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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: catman who wrote (13591)	8/16/2001 5:43:32 PM
From: Wayners	Read Replies (1) \| Respond to of 18137

And in looking at a 3 week MA, what would indicate that I would be fighting an institutional trend...volume No, try to stick with the direction of the moving average. An exponential moving average will be more responsive with less lag. The best stuff to catch is right when the moving average changes direction, not several weeks later. When you state "If you zoom way out" and you notice that there are no cycles"....I'm assuming that you mean as I look at what has already occurred. If that's the case and I saw no clear cyclic pattern, what would the intraday chart show me other than an intraday pattern? With zooming out I mean going from say a 10 min bar chart to a daily bar chart to a weekly bar chart. If your data goes back far enough, try looking at monthly charts too. If you don't see any cyclic, curvy moving averages with nice amplitudes to the oscillations on the weekly, and not on the daily either (example look at a stock ticker: SPOT) then pretty much the only way to play something like that is with daytrades or 1 day overnighters trading against the trend at the extremes. I ran a study on SPOT for example that shows if you bought the close on down bars, held overnight and sold at the next days's close, or shorted up bars at the close and covered at the next day's close, you'd have picked up 126 points on the stock which has gone nowhere over the past year or more. I'm not one that likes to use just an eyeball to determine if the stock characteristics are pretty easily forcastable--I want hard numbers to work off of--so what I do is let the computer count up the number of times say the 3 week moving average changes direction for the total number of price records I have. A really high percentage number here tells me the stock cannot be depended on to carry thru with momentum and should be traded more like SPOT. Other stocks with low numbers can easily be traded on momentum--you want to trade those on fresh reversals and ride the amplitude of the waves--unlike SPOT--and use the up bar down bar approach like you stated---to be a little bit more sophisticated learn the 5 or so candlestick reversal formations that require no confirmation to hopefully get the reversals identified correctly. Even the most forecastable/predictible stocks have their hiccups and do stuff you don't expect, so you still have to protect yourself against the situation and not stay in trades you know aren't doing what the forecast said. The idea is raise your odds dramatically by trading the stocks that have acted in a favorable, predictable, cyclic fashion in the past and hope that continues which for the most part they do as floats, volumes etc that determine the characteristics generally don't change rapidly. As far as getting filled, if its a postion trade off the weekly chart or daily chart, you've got plenty of time to get a fill. With a daytrade, you are forced to go after high volume stocks, I'd say with >700K shares min per day, over a million even better to avoid paying a ridiculous spread. An example of a highly predictible stock with top notch price movements (I use average true range% divided by the low to judge adequate movement) would be AVCI or BRCD. Ideally if you can get in gear with the weekly chart trend, the daily chart trend on fresh reversals, and you stick to stocks that have a good history of following through on momentum and have nice curvey predictible flowing moving averages, it actually becomes difficult to lose money. Also, just because a stock makes the cut as being pretty predictible, doesn't necessarily make it a good long. It could be a fantastic short over and over again on the way down.