SD's Short-term -seat-of-the-pants- swing trading

[bankedout]

I'm not sure how your indicators are calculated, or if you spend much time inspecting individual price or volume bars, just keep in mind that 60 minute bars have 1 bar each trading day that represents 30 minutes of trading.

30 minute bar intervals work well, if you are concerned about that situation.

I think a lot of good traders use multiple time frames to trade. The primary time frame for analysis, a shorter time frame to fine tune entries, and a longer time frame to determine overall trend and areas of support and resistance.

[sd]

Thanks for the feedback Bankedout- my 60 minute bars from stockcharts are equal to hourly bars- only 8 bars show per trading day. I'm not sure where the 60 minute bar represents only 30 minutes of trading? This does not seem to be the case on my charts. 30 minute bars would likely be similar.
I would also agree that looking to the larger time frame to establish the predominant trend is a sensible thing. The question becomes, which nex`t time frame establishes trend.
My experience of trying to day trade this week- One day successful on 80% of my trades, and a few days later only 20%? Hard to rationalize an up and down market trend on a shorter time frame. I also try to gain interpretation from volume as I look at a chart- In this up and down market, it is hard to wait for the series of volume bars to confirm because by then 1/2 of the trade is over - the duration of the trade is that much shorter. The logical response to that is to not be trying to force a trade at all. I don't think there was much substantial support/resistance levels on the 5/15 minute charts with the instruments I was attempting to day trade this week. Using leveraged instruments also exaggerates the minor swings- Had I the time and account to manage several hundred trades, perhaps I would have gotten the knack.....maybe next year.... This has been a volatile market, and there has been 4 days rally up and then 2 days down and vice versa. I thought we were trying to move up from a base.
I would like your opinion on the UGL and the GLL counter flip trade. I think there is substantial reason for our monetary system to become undermined, and for Gold to become a safer haven- The recent trend has Gold going up as our $$$ dollar is coming under fire. This is my belief at present, but my beliefs are often counter intuitive to what the market thinks.

I've looked at a few other ETF's , and so far have not found many that seem to correspond with the SAR in the way that UGL and Gll seem to have done. What I like about this TA approach , is that it reduces the risk of loss when the UGL trade loses momentum with a relatively close stop taking one out. On the other hand, taking the opposite GLL trade on an equal basis is not the smart way to go since the primary trend is up.
However, I think it is important in trying this approach to fully position trades in the primary trend (up) and perhaps only take 1/2 positions in the counter trend trades (pullbacks/down) .
What I particularly like about this trade is that it seems to be relatively stable, captures the major moves , with some minor whipsaws in the short-term. The SAR indicator I was trying to illustrate does a decent job of providing entry on the pullbacks.
In trying to trade UGL and GLL I should likely only focus on the UGL since that is the primary trend- or adjust position size accordingly with a lesser position in the downtrend than the uptrend. That should likely be a sensible approach, lesser risk on the downside position, but still some possibility for gain there.
At some point, the market will give GLL a chance . In the interim, it seems the prudent approach to be prepared for the market to be whimsical- and to try to take advantage of that.
I think IO prefer this to a daily approach- at least in the short term-
Appreciate your feedback-SD

[bankedout]

SD,

The New York Stock Exchange is open from Monday through Friday 9:30 a.m. to 4:00 p.m. ET. Therefore, one of your bars is representing a half hour of trading. It is probably the last bar of each day.

What you showed with UGL and the SAR looks promising. I don't know how far back you looked to see how well the strategy would have worked. Perhaps it will continue to work going forward. Perhaps it won't. Or it could work for a while and then totally fall apart. I think if there was a simple system that worked forever, there would be a lot more rich traders.

For multiple time frames trading intraday you could use 30 minute bars for trend, 10 minute bars for trading your strategy, and 3 minute bars to fine tune entries. Or adjust to whatever suits what you are trying to do.

Monday the market is closed for President's Day.

[sd]

You are right the listing I have on stockcharts go from 1 minute to 5 to 10, to 15, to 30 to 60 to daily, to weekly to monthly.
I assumed the 60 minute bar to be the hoiurly, also think the bar starts at the open, so the last bar is only 30 minutes.

