Favorite chart setup?

[JumpOff]

.... a stock is trending in a particular direction or if it has rallied strongly for a few bars then consolidates for a while in a tight range.

I will normally mark the high and low of the trading range and often buy whist still in the range e.g.. if I expect a breakout to the upside, I will buy when the price is near the low with a stop a few cents below the low of the lowest bar in the range.

My risk is pretty low as I have bought near the extreme away from the break out and thus my stop is pretty close. Even if I don't get the break out, I can usually make a few cents on the trade - better than a few cents loss.......

Ardhill, I assume you do not do this when the range is really tight? How wide does the range have to be in order to generate a Go signal for you; ___ multiplied by size of stop? Does the range have to hit the top and bottom a certain number of times first, or stay in the range for a certain length of time? Does this only work on certain stocks - have you looked at this strategy with indexes or currencies and commodities? OK - I'll stop now....

JO

 

[ardhill]

I JO

All very technical that 😉

I know what I want when I see it, I haven't done that much detailed inspection of my trade set ups.

The set-up isn't my problem, I expect about 2/3 of my trades to be winning trades. My problem is that I have the mind of a scalper and am trying to get it into some thing a little longer term, but the change over is still 'work in progress' 🙂

I look for break outs and bounces of resistance etc, set the stops appropriately (in my opinion) but take profits waaaaaay too soon.

Stops I base on a mix between tech analysis and money stops - it depends on the trade. But to give you an idea, the average stop is approx 0.25% of the price of a share. So AAPL at nearly $66, I would use approx 16c stop (depending on how appropriately it fell on the chart).

I am working on my trade management at the moment as this is where I am leaving a scary amount still on the table due to taking profits too soon.

 

[ardhill]

Oh I forgot to mention,

I primarily trade the Nasdaq as I have L2 information as well.

 

[roguetrader]

The set-up isn't my problem, I expect about 2/3 of my trades to be winning trades. My problem is that I have the mind of a scalper and am trying to get it into some thing a little longer term, but the change over is still 'work in progress' 🙂

I look for break outs and bounces of resistance etc, set the stops appropriately (in my opinion) but take profits waaaaaay too soon.

.

Hi ardhill,
What time frame do you trade?

 

[ardhill]

Intraday

I trade off 5min charts, using 1min and 25 tick to give me a better entry.

 

[roguetrader]

Ok, just a thought but have you ever tried trading off of 15 min charts, I found that helped me prolong my stay in a profitable trade, cuts out a lot of the noise you get with 5 mins, you can still dial down to 5 to pinpoint an entry, I also find the entries are more reliable on a 15 min.
1min would blow my mind, used to watch them when I first started but fortunately I was steered away from them by a professional daytrader who told me they were only useful to scalpers.

 

[ardhill]

I have scalped off the 1 minute charts and even the 25 tick on some of the faster moving stocks, but that was a bit tight.

I am trying a bit of a variation on the management system that Mark Douglas suggests in "Trading In The Zone" as I would much prefer to be in trades longer than I am. I am also trying to keep my eyes off the shorter time frame charts once I am in a trade. I think that I just need to keep trying and the more trades I stay in for longer, them more relaxed I will feel sticking in there.

I have looked at 15 min charts, but am really not that comfortable with them at the moment - too slow and the stop needs to be too far away for comfort.

 

[des44]

Rogue & Ardhill,

Are you in and out of any given trade within a trading day? Do you have swing trades?

d-

 

[ardhill]

I am out at the end of each day.

I am currently working on swing trades (if that is what you call them). Basically trying to do the same as I do on 5min charts but using daily charts. I am sort of paper trading at the moment on those, but that is never a good deal for me - I need to trade with money to see how I will actually play it.

Not sure how well I will be able to sleep knowing how Nasdaq stocks like to gap and jump about.

