prob get caught with stop running..but..if the tick is at 1000+..and all the charts are at the top of range..and lots of prints going off at ask and above..with big size..then..the odds of a breakout up are far higher..in other words..things are lining up for a move..which is what you want to see

trading mid range is always risky..can be done of course..but if you stick with your trade and are not good at reversing quickly..then odds are you will get hit a lot of times

keep in mind these are my opinions..but i can tell you that many use the same approach..for that is how i learned it..have added some of my own little bits to suit me..but overall..the more things you can see lining up..the least riskier your trade will be..which is what you need to master if you want to make money daytrading

 

[Lúidín]

another thing i have started looking at is option expiration data for friday..if we look at the SPY options expiring today..we can see where the market makers would like SPY price to be at expiry..but..thing is..i don't know who is primarily long or short..maybe some others can read this better..if so then please add your comments

from this i would say the MM's would like to see the SPY finish at around 203.50..will that happen..i have no clue..it could fly up or drop more..nobody knows for sure..but if it does rally up to arouund the 203.50 level..then we have a probable reason as to why this happened..and maybe it will happen again

this type of analysis needs more work than i have given it..but will keep an eye on it for now..just to see what happens..especially when SPX is expiring as well

ok..that is enough from me..will give someone else a chance to post their way of thinking for daytrading US stocks/etf's..with some charts if possible

 

[Lúidín]

new order in..

buy 5 x IWM dec18 112 calls @ limit 0.05
delta .0726
iwm 111.73

 

[Lúidín]

filled

iwm @ 111.67

 

[Lúidín]

lol..typical example why you should not be distracted when trading..i bought only 1 contract..i put in 5 but with clicking over and back it somehow went back to 1 contract..now i am only long 1 when i wanted 5..oh well..that's what happens

 

[Lúidín]

i just noticed that the 203.50 level mentioned above is the HOD for SPY..if it rallies all the way up there in the next 25 min i will eat a dozen hats

 

[Lúidín]

btw..i made a mistake..so i am not changing it now..my own fault..what happens now happens..will hold till near market close and let expire worthless if market falls back..initial target was $25 to $30 for quick scalp..but that is gone now..so..though look on me