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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade -- Ignore unavailable to you. Want to Upgrade?

To: Ken Wolff who wrote (285)	1/17/1998 1:45:00 PM
From: Ken Wolff	Respond to of 2120

DETERMINING THE UPSIDE POTENTIAL (Part II) (continued...) Suppose stock XYZ opens up (gaps up) one dollar from the previous day's ending price. Yesterday it closed at a price of $7.00. It opens at $8 and trades up to $8 1/2. Now I would expect 8 1/2 to be the high of the day and the current UPSIDE POTENTIAL is 8 1/2. I WOULD NOT buy the stock unless it came back to about 7 5/8. The reason I need a good pull back is because it will not usually make the high again but I would expect it to go a little above 8 1/8 because of narrowing oscillations being the rule. So when you consider having to clear your spread there is not a lot of potential profit left in this stock. The opposite is true if you intend to SHORT SELL a stock. The downside potential is calculated by knowing the previous low. If XYZ traded down to $7 1/2 and then rose to $9, my downside potential would be 1 1/2. Calculate the downside potential and if it is worth the risk, short it at the top. Many times you will find stocks that oscillate enough every day for you to make nice profits. Experienced traders follow these stocks and only trade them. They know the intraday patterns on these stocks like the back of their hands. Remember RISK and REWARD. Do not risk your money for a very small potential. Many daytraders will spot a stock being bought at the high of the day and because of the heavy buying only to see a small increase in price and then a quick fall. A smart trader will patiently allow the Market to bring high percentage trades to him. Ken mtrader.com

To: Ken Wolff who wrote (285)	1/17/1998 1:53:00 PM
From: Lucky	Read Replies (2) \| Respond to of 2120

Ken A few posts ago you mentioned you shorted GERN at 17 and covered at 12 1/4.Come on nobody did that good on GERN to pick the exact top and bottom.By the way GERN never did trade below 12 1/2 last week and the high was 17 1/8 after the news.I would of believed you if you said you shorted at 16 and covered at 12 3/4 but not 17 and 12 1/4 when hardly any stock traded below 12 9/16. Don't mean to be disrespectfull but please stick to the truth. Lucky. PS.I still think this a good thread,I just don't like fairy tales.

To: Ken Wolff who wrote (285)	1/17/1998 2:22:00 PM
From: wmwmw	Read Replies (1) \| Respond to of 2120

You wrote: The low hit on the first sell off becomes your current DOWNSIDE POTENTIAL because you have NO REASON to believe an oscillating stock will make a new low. Look at PWAV on 1/15/98( it is the kind of stock that you like to trade: it had a earning out on the day beating estimate): It opened at $12 3/4 ( which was $1 1/4 below previous close)then down to $11 1/2 then bounced up, making first bottom. According to your theory, it should be the day low and one should buy at $11 9/16. 10 seconds later it dropped to $11 1/8, making the second bottom. It stayed there for 10 minutes and bounced a little but then dropped to $10 3/4, the third, and then $10 3/8, the fourth, and $10, the fifth. Each time bounced off after making bottom. So many bottoms, which one you choose as the real bottom? And how you decide? For GERN, I check the prices from 1/14/98 after it run up as high ask was $17. So very small chance you could short at that. The low bid was $12 1/2, so you couldn't cover below that. I must say you have something value in your method but without a real time display we couldn't see how it works out.