More explanation about our many trading setups
Brian, just to elaborate a bit on Deron's reply. As he indicated, we trade probably 15-20 primary, core setups the most frequently (the mix depending mostly upon market conditions). Many of the remaining patterns are what I would call secondary, or reinforcing patterns and/or trade entry criteria. We'll also be posting trade 'criteria', such as trade management methodologies, e.g. the Connors/Landry 2:1 trade (money) management approach which we use in taking/managing profits in many of our intraday and swing trades. Similarly, we use the well-known & regarded Connors VIX Type 1 reversal signal as part of our strategy to monitor the Nasdaq and SPX for short-term reversals, so that's another setup criteria that'll be referenced/explained with a graphic on our site (we reference these with their permission).
For example, we may post a trade with the rationale "2D+RU -Classic Reversal up pattern", while noting that the issue is successfully re-testing it's rising 20-period MA, advancing on higher than average volume, is moving in sync with positive action in the sector, and that there was positive news yesterday on the company which we think is bringing in the institutional $. This would be a total of 5 setup criteria that pulled us into the stock; however the 2D+R pattern would have been the most important underlying factor that sets up the trade, so that is the primary setup criteria. There will be a criteria explanation on our site for each element going into that trade, e.g. the nuances of "Trading a stock following positive news". The way our custom trading center software is setup, we'll be able to quickly dissemenate hotlinks to multiple setup criteria on any trading setup that we are discussing. Plus, of course we use live/annotated charts to illustrate the same concepts.
When there are many factors working in favor of a setup, those tend to be the awesome trades. Not always, but usually. For example, this evening we have Lattice Semiconductor (LSCC) setting up as a short on our Stalk list below $21.80, with the setup being: "2U+RD" reversal pattern in a downtrend, recently failed a breakout of a double-top in the daily timeframe (and broken through the bottom of a trading range), with negative news from Monday working against it, and the whole semiconductor sector ($SOX) also setting up for an additional move lower going into Tuesday. So we'll be looking for confirmation from a weak $SOX tomorrow before entering, if it triggers. The confluence of multiple setup factors is what often gives us higher-confidence in entering a trade and staying in it with trailing stops to maximize gains (but this one doesn't look like an 'awesome trade', just something that's maybe good for a point while risking probably 40 cents).
The reason we'll end up with hundreds of setup criteria on our site to reference is simply that there are so many of these micro-detail setup criteria that we use over and over in putting together the puzzle that often comprises a good trading setup. So the PRIMARY setup patterns we use tend the most often do tend to boil down to 15 or 20... it's just that they don't exist in isolation.
Good trading, -Steve |
