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Strategies & Market Trends : Technical Analysis - Beginners -- Ignore unavailable to you. Want to Upgrade?

To: Robert Graham who wrote (7112)	11/27/1997 11:57:00 PM
From: Robert Graham	Read Replies (1) \| Respond to of 12039

Oops. In my last paragraph of my previous post, I meant to say that my strategy that I have outlined has been able to make options trades a manageable approach to making money for me, not a safe approach. There is nothing "safe" about stock and option trades. It is a risky business. Bob Graham

To: Robert Graham who wrote (7112)	11/28/1997 12:09:00 AM
From: SR/WA	Respond to of 12039

Bob: Am duly impressed with your knowledge in option trading. Would U explain "parity & implied volatility" regarding option trading & pricing. TIA Ken

To: Robert Graham who wrote (7112)	11/28/1997 12:16:00 AM
From: Richard Estes	Respond to of 12039

To use an example, if you choose an 89 time series or TSF(wow) MA for your system. You would simply buy on a cross up and sell on a cross down. The difference between the Price and the MA is RISK. You increase your risk if you had choosen a simple or EMA. At the same time if the increased risk is in keeping with your mindset, It might keep you in the trade longer and keep you long in corrections. System testing gives you an idea what your system delivers in drawdowns, the size of the average loss or win. These to a degree measure risk of the system. As you shorten the time period you trade in, You increase the number of false signals because your decision is made on fewer data points. There by increasing risk. Money management mainly is tied to the ability to take a loss. Allowing a loss to get out of hand can turn us into "investors" or big loosers at a later time when you can't stand the immoblity any longer.

To: Robert Graham who wrote (7112)	11/28/1997 12:29:00 AM
From: Richard	Read Replies (1) \| Respond to of 12039

Robert, What do you use to determine if a stock option is under or over valued? I have the information for commodities but have been unable to locate this for stock options. Thank you Richard H.

To: Robert Graham who wrote (7112)	11/28/1997 1:04:00 AM
From: David Russell Coburn II	Read Replies (2) \| Respond to of 12039

Bob, TA and the tape are the key tools I use to determine exits which establishes my profit or limits my loss in an option trade. To be honest, I guess I have become more of a pattern reader than anything else. I have met with pretty good success with this approach since July. <gg> I watch for strong stocks in a certain price range that are basing or coming up off a correction to a strong MA. Each weekend I run two large scans that give me two databases of about 150 to 200 each. Each weeknight I go through both of them visually looking at the charts and fill the watchlist for the next day. This sounds like it would take a long time but I look for very specific things. I can get the number of possibilities down to about 40 in about 30-45 minutes. Picking 10 out of the 40 takes a little more time. Sure wish the Quotes+ data was ready earlier. I also set my exits on stocks that I own with moving averages, previous resistance, and volume. To enter I know what my entry price is, volume should look like, and what I expect the trade to do. This last one would be something like "bouncing off 21ma at $6.5, last resistance at $8, exit at $7.625 or breakout from $8 after 4 week consolidation, next gann at $10, exit at $9.5". If the trade does not act as expected and/or it goes against me I exit very fast and regroup. But I also look for factors that would favor good trading activity on a stock, such as good recent news that has positively impacted the price of the stock, and other positive forces like positive earnings surprises, stock split announcements, and so forth. I do not have any hard data to substantiate this but I think there is often a correlation between strong stocks being sold off and the release of news. You occasionally see a big gap with good earnings, etc. but alot maybe most of the time you see selling into strength. IMO Good IBD ratings are very important to me. I try to look for companies that are very visible in their market place and have basically sound fundamentals. Also, it is important to me that their industry is performing well in the stock market. I agree with the above, especially if one doesn't want to spend 24 hours a day looking at every chart under $15. <gg> IBD ratings and group performance are especially important to me. I wish I had a better method or checking what group a stock is in and how that group is performing against the others. All of these items beyond TA, the tape, and the IBD ratings are optional indgredients to the recipie that I use in my attempt to make that extra difference in managing the risk associated with trades. If you are successful at it and making money then you are correct. Again protecting your capital, however you do it, is critical. David