Best Thread How To Make Money Trading The Markets.

[amit1986]

I have tried using a browser that does refreshing and it refreshes and then you have to log back in and scroll through several pages to get to the most current one. Not very efficient.

Not sure if I understand correctly what the problem is. Here is what I am using:

1) Latest version of Firefox available here: http://www.mozilla.com/en-US/firefox/

2) ReloadEvery extension: http://reloadevery.mozdev.org/

When installed, right-click on any open firefox window/tab and you will see "ReloadEvery". You'll be given some preset reload times or you can customize the reload.

Also, don't forget, on Richard's live alert site, when you log-in, check the box that says "Always Stay logged in".

If any of the above don't help, try to explain to me what your problem is in detail...perhaps others can fix it as well.

 

[sir paul]

You won't learn a single thing from watching a video of a high-ATR trade, trust me. You're already making assumptions regarding level 2 in general as it being not useful, yet you want to see how it can be used on high ATR stocks? Learn to master it on slow moving stocks, then think about watching high-ATR stocks.

I want to see how a pro handles a high ATR stock. Mr. Charts posted in the beginning of this thread that he does not trade high ATR stocks because they are not as readable on level II. I agree with his statement regarding high ATR stocks. But a lot of his recent chart posts have been high ATR stocks. Why the hypocrisy? He has never shown a recorded high ATR stock trade. Why?

 

[sir paul]

Also as mentioned and explained many times, position size according to ATR and personal risk.
And it's no good saying this stock has a spread of 5c. That's equivalent to 1c on a $22 stock and if you know what you're doing and the stock isn't moving too quickly you can trade within the spread anyway, though you might miss the trade doing that.

You can have two stocks at the same price and they will have different spreads. So that comparison really does not work. How long do you stay in a trade when the Offers are firing off but the Bids are staying the same. What if it rolls over on you? If the spread starts at 5c and widens to 20c how do you get out for a small loser?

 

[duncanhoo]

thanks for pointing this out....looks like it is the case on tradestation too....i take back my comments on 100 share lots being too small. that will make me start using real cash sooner. still going to paper trade for at least another 2-3 weeks until i at least stop making the bonehead moves i am currently making....then i will go to 100 share lots.

I also have begun working on a custom scanner that will more reliably identify these setups in time to hit them.

Interactive Brokers & Lightspeed LLC offer $1.00 per 100 shares as a minimum. It is less per share if you buy more shares. The good thing about 100 share lots is your losses are small while you are learning.

 

[amit1986]

Mr. Charts posted in the beginning of this thread that he does not trade high ATR stocks because they are not as readable on level II. I agree with his statement regarding high ATR stocks. But a lot of his recent chart posts have been high ATR stocks. Why the hypocrisy?

Can you please post the exact post number where Mr Charts said that does not trade high ATR stocks? I have read this thread entirely at least twice and I don't recall him saying that.

However, he may have said that he does not PREFER to trade high-ATR stocks. You say that he has said this at the beginning of the thread, right? Well this thread started in September 2008. It's now February 2011, which means it's been 2.5 years since he said what you claim he has said. After reading level 2 for that long (plus more), you naturally want to challenge yourself by attempting to read the fast moving stocks and not only slow stocks.

So no hyprocisy on Mr. Charts' part.

P.S. If you are a member on Richard's live alert site, then you will notice that under the FAQs, he describes in good detail what he looks for on the level 2 screen in his early morning, high-ATR trades.

He has never shown a recorded high ATR stock trade. Why?

No purpose in doing so. Let me explain this to you as logically as possible:

- The videos are designed to familiarize the level 2 screen to those who are new to trading.
- Those new to trading will have to learn to read the level 2 screen on slow stocks before they can attempt to read the fast ones.
- Thus, it would only seem appropriate to make videos of slow stocks to help new traders.
- As the trader invests considerable time in reading slow stocks, he/she will start to realize what to look for on the level 2 screen.
- Once that skill is developed, it can slowly be transferred to reading fast moving stocks.

Thus, making a video of fast-moving stocks will not help anyone. New traders will find it useless. Traders who have been successfully reading level 2 for a long time will find it pointless as they already will know what to look for.

Since it helps no one, why should Richard bother wasting his time?

Let's assume that there exists someone like you who, for unknown reasons, much desires to see a video of a high-ATR trade. Ask yourself how this video will help in any way. You already deny the value of level 2 in general. You're not willing to put in the right amount of effort to read slow stocks. So I don't understand how watching a high-ATR trade video will help you in any way or form. Let's assume that you watch a high-ATR trade video and it convinces you that level 2 is useful. Now there are two outcomes:

1) You decide to learn reading level 2. You're smart enough to start with slow stocks and work your way up. So you start off by watching his slow-ATR trade videos in order to learn and practice. In this case, the high-ATR trade video hasn't helped you in any way.

