Sunday, June 1, 2008

I'M GONNA TRY

...to put everything that I do to prepare for the next trading day, the scans I run and the different styles I use to chose stocks to trade both long and short.
No doubt I will forget a few things and will update this post as I remember different things.
I'm gonna try to get it all in this 1 post because the last month I've been asked by quite a few a bunch of questions regarding my trading style.
Please note that very few of these ideas are mine.
Most have come from Muddy and his blog.
It took me many months but I think I'm on the track for a very bright trading future, thanks to him.

First, every weekend I run the top 40 dayrangers from last week. These are great to watch for green to red or red to green.

The stockfetcher scan:
"show stocks where the average day range(10) is above 8 percent and close price is between 1 and 10 and volume is above 300000."
With this scan I have a column added ADR(30) and I rank the top 40 in order top to bottom highest ADR(30).
For next week the list is:
DCR HYHY FPP LNG SSBX PFB WCI XRIT YTBLA TPLM SYNM KIRK SPF UNCL RTK ROIAK ICOG MMPI LCC TGC PEIX DCGN EEE UAUA XJT ENT QTWW KYUS NWA BSHF DSUP GFG CPSL BCON RCH EGR EBHI AKNS ATSG LGND

Next I scan for stocks over 8% gain from yesterday,this I run every night. This scan is long biased as the stocks may have more in them to run another day or two.
The scan:
"show stocks where close gained more than 8 percent over the last one day and price is between 1 and 20
average day range is above 3
Mondays list:
HYHY WCI KIRK UNCL ROYL EGR SWTX LGND PTEK CALC NCOC GLOB DGLY LLNW DPDW MERX MAG FRPT ALLI VITA NSU TRR JUPM ITI OZN QBIK COOL VVTV QUIK IDIX NENG EXAS HGRD TGX PLX SLTN FIRE VG SHFL MRVL

Next I scan for over 15% gainers over the last 2 days. This is run nightly too and is short biased.
show stocks where close gained more than 15 percent over the last 2 days and price is between 1 and 20
average day range is above 3
Mondays list:
HYHY SSBX UNCL MMPI DSUP PCSV EGR SWTX KOSN LGND TRX PTEK TRMP MAG FRPT ALLI TRR ITI QUIK ULBI HGRD TGX PLX FIRE SHFL MRVL TRIB WIND MESA GNTA NEXC HSOA GNLK SNUS CHTR SPSN SLTN QBIK COOL NENG

Next I run the The Combo scan which is stocks that have run the highest amount of times 10 to 19% in the last 100 days ranked in order of highest times to lowest times run. This is run on the weekend too as the watches change little from day to day. This scan is long biased.
On Stockfetcher.com it's known as the RunForestRun scan.
I then cherrypick the ones over 9% in the ADR(30) column.
EDIT:At the time of this post the average ADR(30) was lower than the average ADR(30)than now at the date of this edit,2/17/09.
Therefor I now use ADR(30) 12% and above to cherrypick.
Thus the name Combo, combo of the RunForestRun scan ( found on Stockfetcher) and Muddys high ADR(30).

Here's the SF code for the scan:
close is between 1 and 15
average volume(90) above 50000
average volume(10) above 250000
offset is 0

set{volcnt, count(volume above 50000, 100) }
set{volzero, count(volume equal 0, 100) }

set{x1, high - open}
set{Long_Profit, x1/open }

set{C1A, count(Long_Profit > .04 , 100)}
set{C2A, count(Long_Profit > .09, 100)}
set{C0010, C1A - C2A}

set{D1A, count(Long_Profit > .09 , 100)}
set{D2A, count(Long_Profit > .19, 100)}
set{D1020, D1A - D2A}

set{E1A, count(Long_Profit > .19 , 100)}
set{E2A, count(Long_Profit > .29, 100)}
set{E2030, E1A - E2A}

set{F1A, count(Long_Profit > .29 , 100)}
set{F2A, count(Long_Profit > .39, 100)}
set{F3040, F1A - F2A}

set{G1A, count(Long_Profit > .39 , 100)}


and add column daychg2
and add column C0010 {4_9}
and add column D1020 {10_19}
and add column E2030 {20_29}
and add column F3040 {30_39}
and add column G1A {40+}
and add column C1A {ttl}

sort column 6 descending


Here's this weeks watches:

SPF SYNM QTWW ABK DCR GETG ICOG UNCL RTK MBI XJT FBR NYNY FBTX EEE MMPI BDCO PKT FTWR KUN FPP ENT PFB KOG HDSN TNRO IMB WCI SSN ROIAK LGDI GFG ROYL HDY JAZ HEV GRZ NBF YTBLA LCC

Next I scan for red candles at, or even better, out of the UBB (called floaters). This of course is run nightly and is short biased. The red floater is often the kiss of death imo.
I use this for watches to short in addition to watching those to short
from the 15%+ gains in 2 day scan mentioned above. I always watch the ones with a date offset of 1 also cause these tend to go down pretty nice over a few days period.