In trying to fit the trade time frame to my available time frame, I'll be trying to use the 60 or 30 minute with the daily chart to establish trend.
As far as backtesting- both of the metals etfs I am using only have been in existance for 3 months. While this system seems simple , it will undoubtedly have it's whipsaws as conditions change from trending to basing, The SAR indicator seems to do an outstanding job of determining viable entries in most larger moves. Better than watching the individual price bars for what turns out to be a failed upturn in a downtrend.
A general thought - Comparing both UGL and AGQ, both are uptrending, with AGQ being the most narrow uptrend. I think the recent price action in AGQ may suggest a weakening in trend that may provide a short reversal- I'm using the prior spike high @ 46.44 as an early warning . This may or may not come to pass. Price is now sitting under the slower Sar and still technically uptrending, but I'm thinking that there has been a substantial run up and price could likely rollover here and at least go into a trading range.
Some other thoughts on trying to time the flip side of an uptrending stock- If the stock is uptrending, the flip side play is a bet on the volatility in the channel. In a narrow channel like AGQ, it would be prudent not to make a position trade until a prior low was broken, and even then only use a partial entry position .
UGL has not been trending as well, but the primary trend is still up. It would seem to offer a better opportunity to take the flip side trade .....
Again, it might pe prudent to reduce the position size on a flip trade, until the reversal shows it has legs? .
I also want to mention the MACD 5-19-4 . It is very timely, and seems to confirm Sar well. When downtrending and below the 0 line, it definitely means don't waste your time.
As the fast line up turns and crosses the slow there may be a trade potential.
I hope to study and trade this more in the weeks ahead.
Initially I feel this type of trading will fit my work schedule - a look at the open, lunch and mid afternoon/close should not take more than 15 minutes to adjust pricing.
Note to self- entry buy-stops should always trail 1 fast Sar bar.
I should always have 2 potential trades on- A stop-loss for the position I am in, and a buy-stop for the position above the trailing Sar.
In trying to apply this 2 sided approach, Friday I took a position in GLL as it exceeded the SAR, it hit my waiting buy-stop.
Price promptly declined a small bit, still above my trailing Sar stop of $15.95. At the same time, I have a buy-stop to go long
UGL @ $36.01 - SAr @ Friday's close.
As I look back on what would have been potential UGL entries, there has always been a 2 day duration before the uptrend continued. This time may be different. I am actually overinvested in UGL , when I should be at a 1/2 position, I am at 1.25 exposed. Will remedy that next time.
Looking at the UGL chart, it would appear that GLL may have one more trading day- I now have a buy on UGL @ Sar @ $36.01-Or will have once available cash clears- Pesky thing not having enough free cash!
I'll try this trade for a while to see if it is workable-
I'll also try to get some charts up as I plod along-
Thanks for the input! SD

[sd]

Friday was an early -out of work- day , and I had the opportunity to sit at the computor Friday afternoon, and listen to some CNBC as the market was tanking and had broken substantial support.

The financials have been tanking, and there was discussion and government personnel talking how they would have to nationalize the banks- Which essentially meant that the common stock holder would end up being the first one sold off.
The Bank of America CEO and comes out and makes a statement that BAC would not need to be nationalized- and a market reversal started underway.
After looking at the BAC chart, I felt there was enough substance in the Ceo's remarks and went long BAC, as well as FAS the financial leveraged. Somehow I immediately stopped out $.05 below my entry and I re-entered and made sure the stop was below the day's low.
At the EOD, the position was up 25% and I decided I would hold overnight.
I'm trying to upload a chart to photobucket and even with restting passwords, am unable to upload a chart-
Tomorrow, our family will be taking the concealed weapons class- Preparing for the future? Who Knows- best to be prepared for the unexpected. SD

[sd]

Thought I had made a horse race entry Friday pm with FAS, but apparently didn't hit the post reply.
Got in late Sunday pm with the over 21 members of my family qualifying for a concealed weapons permit. Self, Wife, Daughter, and Future Son-in-law= Yes, this is a comment on our future society.....