2) You decide to not learn reading level 2. In this case, the high-ATR trade video doesn't help either.

So I've just proved to you that a high-ATR trade video will not help you in any way or form. I suggest you stop wasting your time and energy requesting for one and focus on what you SHOULD be doing to improve your trading.

 

[amit1986]

You can have two stocks at the same price and they will have different spreads. So that comparison really does not work. How long do you stay in a trade when the Offers are firing off but the Bids are staying the same. What if it rolls over on you? If the spread starts at 5c and widens to 20c how do you get out for a small loser?

It's very important to read every sentence very carefully, Sir Paul. When you quote Mr. Charts, he specifically says "if you know what you're doing and the stock isn't moving too quickly".

Automatically, you should infer that this does not apply to you or to anyone who is just starting out using level 2. It only applies to those who have been at it for a while and are consistent with slow stocks. That said, your argument completely falls apart. However, I will still address your concerns:

99% of the stocks Richard mentions on his site are tight-spread stocks (1-3 cents). If you don't have the capacity to handle level 2 on a wide-spread stock, then simply let it go and move on. Why trade something that you cannot handle?

How long do you stay in a trade when the Offers are firing off but the Bids are staying the same. What if it rolls over on you?

In the event this does happen, then it should raise a major red flag to you and you should be getting out. But if you choose your trades carefully, then this should not happen to you at all. If you are not disciplined enough to only stick to high volume, low-atr, low-spread stocks in your early trading career, then you won't make it in the long run. However, in some situations, even in low-atr stocks, the spread does open up to 2-to-3 cents, then you can quickly get out for a small loss or profit.

If the spread starts at 5c and widens to 20c how do you get out for a small loser?

First of all, why are in a trade that has a 5-cent spread? That is far too much for momentum trading. I have been reading level 2 for a few months and I have made some progress. Yet, I know to only stick to stocks with a spread of 1 cent (maybe 2 cents if momentum is good enough). Nothing more. Why? Because I know that if I take a high spread stock, I could get wiped out.

So if you've defined your risk appetite given your level of experience, then you should not even think about trading low-volume, high spread stocks.

That is what Richard is trying to say. There is no point in saying that a stock has a spread of 5-cents. If "you know what you're doing and the stock isn't moving too quickly", then you can limit your losses nicely. However, if either you don't know what you are doing (through a lack of experience) or the stock is moving too fast, then that is a recipe for disaster.

 

[Blaiserboy]

Best policy is to learn what he does.... develop scans to emulate his thinking, prove or disprove to yourself his techniques..... then decide whether you will use the method or not.

To waste time trying to pick a hole in his method actually is a waste of time that could be expended to learn scans or price action or S&R.

His method works....., perhaps it does not work for all people all of the time....

For myself, I had given up on scanning until I started to follow this thread...., and after starting to see what Mr Charts is doing, I started to use the scanner again... and after a couple months I began to see things that I had missed before.... and I have benefited greatly from that.

 

[kwilo]

Best policy is to learn what he does.... develop scans to emulate his thinking, prove or disprove to yourself his techniques..... then decide whether you will use the method or not.

To waste time trying to pick a hole in his method actually is a waste of time that could be expended to learn scans or price action or S&R.

His method works....., perhaps it does not work for all people all of the time....

For myself, I had given up on scanning until I started to follow this thread...., and after starting to see what Mr Charts is doing, I started to use the scanner again... and after a couple months I began to see things that I had missed before.... and I have benefited greatly from that.

Would appreciate an explanation of your perception of 'his thinking' so I can try and develop scans accordingly. Thanks.

 

[Mr. Charts]

Thank you Amit for your recent perceptive and constructive posts. Absolutely spot on.
Richard

 

[Blaiserboy]

Would appreciate an explanation of your perception of 'his thinking' so I can try and develop scans accordingly. Thanks.

That would be counter productive, some things in life we have to experience for ourselves, trading is an area where we get out of it according to the efforts we put into it.

The best way for you to develop scans is to go through the posts and determine what you feel was a scan that would have pointed out an entry, tinker with that until you have a scan that 'talks' to you.

I have a little different idea as to scans than what he uses as mine are geared to what I want to use for my own approach.

He discusses different criteria in his posts, experiment with those and test them.

 

[coopster]

Would appreciate an explanation of your perception of 'his thinking' so I can try and develop scans accordingly. Thanks.

