Grey1
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leveII,
Parallel trading is to take a postion in stocks that shadow the market when market trades above or below previous close..
Example ,,
Go Short YHOO if DOW has been oscialltaing around the previous close for a while( Fined tuned with MACCI ) .... This is a simple trading strategy and works a treat if used properly.. I will parallel trade 2morrow few times if the opportunity is there.
Ragards
Parallel trading is to take a postion in stocks that shadow the market when market trades above or below previous close..
Example ,,
Go Short YHOO if DOW has been oscialltaing around the previous close for a while( Fined tuned with MACCI ) .... This is a simple trading strategy and works a treat if used properly.. I will parallel trade 2morrow few times if the opportunity is there.
Ragards
TheBramble
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Thanks for the update DG - a couple of queries:-
'Weighted' in what way? Was this anything to do with previous comment you alluded to by Grey1 on 'ratio'?
What ARE the pair trading rules? I know Grey1 posted up the outline a few days back, but I'm particularly interested (aren't we all!) on the mechanics. Specifically in relation to your comment above on weighing the trade and how to deal with the remaining trade when the first one of the pair hits its target/stop.
DaveGos said:
'Weighted' in what way? Was this anything to do with previous comment you alluded to by Grey1 on 'ratio'?
What ARE the pair trading rules? I know Grey1 posted up the outline a few days back, but I'm particularly interested (aren't we all!) on the mechanics. Specifically in relation to your comment above on weighing the trade and how to deal with the remaining trade when the first one of the pair hits its target/stop.
Tony
By weighted I mean balancing the number of stocks bought in each so with YHOO at 45.92 and CDWC at 67.50 I should have bot stock amounts in the ratio 1.47 to 1 i.e for every 100 of CDWC I needed 147 of YHOO this is to ensure that the trade remains market neutral and is not skewed by price differentials. What I'm not sure about is whether the Beta should be taken into account and how.
My understanding of this type of pair trading from the posts by Gray1 is that once a target is hit this is because if we get into the habit of closing any side of the trade based upon what that particular side is doing at the time then we may close trades to early and invalidate the market neutrality of the strategy.
By weighted I mean balancing the number of stocks bought in each so with YHOO at 45.92 and CDWC at 67.50 I should have bot stock amounts in the ratio 1.47 to 1 i.e for every 100 of CDWC I needed 147 of YHOO this is to ensure that the trade remains market neutral and is not skewed by price differentials. What I'm not sure about is whether the Beta should be taken into account and how.
My understanding of this type of pair trading from the posts by Gray1 is that once a target is hit this is because if we get into the habit of closing any side of the trade based upon what that particular side is doing at the time then we may close trades to early and invalidate the market neutrality of the strategy.
Grey1
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Dave,
The high beta stocks are those who out perform the index.. These stocks trade around their daily high ..( around the upper VWAP )
SO if a stocks is trading at around its upper VWAP it is a high beta stock ( for the day ).. a high beta stock falls faster if market weakens as demonstrated yesterday in the YHOO hedged against CDWC..
Since we are day traders we only consider the behaviour of the stock on the day .. A high beta stock intra day could be a low beta stock historically but we donot care about the history .
We isolate ourselves as much as possible from the past.. Past is past ,is gone, finnito .. many can not deal with this.. We can and we should do ...
We trade the market as it unfolds..
The high beta stocks are those who out perform the index.. These stocks trade around their daily high ..( around the upper VWAP )
SO if a stocks is trading at around its upper VWAP it is a high beta stock ( for the day ).. a high beta stock falls faster if market weakens as demonstrated yesterday in the YHOO hedged against CDWC..
Since we are day traders we only consider the behaviour of the stock on the day .. A high beta stock intra day could be a low beta stock historically but we donot care about the history .
We isolate ourselves as much as possible from the past.. Past is past ,is gone, finnito .. many can not deal with this.. We can and we should do ...
We trade the market as it unfolds..
Grey
I know been having loads of problem`s last few days both computers have been infected by a known Mydoon virus this attack through blueyonder severs hence the reasons why i have not come into pal-talk. also pal-talk can give problems with pop up`s then detecting your computer's address this is more common with the XP operating system so any XP user would be wise to use a killer the best and safest operating system is win 2000
have used a removal tool so far today looks ok but will leave it for a few more day`s if the problem still persists then i think i will take the option of a clean reformat
so will be in the room next week hope your foot`s ok ? take a rest and enjoy your weekend
if you are still having problem`s with e-mail try [email protected]
regards
John.
I know been having loads of problem`s last few days both computers have been infected by a known Mydoon virus this attack through blueyonder severs hence the reasons why i have not come into pal-talk. also pal-talk can give problems with pop up`s then detecting your computer's address this is more common with the XP operating system so any XP user would be wise to use a killer the best and safest operating system is win 2000
have used a removal tool so far today looks ok but will leave it for a few more day`s if the problem still persists then i think i will take the option of a clean reformat
so will be in the room next week hope your foot`s ok ? take a rest and enjoy your weekend
if you are still having problem`s with e-mail try [email protected]
regards
John.
Grey1
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An excellent day .. we discussed various strategies and we traded MCHP in real time .. A great win .. The entry was spot on with 1C only drawdown ..