It's now Tuesday, and BAC is up 45% from my entry at the Friday close. There is some reward to holding for more than one day. I made the exception of trading ETF's in this position because it was a compelling momentum move.
However, 1/2 my position got taken out at a $3.80 stop- while the $3.70 stop was left untouched. I only see a low of $3.82 , so I question whether the position should have been taken out.... Tonight with a $4.73 close on an uptrend, I feel fairly confident. On the 30 minute chart, I am using a stop below the most recent swing low Sar, and that is at $4.50. The optimist in me has put in a $10.00 limit sell- LOL! I intend to follow this trade with progressively raised stops using Sar and the 30 /60 minute charts.
Well, while we like to honk our horns when our trade goes well............
I had also gone long FAS with a sizeable entry Friday, and was fortunate in selling it off in sections Monday by locking in profits with a portion, breaking just above even, and minimising the loss- All on Monday- Had I held, I would have been amptly rewarded with today's strong up move, but it came with too high a loss potential. Also, betting on a change in the predominant trend is risky business- and is not the time to bet an over weighted position which is what I had done.
I also went long URE and Qld, and by the time it was all over, I came out a bit pink on the outside, but not burned badly .
Barring a comet falling back to earth, the BAC trade will remain profitable and continue to be a net gainer .
The Gold -UGL and silver AGQ both fell off a cliff- 5% and 9% respectively. I did not have active positions in either, but the premise of using stops with SAR would have seen some serious whipsaws the past 4 trading days.
Note the Silver trade was almost 2x the gold move.
This may also be an opportunity to pick up either as a trade when the market loses it's momentary enthusiasm.
SD

[dg]

sd:

Don't feel unusual. I just got a concealed weapons permit about a month ago. I now carry a SW 1911 (45 cal) in special circumstances. I justify mine by the infrequent encounters of some dangerous wild animals and of rabid skunks and raccoons; but these are violent times and dangerous people seem on the increase (perhaps a correspondance with loss of jobs?). I think of it as life & property insurance. Hopefully I will never have to use it; but it's there if I need it.

[sd]

Hi DG,
I just posted some commentary with my recent horserace pick for this week, but I feel being prepared to not be a victim is essential for all of us.
A very smart choice on your part IMO. Hopefully neither you not my Family will find occaision to have to resort to it's use, but I'd much rather be prepared to be able to defend myself, than unwittingly become a victim is optimistic. To be prepared to not become a victim is prudent. . As a victim, you have nothing but the humanitarian impulses that may be contained in your attacker to determine your fate. That seems to be a contradiction in itself.
I think it is just as prudent for one to protect his or her own trading and retirement interests, as well as to protect their own personal safety. For many of the law-a -biding- this is a concept that is outside their perception of reality.
In my reality: My daughter's business was broken into a few weeks ago when she would normally have been working late, and she leaves each evening with cash and is usually the last person out.
In addition, in the small township she lives in, a rural farming community of less than 10,000 population, an 83 year old woman was recently robbed and raped in the past months ; and the police were unable to track the culprit ..... although they have some suspects, no one is in custody.
For Most of Us, these violations are a problem that other people have had to deal with in the past, and we can only hope that they will not become a reality for us or our family. I want my family to be prepared to expect the unexpected and unjustified being forced upon them .
We hear about it in the news , and think it only happens to those far removed from us. The reality is this can happen to the people next door or to us- the only difference is that we have the opportunity to not become a victim- as reprehensible as it may seem..