Not sure how this thread would help as Mr C himself is not actually scanning for this setup. He scans for the conditions where this and other setups most often occur. Although, these are quite loose criteria.

My advice would be look for the price action some minutes earlier than his setup. What would you scan for to find that? A good starting point would be the new high or low of the day. Combine this with filters for the reasons Amit has just mentioned (tight spreads, high Avg Volumes) and there is the start of a scan.

This is about as far as i have got with scanning. Provides too many results tbh, but at least there is always a result. The rest comes down to visually finding the pattern as it forms with L2 and T&S to confirm/reject what the chart is showing. Not easy but i'm hoping to improve through experience.

You have to remember scanners are pretty dumb so there will never be one that shows you exactly what you want to see.

 

[duncanhoo]

Would appreciate an explanation of your perception of 'his thinking' so I can try and develop scans accordingly. Thanks.

i just recently subscribed to trade ideas dot com service to help scan for this particular setup. I spent an entire weekend (12 hrs/day) playing with it and backtesting my scans to see if i was picking up this setup.

First step: Find a bunch of examples of this setup (this thread is full of them)
Second step: Look at the setup very very very very carefully including various indicators etc.
Third step: program scanners based on those indicators. note this took me many many hours and i am still not done yet.

I have a very specific scanner setup that captures about 50 - 100 hits in first 2 hours of trading - about 5-10 are matches.

Now that i have a scanner that I THINK WORKS - i am testing it every single day and tweaking it for two things: Noise it picks up and setups it misses (probably more important).

More in another post..

 

[duncanhoo]

continued...I also took Mr. Charts video course which has many other setups. It is a bit too much to start with at once so i am focusing on this one particular setup and doing nothing but trading it...whether thats one time per day or 10. I struggled when trying to do them all.

Another thought Kwilo - dont bother with this setup between 1130 - 1PM EST. Although it exists and works in that time frame...maybe 1 out of ten times it will work vs. 7/10 between 10-11 AM [Richard - feel free to correct me here]. Between those hours the wolves (market makers, etc.) are salivating to gobble up us lambs and fake us into losses. During these hours i review any morning trades and work on my scanners.

Also - I dont bother with 930 - 945 am....WAY too fast for me and my experience level.

 

[duncanhoo]

Would appreciate an explanation of your perception of 'his thinking' so I can try and develop scans accordingly. Thanks.

one more thing - getting a scanner to find this setup was one of my greatest professional victories in many years :clap: - that is saying a lot given my current career

 

[coopster]

one more thing - getting a scanner to find this setup was one of my greatest professional victories in many years :clap: - that is saying a lot given my current career

Hmm, congratulations, i think?

Do you get the signal with a minute or two to spare in order watch the action on L2, put in some basic S&R lines (if the stock is new to you) , zoom out to a larger timeframe chart for a quick check, glance at the futures/indices and then actually trade it or is the signal exactly as the next swing of the move is happening or already underway and you effectively chase the trade with no idea as to where the next area of difficulty may occur for your exit strategy?

Not a dig at you duncanhoo, more my own experience. If i tried to nail down a setup too tightly. I was always informed too late to make any use of it.

This setup is very much right place right time if you ask me. ie as a stock suddenly shoots off in one direction after ranging for a while. If you're not aware as it breaks the range, you don't have all the necessary info to make the trade. Maybe i'm too cautious and expect too much.

If however, the stock had news or early action and has been on the radar for the last half hour and then breaks its range until it forms this setup in front of your eyes, you are much better placed to make a decision. The issue with that scenario is how to scan for it with enough time to spare and then instinctively keep the chart on the screen instead of moving onto the next one too soon! Again, my limited experiences.

Well done though for your tenacity. I kinda left my scanner finding new highs/lows or 50c and whole numbers with a few general filters and that's as far as i've got. The rest is a bit of luck at the moment when it comes to finding stocks.

 

[duncanhoo]

1. just because i can find it does not mean i trade it successfully (yet) - in fact, i entered three trades on this setup yesterday. two i traded ok (=.40 or so) and one i cut off for a .02/share profit to watch it roll for another .50..
2. I do not claim to be able to read level II but as i make these trades i watch it very closely and i think the momentum is somewhat readable (maybe beginners luck).
3. I have esignal 11 setup with a 3 minute, 5 minute and 1 minute chart of same security all linked. I also have level II stuff there as well and a chart for S&P/QQQQ etc.
4. When i get a hit from my scanner it takes about 10 seconds to pull up target and make a quick assessment of the pattern. IF it looks promising i watch it and if it resumes uptrend (without significant resistance nearby) I enter with a stop.
5. I dont have a "success" ratio per se since i am still experimenting AND OVERCOMING my own trading failures (cutting off winners, chasing trades, etc. etc etc etc....)
6. Trade ideas .com gives you real time hits as the flow through..i just have that window open and check them as they come in.