Here's the scan:

stocks where close is above upper bollinger band(20) and close is below open and price is between .5 and 20 and volume is greater than 200000
offset is 0

Mondays watches:
WTSLA UFS CWTR COCO CKR CMGI SINO SCS NSIT STSI HRZ RDEN ITI TRMP PCSV SMRT MMSI CYBX TMM

Then I scan for the top 120 RunForestRun stocks for next week. You really need not do this but since I use 3 monitors, ONE IS ALWAYS RUNNING THE SCOTT SCROLLING HOD LIST, I can watch a bunch of stocks in seconds by flipping fast from watchlist to watchlist.

And then the morning an hour before open I begin loading the Pre-market leaders from Interactive Brokers onto a watchlist as possible long/short opportunities.

It's not as many watches as you might think because many of the stocks are on multiple lists.

Ok, now some of my thoughts on what is important to me for successful trading.

1. I can not live without the scrolling Scott hod lists.
Muddy showed me how it was possible to get 20,30,40,even over 50% profits in minutes to a few hours using this. Last week I caught MESA and LGND almost at the start of their runs.
Never had them on any lists,only saw them on the hod list,which brings me to this.......

2. KNOWING former runners and stocks that have hit these scans I run more than normal stocks do. Both MESA and LGND I knew from that way.The only way to get them in your head is to study each nights scans and either write down multiple repeaters or try to remember them.
Watching hours of scrolling hod list helps a bunch too.

3. I like to trade around even dollar marks for under $10 stocks plus .50 marks for the $3 and unders.

4. I really watch the "late hits" that appear on the pre-market leaders board, the ones in the 20 minutes before the opening bell. Many of these run longer than the ones that had been on it since 8 am EST as West coasters tend to wake up late:).

5. I really like the ones I scan for for the "red to green" and "green to red" reversal.
Red to green means going from negative to positive on the day and vice versa.
Since almost all my scans include high dayrangers I think you can see why.

6. If I can I really like to daytrade the lower float stocks.

7. I also like to trade lower volume new 52 week high stocks.

8. I love finding pump and dumps and fluff press release and/or paid promoter stocks.
You need to watch like a hawk cause when they come down they can fall super fast without warning,if you can catch the start of the fall they make great shorts.That's what I'm always looking for,the short opportunity which brings me to.....

9. I like trading with IB,not just for low commish but mainly because you can short almost any stock there regardless of price plus their premarket leader list rocks, it shows in order the amount of time the stock has been on the list,you can catch the real late hits in the last 20 minutes real easy this way.

10. Besides Muddy's blog I read only one other ( since I daytrade I really don't care which direction these other bloggers think the market is going ) Its http://www.timothysykes.com/ for pennystocking and shorts.

11. IMO Stockfetcher is the best $9 a month you can spend if you are looking for a screening service.

12. Both Muddy and I have been in the mutual fund CGMFX for a long time, good place we've found to park trading profits.

13. I like to watch for the high gap open stocks,that are NOT due to earnings, for a fade between 10 am and 10:45 especially.

14. Intraday chartwise I really like the 10/60 sma cross for entries and exits. I used it a bunch when I first started not so much now cause I trust myself a lot better knowing the symbols.
Do a search for "10/60" in the search blog box to see some charts .

15. Daily chartwise I like the "Muddy zone" on UBB pullbacks and "waiting for green " with these to bounce out of this zone.Do search blog box for "Filters I Use". Muddy explains how to use this zone.He recently has widened the zone a bit to EMA10/SMA30 for better visability.

I like to follow stocks like ROYL that had a white candle being pierced by the UBB on a vol increase,see ROYL chart 5/2/08, 5/13 the bottom shadow went right into this zone,the next day it went green at 3.32,it's now at 5.79, ironically bouncing off the EMA twice during this run.
16. Also daily chartwise I like to use RSI(2) as an indicator of STRENGTH when the white candle is being pierced by the UBB. I like to see 90+ RSI2 in this situation,the nearer to 100 the better.
Most look to short these kind and I say they are dead wrong; this is an indicator of a strong stock not a sign of weakness.