My wife has purchased a 12 shot Tauraus 380 Millenium semi-automatic. She also has expressed that she felt confident while handling her weapon on the range.
As we learn to protect and defend ourselves from the unexpected, we maintain control of our lives- Not a bad thing -all-in-all-SD

[sd]

While I had planned to post a chart, the candle is almost out tonight, but I wanted to share my foray into BAC. Not only is this not an ETF, but I decided I would hold and try to trade the trend. I actually held for 4 days.
While this was a "winning" trade, it was a substantially better winning trade had I bailed out earlier.
I entered at $ 3.30 on momentum news a week ago- Friday afternoon and decided that the pronouncements were large enough that this thing could reverse and go back to $7 resistance.
1/2 the position sold off at $3.80 as I recall, and the remaining half (stop was $3.70) remained unscathed.
I intentionally determined I would hold and see if I could max out a larger gain . Once the stock was clearly in profitable territory, that's not that hard a decision, but what about maximising profits? Since every swing trade is not a long term investment of years, but days and hours, netting the most bang for the buck is what it's all about.
I gave this trade plenty of range, using SAR on an hourly chart for stops as price moved up. Thursday pm I saw that Ken Leigh- CEO of BAC had flown to the Attorney general's office of NY to defend his handling of bonuses and TARP money with the Merril takeover- That was the evening news- OH, by the way, he didn't go there contrite and with his hat in hand, he flew his 50 million corporate jet at $5k an hour to go put that pesky attorney general in his place.
Of course, when I heard the news I was just in the middle of an e-mail to a friend telling him all about the 56% gain I had so stunningly made (on Paper) in BAC- Actually , I hadn't gotten to that bragging point in the e-mail, but I did know I would be lucky as hell to come away with any profit at all when I listened to the evening news.- The stock gapped down well below my $5 stop- and I was taken out at $4.40 during the open - still for a gain- but I like to think and trade in percentages- more relevant than $$$. If only I had dropped back to the 5 minute charts and sold @ $5.60 or so- LOL!
GREED kept me in the trade- for this past week- and it ended up still net profitable. but I could have squeezed a little harder with my stops.
I've become an advocate of viewing and acting on the shorter time frame charts. I'm trying to find a balance between the 5 minute chart and the daily, and I think it resides within the 30 minute and hourly from a practical standpoint, with the daily to determine the predominant trend. This is also more appropriate for my allocated time to spend , and gives additional information that swing traders that only look at the daily bars never see.
3 or 4 days does not make a trend, but it does give an opportunity to make a successful trade.
I'd like to encourage anyone that hasn't, check out the weekly, daily, and hourly charts, even 30 minute charts. The faster charts lets you get a birds eye view of what traders were thinking during the course of the day. Keep in mind the predominant trend is by the longer time frame chart, and expect the price action in the shorter time frame to stay within the boundaries of the longer time frame trend.
I think to access stockcharts faster time frames, you have to pay for an "extra account" - I think it's $24 or so a month and real-time charts are an additional $10- or about $1.80 a day.
I activated the real-time charting feature, and have been very pleased with it using 5 minute charts. Extra charts have a 20 minute lag . I'm going to be trying to trade longer than just intraday going forward.
I'd like to encourage other swing traders to try out the faster time frame charts as they do their analysis -
Good Luck- SD

[sd]

Both Gold and silver UGL, AGQ, have pulled back and now are trying to turn back up-
I actually expected these to continue to trade in tandem with a declining market, fears of inflation etc, and that is not necessarily the case-
There is a 2 day upturn in silver, and 1 day in UGL, and I'm willing to take 1 of the 2 trades - UGL with a buy-stop @ $35.50 about $.50 higher than the close. I'm looking at the daily chart and using the trailing SAR as the basis for entry-SD

[sd]

Inspired by Blygh 's posting his journal to catch up this past month.


I never got any traction or profits in the Gold trade-
Again, I find it's a case of my perception of what the market "should do" and finding that the market does just what it wants to.

Work had me with head down and tail up, and no more free time to try watching glimpses of the market intraday . Nevertheless, I threw a few trades at the market , without much conviction with the expected results. I felt I needed to try some swing trades, not taking up intraday time I couldn't find.
It also seemed the market had changed, and started putting together multi day upside rallies- All the while I believed each was a bear market rally and wouldn't have any legs-
Boy, did I miss the upside train. Again, it was a case of allowing my "belief" about the market to allow me to ignore what was actually occurring. Add to that, a gov't that would pull big p[olicy changes out of the hat, and I found I was sitting on the wrong side of the fence.
Last week I believed that the market rally was stalling, and I felt sure that it would sell-off sharply. I never believed in the rally, and also never felt we had achieved the big sell-off capitulation that should have preceded such a move up. That Friday I took a long on SKF, TWM, and was rewarded with a 15% gain Monday; I was prepared to try to hold for successive days .
The Market rallied off the Tuesday open and I managed to retain some profits , stops getting hit immediately.

