Best Thread How To Make Money Trading The Markets.

[shadowninja]

Completely changed so I don't look like I'm asking stupid questions. Re-read post 4. :whistling

 

[simba00000]

Hi Mr. Charts,

How are you configuring your scanner? Mine has a crazy amount of options.

Thanks in advance!

Chris

 

[trder2win]

.....

What I am looking for is an ongoing sequence of candles in the time frame I'm trading - one minute in this instance - where the tops of the candles are lower, (in a down move), than the previous candle. .....

Hi Mr. Charts

How many bars we should expect for before we enter a trade? I looked these charts you posted and I found no fixed/defined number of bars for the set up...are these fully discretionary?

Anyway, thanks for this thread, I like this 'simple' approach.

Trder2win

 

[Mr. Charts]

Hi Richard!

Thank you for sharing your wisdom with us. There is an statement (marked in blue)that got my attention in the quote before and a question arose: How do you relate your position size to the stock movement?

Thanks

Hi Freeman,
There are two ways.
Firstly ATR will give you a good idea how much a stock moves within a given candle.
If you are trading on 3 min candles for example then you certainly don't want to have the same position size on a stock with an ATR of 60 as you would on a stock with an ATR of 15 as it tends to move more suddenly and violently and your risk is greater.
Always bear in mind that the intra-candle range can suddenly explode. By that I mean that the ATR might be say 12, but the next candle might range through 30.

The second way is actually quite simple but sounds complex. It depends on level 2 movement, T&S and buy/sell pressures, (what I call "Micro-Analysis"). As I've said before in this thread I am NOT going to go into how I use them in detail.
The nearest analogy I can think of is driving when you need steering and two or three pedals, some skills and knowledge and the skill to anticipate road conditions ahead. You obviously also improve with experience and practice. With time these become integrated.
By the way, all the old fashioned follow the market maker techniques are much less significant than they used to be, though still matter sometimes in some circumstances.

However, many stocks at many times are readable - not all of them - not all the time - on micro-analysis. If you can see the steady progression of price and can read its continuity on level 2, see the roadblocks and whether they remain under pressure, and several other factors, than you can gain a huge edge and sometimes see things which may be about to happen BEFORE they appear on a chart.
In this type of situation then the ATR comments earlier in this thread are trumped.

Of course most people can't be bothered with level 2 and some denigrate it without understanding exactly how and when to use it. They think that because old techniques no longer work so well then it' all useless - throwing the baby out with the bathwater.
It's not a be all and end all technique, it's a precision approach some of the time, not all, but my goodness, when it does come into play, it's a huge help and very profitable.

Hope that helps, Freeman,
Richard

 

[Mr. Charts]

Simba,
We actually have a cat called Simba
Scanners vary hugely. Some days are relatively low volume days. Some stocks have a sudden expansion in volume, often triggered by news. I use different scans at different times.
Richard

 

[Mr. Charts]

trder,
No hard and fast rule as you have discovered for yourself. As in the last example I found it later than would have been ideal - an earlier entry would have been better. As long as the momentum is there on the chart and on the level 2 screen, that's fine. The key is the exit rule and appropriate position size to limit any losses on the ones that reverse on you, though as I've said, if level 2 is warning me of a possible imminent reversal I won't wait for the candle signal. No point in waiting to lose money or earn less if you can see the wind is blowing against you.
It's below freezing here in the UK, goodness knows how cold it is in Ontario - nice state, btw, we drove through it on an Atlantic to Pacific drive in 2007.
Richard

 

[chump]

Hi Richard ,hope you don't mind me saying something for the scanner guys...

You don't need a scanner per se. If you can get access to sector data then unless you are completely blind you will soon be able to find out which sectors you should be trading if that is you are looking for volatility. Likewise if you are looking for a trade that moves then look at those stocks that are taking up a technical position that will support a sudden move.
I don't do US stocks ,but here in the UK you'd have been very happy just trolling the mining sector of late...likewise if you had seen Standard Life hitting a range support bottom on narrow price you would have set up for it today and so forth.

 

[Freeman.ayres]

Hi Freeman,
There are two ways.
Firstly ATR will give you a good idea how much a stock moves within a given candle.
If you are trading on 3 min candles for example then you certainly don't want to have the same position size on a stock with an ATR of 60 as you would on a stock with an ATR of 15 as it tends to move more suddenly and violently and your risk is greater.
Always bear in mind that the intra-candle range can suddenly explode. By that I mean that the ATR might be say 12, but the next candle might range through 30.

The second way is actually quite simple but sounds complex. It depends on level 2 movement, T&S and buy/sell pressures, (what I call "Micro-Analysis"). As I've said before in this thread I am NOT going to go into how I use them in detail.
The nearest analogy I can think of is driving when you need steering and two or three pedals, some skills and knowledge and the skill to anticipate road conditions ahead. You obviously also improve with experience and practice. With time these become integrated.
By the way, all the old fashioned follow the market maker techniques are much less significant than they used to be, though still matter sometimes in some circumstances.