Using ROYL again as an example look at RSI2 on its price/vol breakout day 5/2
Its RSI2 that day was 99.62 about as high as it can get!

17. As mentioned in the scans I run, I love to find red candles at the UBB and especially red "floaters" above the UBB. Then I wait for red the next day to go short. As Muddy used to tell me, "Red floaters kill!"

If I think of other tips that might be useful I will update on this post. I hope this will help clarify what I've been taught and how I try to put it into play for the average person just like me.
I feel I have a tremendous edge with this stuff, hope some of you find this helpful.

Edit by Muddy 1/1/09
Here's another filter/scan written by TheRumpledOne,TRO,that I know Mike ran and that I run that I guess Mike forgot to include in his original post.
TRO graciously gave this to me after we had talked about trying to find these.
He has posted his version on Stockfetcher that can be found on the RFR forum thread,3rd page dated 11/15/07 8:44am
The version Mike and I use is a modification showing the highest risk/reward(in our opinion)stocks,ranked in order of total points for 10%+ runs plus ADR(10). This scan is for stocks $1-15. We also run it with price between .20-$1.

The SF code....


/* RUN FOREST, RUN for 1 day 8 pct loss, 2 day 10 pct loss or more */
/* and fails */

set{ DayChg1 , day change}
set{ DayChg2x , close - close 2 days ago }
set{ DayChg2y , DayChg2x / close 2 days ago }
set{ DayChg2 , DayChg2y * 100 }

set{CCb,days(close is above close 1 day ago,100)}
set{CCa,days(close is below close 1 day ago,100)}
set{ClxCl , CCa - CCb}

set{ pick1 , count( DayChg1 below -7.9999 , 1 ) }
set{ pick2 , count( DayChg2 below -9.9999 , 1 ) }
set{ pickx , pick1 + pick2 }
set{ pickx1 , pickx 1 day ago }
set{ pick3 , count( ClxCl below 0 , 1 ) * pickx1 }
set{ pick , pickx + pick3 }

add column DayChg1 {Day1}
add column DayChg2 {Day2}

/* Long Profit Percent Statistics Display */

set{volcnt, count(volume above 1000000, 100) }
set{volzero, count(volume equal 0, 100) }

set{HiOp, high - open}
set{Long_Profit, HiOp/open }

set{B1A, count(Long_Profit > .01 , 100)}
set{B2A, count(Long_Profit > .05, 100)}
set{B0010, B1A - B2A}

set{F1A, count(Long_Profit > .05 , 100)}
set{F2A, count(Long_Profit > .10, 100)}
set{F3040, F1A - F2A}

set{I100, count(Long_Profit > .10 , 100)}

and add column B0010 {1_5}
and add column F3040 {5_10}
and add column I100 {10___}

pick above 0

close is between 1 and 15
average volume(10) above 250000

sort column 10 descending
set{total,I100+average day range(10)}
and add column total
and add column average day range(10)












20 comments:

johnnyvento said...

13th you are a gold mine and very generous to share. I've spent the past couple of weeks just trying to compile what you have detailed in this one post.

One thing I would like some clarification on is the opening 30 minutes. The hod list is basically unusable then imo b/c everything is at the high. Do you have another way to select for high priority entries? I have been experimenting with those stocks that are B&A flipping the fastest, this may not be the best method but I would appreciate any insight on this.

I take it you are rapidly flipping through the watchlists in order to help you spot hods that show up in the different color, but you are obviously not relying on that since you are able to pick up symbols not on the watchlist. Are you constantly pausing the list or are your eyes that fast?

johnnyvento said...

About the west coasters- you guys say that they wake up 'late' but the market starts at 6:30am and with an hour of premarket scanning and planning that is 5:30am. Therefore a west coaster is actually getting up much 'earlier'. It is possible that there are west coast traders that wake up 'later' but there is no way that a serious trader would miss the opening hour of trading unless they deliberately wanted to... and anyway that strategy would apply equally to all time zones. It's more likely that the late pre hits are missed because everyone is up early doing their DD and already has trading strategies in mind 10 minutes before the open. If the explanation was simply that west coasters woke up 'late', then ALL of the premarket stocks would pick up later in the morning due to Pacific time zone trading increases, there would be NO differentiation between the early and late pre hits.

Sorry to rant on that, the phenomenon is certainly real, but the explanation for it is pure BS- stop it with the west coast prejudice-

machismo said...