At this point, while I listen to the increasing unemployment numbers, I only see gov't policy changes as the rationale for the market to be stimulated. Had a company wide meeting today of all our company supervisors, and the tone was simply- difficult times ahead, we're trying to maintain, but we don't know what the next 6 months will bring. There's a huge disconnect between the market and the reality of main street.

Of course the head of our company and I exchanged market views 2-3 weeks ago, where he said to me it's a great buying opportunity and I told him BS- it's a bear market rally and won't last. I had a larges serving of crow along with the BBQ.
At our lunch today, I had to acknowledge he had the timing right so far- the markets have decided it's time to rally, and I still have to ask why. Maybe it was the end of quarter rally.....Maybe it was the miraculous new mark to market forgiveness of the actual toxic values-held by the financials- Too complicated for this country boy why this should suddenly be allright when it was the albatross around the market's neck just a month earlier.
on a personal front, I'm getting ready to do a refi at 4.5% - and am reading "the Total Money Makeover" by Dave Ramsey.
I hope to get the rest of my financial house lean and mean to be able to withstand any of the speed bumps awaiting in the future.

I will have to reevaluate my trading going forward, and try to get past my personal bias as to what "should be'. and trade what is. I'm not willing to extend a wide stop-loss in order to try to stay within a trade.

Good Luck, SD

[sd]

yesterday I took a short position with SDS and TWM, and added 50% more today on the follow-through along with a POSITION IN fXP.
I'm using daily & hourly charts on these trades- My expectation is there will be some short term profit taking .
I'm using initial stops below the daily lows, and don't expect there to be a sharp market correction here, just a quick overbought trade .
SD

[sd]

I.I had hopes of 3-4 days of investor's getting jitters and taking profits- had to bail on the trades as the market futures went from negative earlier, and then to positive pre-open , I put in market sell orders for the open, and that proved to be the prudent thing to do.. I
I flipped to some long trades, and got chewed up on those as well, so I'm nursing my wounds and long AGQ, UVT, ROM-
SD

[blyghme]

Hi SD
Question - given the intraday volitility, do you have a strategy as to what time of the day is it best to buy and best to sell? I am testing the strategy - If Europe and Asia are up it and if the market is above its 50 day moving average for 3 days in a row -short the market around 10:30 and cover at 15:00

Blygh

[sd]

HI Blygh

I'm likely not able to give you good info based on today's intraday markets because I'm not trading with an intraday focus.
I'll post some of what I've done, tried, and see if any of it has any relevance for you in today's market.
" I am testing the strategy - If Europe and Asia are up it and if the market is above its 50 day moving average for 3 days in a row -short the market around 10:30 and cover at 15:00 "

What are you using chart wise, stocks/ etfs?




I'm in transition now from taking only day trades to trying to swing trade with holds for several days, and possibly longer. , The work schedule now only allows me a couple of 30 minute views of the market- morning break- at the market open to 10:00 and again at lunch. And sometimes that is not possible- And less time in the pm with spring now here in NC and numerous home projects ......

Let me add: I totally missed the big moves up this past month. Partly due to being very busy, and also because I didn't believe this rally would succeed , and each week proved me wrong - I was in disagreement of where the market direction would go.
Didn't make many trades either. Busy at work and home also, I didn't make the effort needed to try to trade.
I still believe that the bears are right, that we should retest lower, but the market seems to shrug off what reasons it would have to precipitate a major sell-off. Maybe next week.
When my short focused trades proved to not have traction this week, I immediately went to buy the long side. I sold at the open, and after 10 am went long. I decided that I would try this group of long trades using stops based on the daily or hourly charts.-


When I had my best runs daytrading, The market was even more volatile then, with sharp swings every couple of days in different directions:

