Originally Posted by kccrow:
Don't let lew fool you, he just uses this method:
There are thousands of trading methods. This is just one method.
I prefer it because it doesn't allow for large draw downs and the mental anguish for a trader that comes with that. Too many traders who have a style that allows for large swings end up getting more risky AFTER they have large draw downs, trying to make that cash back faster. This is the opposite of what you should be doing but many traders are unsuccessful because they can't regulate themselves. This method I'd described is what works best for me and my trading mindset as it leaves no room for guessing. [Reply]
Originally Posted by lewdog:
My man here's been posting about using VCP and trading strategies that I use from Mark Minervini. Figured I'd post some here as examples.
Here's a rough example, although with the few days of large sell offs this week, I would hesitate to force any trades right now as the number 1 rule is capital preservation.
Hopefully you can open this up enough to see it.
SAVE. Consolidating nicely for about a month. The outlier of this is 7/28 where the price jumped to 25.67 so excluding that for this example. Over 200k volume allows this to be a liquid trade and I do not trade anything with lower than 200k volume.
Using this strategy, you want to catch a stock moving up, not guessing it's reached a bottom. So I would set a buy point for the high point of this consolidation so I catch the "breakout" of this stock moving up. The price of this buy point is 25.01 as this stock reached a high of 25 on 8/15 and 8/16. The technical stop of this would be the lowest price of this stock at the end of this consolidation, which would be 23.92 on 8/19. Instead of setting this stop right at that point I take 23.92 x .999 so we are right below that = 23.89 is my stop.
Buy at 25.01 and stop at 23.89 makes the risk:
25.01-23.89 = 1.09/25.01 = 4.4%. This is a fairly low risk trade.
Now in really choppy markets, the stop of a trade may simply just be the low of the day before or the intraday low of that current trading day. The stop depends on market conditions. In a really good bull market, I may have a risk of 10% as I want to allow the stock to fluctuate without getting stopped out.
Wouldn't this be known as a cup and handle formation ? I know when I follow a ticker and see this it's normally a good set up as they normally break to the upside. The handle is the consolidation phase.
Also, wondering about your use of a stop loss. How often do you find yourself getting stopped out just to see it rise immediately afterwards ? That seemed to happen to me quite often so I basically quit using it and doing like Johnny said and making a mental stop and selling at that point.
On a side note , one thing I've learned to do is that if I want to get into a stock at the open I'll set my buy order 3-5% below the open and that wick will drop down and grab it 75% of the time so I'm wondering if it's grabbing someones stop loss ?? [Reply]
Originally Posted by Hog's Gone Fishin:
Wouldn't this be known as a cup and handle formation ? I know when I follow a ticker and see this it's normally a good set up as they normally break to the upside. The handle is the consolidation phase.
Also, wondering about your use of a stop loss. How often do you find yourself getting stopped out just to see it rise immediately afterwards ? That seemed to happen to me quite often so I basically quit using it and doing like Johnny said and making a mental stop and selling at that point.
On a side note , one thing I've learned to do is that if I want to get into a stock at the open I'll set my buy order 3-5% below the open and that wick will drop down and grab it 75% of the time so I'm wondering if it's grabbing someones stop loss ??
Yes, loose cup and handle formed. That's not always what I'm looking for but those are good formations.
Yes, there are times a stop loss gets me out with the stock then moving higher. But if your number 1 rule is to control risk, I cannot break that rule. What if I ignored having a stop loss and the stop plummeted 10%+ more from when I should have gotten out? That happens too. With this strategy, you just scan for other stocks and find the next target. The mindset is there's numerous other patterns to find, don't get glued to one stock. Also, I have to use stops. I rarely can watch the market while at work. If I was truly day trading I'd just use mental stops.
I don't like to buy a stock on a dip. The breakout method has it moving up when buying. That way you trade with the trend instead of guessing if you're catching a short term bottom or a falling knife. [Reply]
Originally Posted by lewdog:
Yes, loose cup and handle formed. That's not always what I'm looking for but those are good formations.
Yes, there are times a stop loss gets me out with the stock then moving higher. But if your number 1 rule is to control risk, I cannot break that rule. What if I ignored having a stop loss and the stop plummeted 10%+ more from when I should have gotten out? That happens too. With this strategy, you just scan for other stocks and find the next target. The mindset is there's numerous other patterns to find, don't get glued to one stock. Also, I have to use stops. I rarely can watch the market while at work. If I was truly day trading I'd just use mental stops.
I don't like to buy a stock on a dip. The breakout method has it moving up when buying. That way you trade with the trend instead of guessing if you're catching a short term bottom or a falling knife.
You can make a better and more enjoyable life day trading once you have a solid foundation than working a day job. With your discipline and knowledge you should consider taking a 30 day vacation and day trading the whole time and see if you can tell your boss that my vacations now permanent. LOL.
NOT FINANCIAL ADVICE.
I've been able to really focus this year and will make as much money as I did jerking off those fucking pigs and have fun doing it. Well , most days. And watching people like TZ make 30K on a single trade that lasts minutes is real inspiring to me. I'll get there. And yes I've seen him do it multiple times just over the last month. [Reply]
Originally Posted by Hog's Gone Fishin:
You can make a better and more enjoyable life day trading once you have a solid foundation than working a day job. With your discipline and knowledge you should consider taking a 30 day vacation and day trading the whole time and see if you can tell your boss that my vacations now permanent. LOL.
NOT FINANCIAL ADVICE.
I've been able to really focus this year and will make as much money as I did jerking off those fucking pigs and have fun doing it. Well , most days. And watching people like TZ make 30K on a single trade that lasts minutes is real inspiring to me. I'll get there. And yes I've seen him do it multiple times just over the last month.
Honestly, I really like my job and just worked 6 months doing training + studying for a promotion. They voluntarily gave me a raise of 15% once I completed it, even though I was already given a raise up to what they promised I'd be making in April. I like going to work, they pay me well, I can take time off when I need and I love the people I work with.
My retirement goal is 60 given my current savings pace. But retiring at 50ish and day trading for income doesn't sound bad. The problems with this are not being able to take withdraws this early from retirement accounts to use as day trading capital and paying for health insurance.
I'd need a MUCH larger amount of capital to be day trading for income. If I started diverting investment money away from retirement accounts such as my 401k, to build up a larger trading account, I'd take a large hit on the tax side though. Doing this would put me in a higher tax bracket AND would increase my taxable income paying higher short term capital gains. Just not sure I could retire super early to accomplish this. [Reply]
Originally Posted by lewdog:
There are thousands of trading methods. This is just one method.
I prefer it because it doesn't allow for large draw downs and the mental anguish for a trader that comes with that. Too many traders who have a style that allows for large swings end up getting more risky AFTER they have large draw downs, trying to make that cash back faster. This is the opposite of what you should be doing but many traders are unsuccessful because they can't regulate themselves. This method I'd described is what works best for me and my trading mindset as it leaves no room for guessing.
I absolutely think you have the right strategy. I thought I'd poke a little fun :-). [Reply]
Originally Posted by lewdog:
Prepare thy anus. Did we just see a text book bear market rally?
I've been busy carrying the wife around to doctors today , just got home to check my shit and it's definitely bloody. What the hell is wrong with stocks??? [Reply]