Everyone Bookmark this post and use it. Thanks 13th.

machismo said...

I did some scans on RFR and Combo and these are the ones I had picked: bxxx csgh edvc fxpt getg grz hdsn icog mkytd mmpi nbf nnvc pwsv roiak sunv uaua wavx wci xrm

I see some of them in your list so I feel on right track. Also 13th if you dont mind, how many trades do you think you have at end of the year.

Rick said...

Holy Cow, what an awesome post. Thank you so much for taking the time to write it all down!

Anonymous said...

Tell me if I am crazy--I entered the15% gainer scan exatly like it was written in the blog into my filters on stockfetcher and trr mrvlwind mesa gnta nexc hsoa gnlk snus chtr spsn sltn qbik cool neng
did not show up on the scan. Where did I go wrong????

13th said...

johnny,

I'd avoid the first 30 mins if you are uncomfortable with it,plenty of plays later in the day.
Yes my eyes are finally that fast with the hod list.
Takes alot of practice.

And I stand by what I said about the "west coast" factor.
I am not at all prejudiced against West coasters ( who doesn't love California girls? )but I say my theory is in no way BS.
I know a bunch of WestCoast traders that tell me they miss the late hits because they are doing their DD on the ones they see earlier as they DO WAKE UP LATE and miss doing DD on the ones that hit pre the last 20 mins,but believe whatever you want...you won't change my mind.
BTW I have nothing but respect for WC'ers that can up at 4-5 a.m. to get ready for the trading day.

13th said...

machismo,

probably around 2,500 to 3,000 trades will be this year.

13th said...

Rick,

you're are very welcome.

Anon,
Sorry about the confusion with 15% list.
Because Scott holds 20 watches each on a watch page,if I'm short an even 20 or 40 I will change it to "between 14 and 15% and even go "between 13 and 14%" and even do price between .10 and $1 to pick up 20 or 40.

Michael said...

"probably around 2,500 to 3,000 trades will be this year."

13th, have you ever run the stats on your own trades i.e. percent gainers 0-4, 5-9, 10-19, 20-29, etc as well as losses as a percentage of total trades

just curious about what that would look like for a successful trader

jv said...

haha no use creating a feud when there are no data to use for analysis... still find it hard to believe that serious traders wouldn't get up in time but I'll accept your anecdotal info

seriously, you can read the hod at the open? I want to learn the best way to trade at the open but is seeing on hod enough, perhaps this can be a topic in another live chat if you ever do another one

johnnyvento said...

great mention on Timothy Sykes blog, he should let you post original material over there which would drive even more traffic over here. Your following is growing Son Of Muddy

Zach said...

13th,

Great post, thanks so much for the information.

As a new trader, I love your explanations and would love to hear about what you recommend for new traders in terms of educating themselves and figuring out the market. I'm not really interested in day trading but I would love to see the trends you see and what not. Any information would be extremely helpful.

Thanks again

DaBear said...

Wow 13th thats amazing, all of it went way way over my head. Have you ever tried just doing resistance trading? I look forward to trying to see if any of this is use full to me. I have bean reading all of your comments on TIM and you realy seem to know what you are doing.

AntonellaB said...

13th, I been in the chat room on the sideline, learning. 1 question, your method, and theses scans by SF, you mention ADR(30, is that phrase included in your scan process already: example, First, every weekend I run the top 40 dayrangers from last week:

"show stocks where the average day range(10) is above 8 percent and close price is between 1 and 10 and volume is above 300000."

13th said...

AntonellaB,

For the dayrangers I use ADR(10) but I have a global setting that makes ADR30 column appear on each of my scan results

thenakedsingularity said...

13th, thanks for this awesome post. I am trying to study your method and got myself an account on stockfetcher to experiment. One question - how do you limit your result to top 40 results after sorting? I can't seem to get it to work and can't find that on the manual.

Another one - is there a way to compare multiple lists and identify items that exists on all lists?

Thanks again!

imexplosion said...

Muddy,

Very interesting new scan. One question: is there any particular reason the results are sorted by 10%+ runs (column 10) instead of Point Total (column 11)? Based on your description on thedarkside blog, it seems like the Point Total is what you feel is most important in the results?

Thanks, and Happy New Year!

Banana said...

Good question. And is the code wrong when the 10th column was left open with "10___". I might be splitting hairs here, but should it be "10_19" and sort column 11?

thanks Muddy.
Banana

Jeff C said...

Banana, I grabbed the code from stockfetcher's forum and it's identical to the blog post. FYI