Then: Using real-time charting, I would use the 5 minute to watch the open- As a general rule, I wouldn't trade the first 30 minutes, Often the market would go in one direction at the open, and then work it's way back in the other by 10 am- I think this is still likely a good period to wait and see. I would watch price and volume, and look to see if the trend was slowing or gaining momentum. I threw on some moving averages, and a fast macd indicator. I also put an initial stop in place with the entry, and if I was taking a reversal of the 5 minute trend, I would use the lowest bar prior to my entry to set a stop. If the position was holding positive and gaining, I'd move my stop up to break-even as soon as possible.
If price retraced lower from the open and then tried to take out the open high, particularly on gap opens, I figured there was profittaking on the gap, but if the momentum looked like it would push higher, and exceed the open, I would use that as a buy-stop entry.
If price declined substantially lower from the open , I would also use attempted rally bars that failed as a level to reenter - I found it easiest to use multiple moving averages to see when that change of trend appeared to have greater potential. It is my sense of things, that waiting for the ma crossover to occur- along with the fast macd line to get above the 0 line - proved the most reliable.

If price rolled over, and then dropped below the fast ema, it was a quick indication that it was time to lock in some profits-
Well, that was a roller coaster that required full-time computor screen time, and often there would be numerous pullbacks and then greater upside on the 5 minute time frame.

I eventually started referring back to the 15 minute chart and using it,particularly once the initial trade was profitable, and the fast ema on it as a basis for stops to stay in the trend longer. Also, I favored parabolic Sar for stops, particularly the slower sar on the faster time frames. The key there was to keep the trade net profitable and not let a winning trade become a losing trade.
I would sometimes sell 1/2 of the trade to lock in profits, and sometimes would add more to the trade if it was moving up strongly.
I wasn't able to spend all my time monitoring trades, and would try to get back at 3:30 to check on positions. If I was still in the position, I'd drop back to the 5 minute charts with the fast ema and- if price was trending up, I'd keep raising the stop with each bar to the prior bar. If Price rolled over , dropped below the fast ema heading into the close, in those last 30 minutes, it was time to get out., Traders were taking profits.
by then, I'd also have a market sell order ready along with the adjusted stop-loss, so I'd hit the Transmit- There was a great sense of satisfaction in maximising the gain this way- Many times it proved to make a 8% gain over what would have been only 4% if I held all the way to the close. Using the 5 minute chart will work well in the last 30 minutes if price is trending strongly- However, the downside is it's prone to greater whipsaws that a 10 or 15 minute, or hourly will give progressively less.

For intraday trading, you may want to only use the 5 minute for monitoring the open and close to witness what is actually happening, and use a 15 minute chart , along with an hourly chart to see where price is within the prevailing trend of the larger time frame- And also where price is in relation to the daily- If the daily trend is up, the hourly and 15 minute also are heading in the same direction, it's safesr to go with that flow.

If price has been extended, and say the daily chart has gotten ahead of itself, there will likely be good opportunities to determine a better entry as daily price comes back to the trend line, and the hourly chart confirms an upside move.
Again, you have to be careful in interpreting moves on a faster time frame chart - Look to the larger time frame chart to see where price seems to be trending - and I'd use the daily as the primary trend.

Market sentiment plays a huge role, so where the market decides to go, is where we need to follow.
Note- If the US market starts to sell off, then you should look to short China, , FXP, or the Emerging mkts if they're up strongly.- They usually follow the us markets .
As long as the US markets are trending up, and they have been so for the past month, betting against the trend has to be for the nimble, ready to exit as soon as the trade goes against you.

With taking the swing trades -long- I am now having to use a greater range stop than I would care to. Logic tells me we are overdue for a market correction, but until it happens and the present up trend is broken, I'll have to go with what the market is saying. Trying to sense how the market is setting up for the next day - shorter term charts help give that intraday look.
Check out the Market summary page - to get a sense of what thge larger markets are doing in relation to one another. stockcharts.com/def/servlet/Favorites.CServlet?obj=msummary&cmd=show,iday[Y]&disp=SXA

Sorry so verbose- Hope you find something relevant to your situation, while I ramble on about mine!

Good Luck, SD