Below are the White Whale Long (what i call this setup for obvious reasons) scanner results from yesterday morning 945 am to 1030 AM (which was not a very good day for this type of setup i think?) (i would post a file but cannot figure out how to do it)

BHP, EOG, CNX, INFY, MRO, SINA, RIG, NE, PCX, FFIV, JOYG, VAR

I will spare you the effort: one of the above was the setup in this thread: MRO and would have made .30- .45 depending on how you traded it. I also hit RIG for .30 and was busy with that and missed MRO.

Also note my scanner missed CVE at 10:09 and X at 10:00 AM . Back to the drawing board I go.....

Keep in mind the short scanner was bearing much more fruit yesterday (look at LMT around 9:48)

Hmm, congratulations, i think?

Do you get the signal with a minute or two to spare in order watch the action on L2, put in some basic S&R lines (if the stock is new to you) , zoom out to a larger timeframe chart for a quick check, glance at the futures/indices and then actually trade it or is the signal exactly as the next swing of the move is happening or already underway and you effectively chase the trade with no idea as to where the next area of difficulty may occur for your exit strategy?

Not a dig at you duncanhoo, more my own experience. If i tried to nail down a setup too tightly. I was always informed too late to make any use of it.

This setup is very much right place right time if you ask me. ie as a stock suddenly shoots off in one direction after ranging for a while. If you're not aware as it breaks the range, you don't have all the necessary info to make the trade. Maybe i'm too cautious and expect too much.

If however, the stock had news or early action and has been on the radar for the last half hour and then breaks its range until it forms this setup in front of your eyes, you are much better placed to make a decision. The issue with that scenario is how to scan for it with enough time to spare and then instinctively keep the chart on the screen instead of moving onto the next one too soon! Again, my limited experiences.

Well done though for your tenacity. I kinda left my scanner finding new highs/lows or 50c and whole numbers with a few general filters and that's as far as i've got. The rest is a bit of luck at the moment when it comes to finding stocks.

 

[duncanhoo]

one more note: scanner gives you about 1-4 minutes of advance warning...so if you are not on top of it you see alot of "Oh darn, should have traded that". At least that is what i say now instead of: "i might be a little late but maybe there is more"...

 

[coopster]

one more note: scanner gives you about 1-4 minutes of advance warning...so if you are not on top of it you see alot of "Oh darn, should have traded that". At least that is what i say now instead of: "i might be a little late but maybe there is more"...

That would be enough time to catch the trade, even for me! It would also be enough time to look at it, dismiss it and move on, only to have missed a good move. My language tends to be stronger in those cases! (Not quite so bad as Mr Pazienza's language but close!)

The issue i can see on the horizon would be that if you scan per setup like this and have say 10 setups. You will not be able to sit and watch every hit on every scanner as they may all trigger at once. Not something to concern yourself with while learning this setup but maybe an issue later.

Good work

 

[duncanhoo]

email me and i will give you the tradeideas code that i am using. disclaimer - yesterday had virtually no valid hits on long side. short side much better but yesterday was very choppy.

in my short experience tradestation does not work fast enough to do this...only esignal loads the charts fast enough. And you are spot on managing multiple hits.....I am not adept enough to manage more than one trade.

Essentially for me to be successful on this strategy using this scanner, I have to be VERY selective. This means (as in the case of yesterday) you have to be VERY patient and be prepared to not trade (yesterday i looked at about 40 potential setups from 950 to 11 Am on the long side and took zero trades.

Good news is that i cannot seem to find this pattern working reliably for me at all after about 1130 AM..so for me it is just going to be a tool in the box for that short window.

That would be enough time to catch the trade, even for me! It would also be enough time to look at it, dismiss it and move on, only to have missed a good move. My language tends to be stronger in those cases! (Not quite so bad as Mr Pazienza's language but close!)

The issue i can see on the horizon would be that if you scan per setup like this and have say 10 setups. You will not be able to sit and watch every hit on every scanner as they may all trigger at once. Not something to concern yourself with while learning this setup but maybe an issue later.

Good work

 

[aberden]

Duncanhoo, very good works, the level 2 of esignal 11 do not have regional option, so is not as good as esignal 10. When you use this methord in 1m timeframe, level 2 is the key.