OptionsXpress Auto-Trade

See Trade-Ideas.com site for robot.  Auto-trade SPY or QQQQ?

Pristine Pullback

Velez reference with example: http://blog.traderslibrary.com/traders-library/2009/08/the-first-pullback-a-simple-lesson-from-velez.html

Telechart_TCNet Users Yahoo Group: http://f1.grp.yahoofs.com/v1/cLerSk12ASNDudGNVCpyDnj0x8sWcfq-OTTV7NZaIHRqnwHQjhGlx09ycqwsQrrtfDN-pB4e0vin4_k8naqBtLxYygu7eVI/Strategies/Pullback%20Strategies/Anatomy%20of%20the%20Pullback.doc

TC Scan Idea Percent Change and Volume

The Worden Report (Thursday, July 2, 2009)

We Dub Thee Sir Idea Trapper

Sir Idea Trapper has developed a technique for identifying stocks that are breaking out or moving ahead of the pack. We welcome him to the Roundtable of Knights Who Think for Themselves. A cool bottle of Veuve Clicquot Ponsardin is being prepared for travel. -DW

Don,

One of my favorite uses of TeleChart in recent weeks has been to identify stocks and ETF's which are breaking out or moving ahead of the pack. The technique is simple, but in the market upsurge since March 9, 2009, it has proven to be very effective at finding winning stocks. Besides my normal nightly download, twice a day, once in the morning between 10:00 and 10:30 AM and once in the afternoon between 3:00 and 3:30 PM, I download the current prices. I then use the following scan to find the movers:

Price Percent Change Today (Top 10%)

Volume 1 Day (Top 25%)

Price per Share (>$5.00)

I used to use a much more complicated formula including fundamentals, but found that it excluded too many winners and added little value. I use all items in the system so that I capture ETF's and sector groups. If the stocks seem too risky, I may trade the ETF instead. If there is a hot sector group, I may display the component stocks in a list and look at them for movers. The morning scan gives me ideas for candidates to trade that day, and the afternoon scan gives my candidates for placing orders before the close so that I can take advantage of overnight gap-ups, which account for many of he best moves. A recent success was capturing the gap up in DRYS on April 16 and 17, 2009.

Once I have my list of stocks that had big price moves on high volume. I use sorted lists to peruse my selected stocks. In my opinion, the ability to quickly and easily sort a pre-selected list of stocks on many different parameters is one of the most powerful features in TeleChart. I focus on four primary measures:

Price Percent Change Today

Price Percent Change 5 Day

Volume 1-Day

Volume 5-Day

For my purposes, I am primarily interested in stocks which have a high volume and can be traded "at the market" in blocks of 1000 to 10,000 shares without affecting the market price, though I will frequently still use limit orders. By including the 5-Day statistics, I can spot movers which may have pulled back and represent buying opportunities. To help further filter the stocks, I might do sorts on Capitalization and Sales, though I have found that if the stocks have high trading volumes, they usually have acceptable market caps and annual sales. Volume is a daily vote as to what stocks the investing world likes or dislikes. I find it strange that so many investors fight against what the market is voting for. Before investing, I want to see a big spike up in volume. With so many choices, there is no need to look at price movers which do not also spike in volume.

I have been using TeleChart for over seventeen years and cannot imagine investing without it. The above scans and sorts make it unnecessary to look to other sources for trading or investing ideas. I may look to other sources to explain the reason for the moves, but I find the ideas with TeleChart.

Thanks for a great product.

John

Gorilla Picks

Stored here.

Idea: Play opening gap with put/call

Buy a put or call at day end to benefit from gap up/down at open; have to bank on gap filling if it goes the wrong way. Example on DIA:

Options Strategy

OK, now that I got creamed on the GOOG call options, watching them crater, selling them low, and then watching GOOG cruise back up past my original entry point....

I did this trade blind. Never looked at the daily charts, only the one-minute and five-minute which drove me crazy. Time to back off to the overall trend level and use the dailys with a 10% stop to start, 5-10K buys in the play account until we see how it works. This could be a great long-term play, but must adjust for risk as we near the expiration week.

Set up a watchlist with GOOG, IBM, GS and other optionable candidates to spread the risk. Also check out the new S&P ETF's as they get option volume.

TeleChart vs. StockFinder?

According to Stu, SF supports back-testing. TC only does that with an add-on. Time to hit the forums and see which one to use.

Does Worden have a SF-only plan, or only an add-on with TC?

Does the TC user's group also benefit someone using SF?

Better Gap example: BAC on 6/19/09

Perfect example. Gapped up from 12.88 to 13.10, then dropped right back to 12.88 by 10:10 AM.

Sometimes the Gap keeps widening

Cannot assume the gap will always fill. Note QQQQ on 6/19/09, which kept running. Need to watch the behavior after the open and respond accordingly.

Gap example: GOOG

GOOG gapped up from 413.59 to open at 414.87 today. It quickly jumped up to 418.5 but then dropped to 414.74 by 10 AM. The 420 ITM put (expiring today so delta was over .94) opened at 2.8 and then ran to over 5.4 as the stock dropped.

Mind the GAP

The gap always fills...that means that when stocks gap up at the open, they nearly always trend down afterwaards and vice-versa, almost always in the first 30 minutes of trading. Study the charts for verification.

This can be played by shorting or buying puts at the open, and capturing the profit as the stock gaps down.

Same goes for opening on a gap down, but test it first.

Small positions = Lower Stress = Diversification

Home runs are hard to hit. Two big losses this week (E*Trade options and GS options that ended up higher after I sold) plus a near-miss on Palm options, which went up five-fold the same day i dumped them with a 6K loss, are valuable lessons.

Three 3K positions are better than one 10K. Those who take huge bites are liable to choke. Hope I have learned that by now. Have to make up 40K to break even, then we can start making some money.

Fave Stocks

IBM

AAPL

RIMM

DRYS

MOS

POT

DRYS Contingent Order Idea

When it's on a run, buy DRYS common plus a flock of calls. Stock: opened 7.10, down to 6.78, then up steadily past 7.36. OOC FU 7.50 June call: opened at 0.6, down to 0.4, climbed to 0.7. Buying at 0.4, profit on $10,000 would be $5000.

Set stop on the common at about 2%, contingent order to get out of the options if the stock sells. Options were more volatile but continued up; will track closer to stock as we near expiration.

And, WATCH FOR CORRECTIONS in DRYS! The May 28 chart shows what it's capable of doing. It finished at 7.30, with the OOC FU call at 0.60.

Keeping confidence up and losses smalll

http://www.thestockbandit.net/2009/04/07/the-importance-of-losing-small/#comments

Confidence...

Still have confidence that I can succeed at this but it takes attention during the morning session.

Frustration....

Mkt started out mixed and then trended down sharply till 10:15, then everything shot up but I wasn't tuned in. Have to find a way to stay more in touch with the early morning action.

Also don't forget to watch options on fave stocks. DRYS went from 6.8 to 7.18 but OOC FU (June 7.50 call) went from .40 to .60.

Long-Term Low-Stress Plan

Ideas for long-term investment planning:

- Break account into thirds (assuming 3-day settlement on non-Day-Trading accounts like IRA)

- Select 3 or 4 stocks that reliably trend back toward the mean and are attractive candidates based on fundamentals (IBM, RIMM, AAPL, MOS, etc.)

- Take large long position with 1% stop and 5% profit target in each.

- Track performance for a month and evaluate/adjust.

Can I keep a spreadsheet here in the blog???