 

[roguetrader]

Yes I know what you mean about the stops, saw your post re 16c stop on AAPL.. Strangely enough I traded that one today and my opening stop was about 70c ish I think. I found that I was taking profit too soon on 5 min charts which was why I switched to 15 and like you was initially uncomfortable trading off them, but if you just watch them for a while you get used to them. Worth a look anyway

 

[roguetrader]

Rogue & Ardhill,

Are you in and out of any given trade within a trading day? Do you have swing trades?

d-

I am primarily a daytrader though if I get enough profit up I may hold a peice overnight if I think market and stock are favourable. Trouble with me is I am a born pessimist, am always expecting the market to collapse at some point, guess I am a perma bear although it doesn't stop me going long intraday, in fact given the uptick rule etc I much prefer the long side intraday

 

[des44]

I am out at the end of each day.

I am currently working on swing trades (if that is what you call them). Basically trying to do the same as I do on 5min charts but using daily charts. I am sort of paper trading at the moment on those, but that is never a good deal for me - I need to trade with money to see how I will actually play it.

Not sure how well I will be able to sleep knowing how Nasdaq stocks like to gap and jump about.

I understand the feeling. If your size allotment of shares is moderate (compared to your trading capital) Swing Trading can be quite lucrative. Let your trending stocks run--giving them the room to gap and pullback. Some of these stocks will run for quite sometime. Matter of fact I have multiple stocks giving me well over 20% gains so far, and I am still holding the. I have one stock giving me a 80% unrealized profit. It's my opinion that many people miss out on these significant profits due to not understanding trends. As soon as your stock breaks your trend perimeters that you set you will have stopped out. And if a stock stalls too long (no longer generating profits) I exit and move my capital and profits to other opportunities.

I am a swing trader that hopes that every trade I have blossoms into a position trade.

d-

 

[des44]

... Trouble with me is I am a born pessimist, am always expecting the market to collapse at some point, guess I am a perma bear although it doesn't stop me going long intraday, in fact given the uptick rule etc I much prefer the long side intraday

It sounds like this way of thinking has helped you become the trader you are today. Many people seem to have the opposite tendency being overly optimistic when trading. Many would say that this would be hazardous to one's longevity in their trading ventures.

I heard one say "I HATE all stocks. They have got to really convince me and pretty charts are a start."

d- 😎

 

[ardhill]

Let your trending stocks run--giving them the room to gap and pullback. Some of these stocks will run for quite sometime. Matter of fact I have multiple stocks giving me well over 20% gains so far, and I am still holding the. I have one stock giving me a 80% unrealized profit. It's my opinion that many people miss out on these significant profits due to not understanding trends. As soon as your stock breaks your trend perimeters that you set you will have stopped out. And if a stock stalls too long (no longer generating profits) I exit and move my capital and profits to other opportunities.

I am a swing trader that hopes that every trade I have blossoms into a position trade.

Now what was it that I mentioned earlier?

Something about feeling that though our set-ups may be similar you would be more profitable.

Now, let's see...

I have difficulty staying in a trade if it falters and you don't want to leave your new found love and will go through the ups and downs in a trend. Do you think that there is something in this line of thought 🙂

 

[roguetrader]

I heard one say "I HATE all stocks. They have got to really convince me and pretty charts are a start."

d- 😎

ROFL 😆 I like that. Though seriously a balance is what is required and at the moment I have not quite found it yet so I miss out on the long swings. I will likely wait for my friends the bears to come out to play and try and practise my swings in a down market where I am more confortable overnight. Have been eyeing the homebuilders, but they just seem to keep on trucking, but I can wait. Their time will come.

 

[des44]

Now what was it that I mentioned earlier?

Something about feeling that though our set-ups may be similar you would be more profitable.

Now, let's see...

I have difficulty staying in a trade if it falters and you don't want to leave your new found love and will go through the ups and downs in a trend. Do you think that there is something in this line of thought 🙂

LOL.......... 😆

 

[des44]

Isn't it 2am where you guys live? Shouldn't you be in bed?

d-

 

[roguetrader]

Isn't it 2am where you guys live? Shouldn't you be in bed?

d-

Yup thats all from me tonight.

 

[des44]

Here is one setup I missed...grr. This is my favorite type of setup. If this one were on my radar screen I would have set a trap (stop) above the $52.50 area. This would have been a nice ride.

d-