I also called long CHKP where Trader 333 took a long postion and we won that too.
We also pair trade JNPR hedged against YHOO... That hit the target as well.. A good hedge.. Great to see JNPR falling while YHOO rising ..
No losses all wins .. Perhaps the 5 participants can comment on the trading day .. Dave and Colin left a bit early .. Being friday I suppose ..
We had , ian , bluechip,trader333, bramble, colin in the room to day ..
Room was buzzing with paul commenting on various L2 trading concepts.
Bluechip managed to get his MIC working at last..
All in all another profitable trading day ..
I also called long CHKP where Trader 333 took a long postion and we won that too.
We also pair trade JNPR hedged against YHOO... That hit the target as well.. A good hedge.. Great to see JNPR falling while YHOO rising ..
No losses all wins .. Perhaps the 5 participants can comment on the trading day .. Dave and Colin left a bit early .. Being friday I suppose ..
We had , ian , bluechip,trader333, bramble, colin in the room to day ..
Room was buzzing with paul commenting on various L2 trading concepts.
Bluechip managed to get his MIC working at last..
All in all another profitable trading day ..
BlueChip Trader
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Some great calls today and good commentary both by Grey1 and later by Trader333.
Thanks and have a good weekend!
Thanks and have a good weekend!
Trader333
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Yes it was another good day. The best thing for me is the ability to share knowledge interactively with others and especially Grey1. The amount of information that was being discussed was considerable and I gained new learning again and added even more knowledge on how to make profitable trades whilst reducing risk at entry.
Paul
Paul
TheBramble
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Total agreement with you Paul. I have never experienced such a massive and concentrated trading education in such a small space of time.
I learnt more in 2 hours this afternoon than I have ever had packed into a 3-4 day trading course. And quite apart from the excitement at the sheer slope of the learning curve - this stuff works right in front of your very eyes !
It was tough to keep up with the more experienced traders and I think this is precisely why it proved to be such an excellent session for me personally. In at the deep end...
I sense it might be a while before I can handle actually trading whilst watching/listening to the flow, but I really cannot emphasise strongly enough just how useful this exercise was and will be. Long may it continue.
Genuine thanks to all, especially Grey1 who increasingly amazes me with his generosity in time and effort providing this wealth of info for FREE and dealing with newbie questions with such patience.
Good man.
That's enough flattery for one day. The purpose of this (longer than intended post) is to urge other members of this forum to get themselves over to the TT room to participate (that's giving & receiving) in the most serious trading education of their lives.
For those who weren't there you missed:-
The significance of 52 week high/lows and how to trade this action.
A Trending/Oscillating market is determined on how it opens, not what is does afterwards.
When not to use vwap (within first hour-ish) of open.
To enter your trade on a pull-back.
How to set the target (non-vwap initiated) entry point for a directional trade.
...and I missed and awful lot of other stuff i'm sure.
I learnt more in 2 hours this afternoon than I have ever had packed into a 3-4 day trading course. And quite apart from the excitement at the sheer slope of the learning curve - this stuff works right in front of your very eyes !
It was tough to keep up with the more experienced traders and I think this is precisely why it proved to be such an excellent session for me personally. In at the deep end...
I sense it might be a while before I can handle actually trading whilst watching/listening to the flow, but I really cannot emphasise strongly enough just how useful this exercise was and will be. Long may it continue.
Genuine thanks to all, especially Grey1 who increasingly amazes me with his generosity in time and effort providing this wealth of info for FREE and dealing with newbie questions with such patience.
Good man.
That's enough flattery for one day. The purpose of this (longer than intended post) is to urge other members of this forum to get themselves over to the TT room to participate (that's giving & receiving) in the most serious trading education of their lives.
For those who weren't there you missed:-
The significance of 52 week high/lows and how to trade this action.
A Trending/Oscillating market is determined on how it opens, not what is does afterwards.
When not to use vwap (within first hour-ish) of open.
To enter your trade on a pull-back.
How to set the target (non-vwap initiated) entry point for a directional trade.
...and I missed and awful lot of other stuff i'm sure.
I agree with the other comments, I would have stayed longer but I was having problems with my PC, time for a new one I think as it has been having real problems handling all that I put through it. Anyway I'm off to the States for two weeks, have to keep the Green Card current, and I'll replace it when I get back.
Gray1
Following todays session just a quick question on dynamic stops in directional trades. I understand that we stop the trade in a parallel trade when the DOW crosses back over the previous days close. However do we stop when the DOW reverses when we are in a VWAP or Pullback trade, although clearly this wouldn't apply to a pair trade?
Dave
Following todays session just a quick question on dynamic stops in directional trades. I understand that we stop the trade in a parallel trade when the DOW crosses back over the previous days close. However do we stop when the DOW reverses when we are in a VWAP or Pullback trade, although clearly this wouldn't apply to a pair trade?
Dave
Grey1
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Dave,
I will open a new thread called dynamic stop loss during the week end and I will explain how to set your stop ..
To answer your question, in a directional trade market does not go below previous close because by definition it would be a strong trending day and not an oscillating one..
regards
I will open a new thread called dynamic stop loss during the week end and I will explain how to set your stop ..
To answer your question, in a directional trade market does not go below previous close because by definition it would be a strong trending day and not an oscillating one..
regards
