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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 (1904)	4/14/1999 12:20:00 PM
From: Wayners	Read Replies (2) \| Respond to of 2120

Seems to me all you need in order to study pullback dynamics of a particular stock and its past patterns is to make a simple indicator that measures the %change day to day of the open minus the low. When the % change has been increasing (i.e. greater pullbacks) and then you have a day where the pullback is less, its often a great signal to buy at the open for the next day, especially if the stock is in an uptrend. Another way to play it with respect to dumpers is look at the high spike values of the indicator over time. Look for dumpers where the open minus low % is very high in relationship to the historical perspective. I'm noticing some interesting patterns for what peaks in the open minus low % can look like. Some patterns remind me of failure swings you would normally look for in using an indicator like RSI.

To: Ken Wolff who wrote (1904)	4/15/1999 12:07:00 AM
From: Roman S.	Read Replies (1) \| Respond to of 2120

Ken, you are very right. Perceived value is what the daily market fluctuations are made up of. News releases, upgrades, downgrades, mergers, aquisitions, all these items help add to the daily soap opera that we ourselves are the characters on the screen. We make a choice whether to buy ABC or short XYZ, or buy options on JKL 3 months out. It is very good to screen the news, but you have to be careful about overenthusiasm and getting caught up in a fast updraft that ends abruptly and starts going the other direction. Happened to me yesterday on MHMY. Got caught in the rush at 9 and it was down from there. If I waited for the first pullback, could've gotten in below 8 1/2 and out above 9 within 10 mins and been done for the day. Instead I had to sit it out in front of my monitor watching for the type of close it was going to have and decide whether to hold it overnight. I held and sold out at $10. Could've/should've had $11 but my brokers website had a glitch and my sell didn't go through. Got on the automated phone system and entered my order that way, instead of waiting for a live person (which would take way too long). Lucky I got out with a profit instead of taking a loss by the end of the day. The way I figure out when to hold, is if volume has been extremely high for the particular stock, and it is still closing at or above it's open price which should be a gap up from the previous close. And an additional criteria which sometimes applies is what my average price is in respect to the close. If I see a steady close with no selloff or rise, I'll usually average down at that time, and that helps me get above my average price quicker and realize a gain. Look at the chart of ELCO for today. I'm in at 5 15/16 and took it home. The news plus all the extra volume with big block buys that I saw, helped me make up my mind by 3pm est to take it home and figure it opens about 6 1/4 or better, that being a conservative estimate. Sorry for being long winded, but if you want to learn, you have to read, read, read, comprehend, then go read some more. And something I read awhile back, but not sure where : "The most important thing to know is when to do nothing."

To: Ken Wolff who wrote (1904)	4/16/1999 6:07:00 PM
From: Ken Wolff	Read Replies (2) \| Respond to of 2120

cont... Confusing fundamental value with real value is another way for a daytrader to justify blown stops. One moment of hesitation while trying to guess what his trade will be trading at in a few days, weeks or month is another reason NOT to sell. That moment of indecision will cause a stop blowers nightmare. It goes something like this: 1. You just bought XYZ at 20 bucks with a stop loss set at 19 3/4. The real value is being stated as 50 bucks in 6 months. They just got a wonderful contract and everything looks rosey... 2. The stock does indeed climb to 20 1/4 and looks set to go to 50... just like the analyst said it would. 3. You are now computing the score as you translate your 1K shares times 30 bucks and figure a clean 30 grand on this one.. 4. The stock falls down to 20 and gets selling pressure. The pace picks up... gets faster and is getting sold. 5. The stock sells at 19 3/4 and you are still thinking of the value at 50. "Heck it is worth 50.. so even if it hits 19 1/2 this stock has good fundamentals and...." 6. Meanwhile as you thought about the trade it is now trading at 19 1/2 and you are down 500 bucks. You are now thinking that it has to bottom soon...all based on the real value of the stock...50!!! Now you are beginning to sweat. 7. You are now seeing the stock trading at 19 under heavy pressure and now are experiencing real pain... down $1K and you can't sell now... you REFUSE TO TAKE A $1K LOSS!!!! 8. The rest of the trade is now a familiar story as the stock heads to 18, 17, 15 or 10 ..... Daytraders should only care about the predictable increases for a very short period of time and when he's wrong he should get out taking a small loss. Ken www.mtrader.com