However, many stocks at many times are readable - not all of them - not all the time - on micro-analysis. If you can see the steady progression of price and can read its continuity on level 2, see the roadblocks and whether they remain under pressure, and several other factors, than you can gain a huge edge and sometimes see things which may be about to happen BEFORE they appear on a chart.
In this type of situation then the ATR comments earlier in this thread are trumped.

Of course most people can't be bothered with level 2 and some denigrate it without understanding exactly how and when to use it. They think that because old techniques no longer work so well then it' all useless - throwing the baby out with the bathwater.
It's not a be all and end all technique, it's a precision approach some of the time, not all, but my goodness, when it does come into play, it's a huge help and very profitable.

Hope that helps, Freeman,
Richard

Thanks Richard,

I will have to become more acquainted with ATR, since I have never used it.
I will make this information you gave me very useful.

Thanks,

 

[Mr. Charts]

I would always welcome your imput, chump
I don't really want to get into this in too much detail, but there are basically two approaches, top down, bottom up. Neither is "right" or "wrong". Both are fine.
For quickly finding opportunities intra-day, a scanner is, imho, extremely useful. Although finding clearly trending stocks is possible with multi-day sector movements, you can find a much larger number of good opportunities with a scanner which searches through 16000 stocks individually in seconds; faster if you narrow the parameters.
In fact I sometimes use a hot sectors scan which does what it says, then zero in on the individual stocks.
It's what works which matters, top down or bottom up.
US stocks do tend to be different to UK stocks for various reasons, not least the number of day traders and their activities sometimes creating clearer and more reliable moves. Also US movements tend to influence UK from mid day onwards.
Best wishes,
Richard

 

[Mr. Charts]

My pleasure, Freeman
Richard

 

[mlbuzz]

Richard,

Thank you for your on going posts and advice. I have been using level 2 and attempting to learn some of your "micro-analysis" techniques. I have had some really positive initial success. I have been quite conservative, and had limited profits, but have made very few bad trades (and per your advice, got out of those quickly as well). So net I am up and doing well.

I just wanted to let you know I appreciate your help. (We "newbies" can use all we can get!)

Mike

 

[Mr. Charts]

My pleasure


Here's another one today.
This is slightly different as I took the break out on a strongly trending stock which was on my hot list.

+49c per share on this one so $490 for a 1000 shares,$245 for 500 shares etc.

Richard

 

[Mr. Charts]

PS Red X hairs on entry, image taken at time of exit

 

[thevinman]

My pleasure


Here's another one today.
This is slightly different as I took the break out on a strongly trending stock which was on my hot list.

+49c per share on this one so $490 for a 1000 shares,$245 for 500 shares etc.

Richard

Hi Mr. Charts,

Your timing and entry in this trade is perfect. I was wondering: If you missed this entry and the price was already trending upwards, would you still consider entering this trade?

I also found ACN in my scanner. I didn't trade ACN, because it already broke out of the base.

Thevinman

 

[shadowninja]

His entry isn't perfect. I think that's the point. You don't have to grab every single point. (Correct me if I'm wrong.)

 

[thevinman]

His entry isn't perfect. I think that's the point. You don't have to grab every single point. (Correct me if I'm wrong.)

Hi Shadowninja,

I have to correct you! I do think that the entry is perfect. It is a nice flowing chart, a nice neckline, price cleared the whole number, price above yesterdays high and he enters the trade on the break out bar.

Cheers thevinman

 

[Mr. Charts]

Piet,
Yes, I would still have taken the trade later provided I had momentum confirmation on level 2.
Yes, I thought the entry was optimal too.
I suspect shadow actually meant the entry doesn't always have to be perfect - sorry if my mind-reading is wrong, shadow
Richard

 

[_JWG_]

Question about ATR

Great thread Mr Charts. love it.

I'm not sure if you have covered this. Forgive me if you have.

Do you use ATR to help determine your initial stop? I can understand if the trade didn't go your way you would just exit from the get go... but what if something unexpected happened. And it just shot and went against you. I assume you have a stop in place from the get go. Just wondering how you put it together? I have been using ATR (6periods) on the 5 min chart because my trades average around 5 min. But the thing is I trade off the 1 min charts. Should I be using the ATR on the 1 min with the standard 14 period? What do you do?

Cheers
JWG

 

[Mr. Charts]

Glad you like it.
I don't use hard stops, they are all mental. But then I am very disciplined and will execute without hesitation and never adjust a mental stop if price goes against me.
I don't want to be taken out by a block trade away from the market or any follow up trades printing off as a result, even though that is uncommon.
In any case I will often exit before a stop loss or trailing stop is hit if I can see a reversal or problem developing on level 2. It's not infallible, but being able to sometimes see what might happen before it appears on a chart is a huge edge.
Generally speaking the lower the ATR, the less likely you are to experience the problem you describe.
Richard

 

[PitBull]

I believe his stop would be based on level 2 and that would warn him of any impending trouble, example if long, fresh air on the bid (gaps in prices) or suddenly bids pulled and then next price below best might too much risk therefore signal to exit. If your exit is based on 5min charts then your stop should be based on that timeframe unless your entries are perfect. Mr charts advocates not letting the Market stop you out if the trade doesn't work immediately.
Cheers
Lee