Trade Ideas Blog

Strategy Session: Over Extended Up Move – TAS&C November Article

Oct 23, 2008

 Traders’ Tips

 November Issue

“With globalization, the big [countries] don’t eat the small; the fast eat the slow.” Thomas L. Friedman (Op-ed columnist, New York Times)

Mr. Friedman’s observation easily applies to traders.  For this month’s Traders’ Tips, we’ve provided a strategy that uses speed to uncover a backtested and winning advantage in this volatile market.  It’s based of course on the Trade-Ideas inventory of alerts and filters and backtested with trading rules modeled in The OddsMaker.

This strategy fades certain movements to take advantage of our market theme that today’s markets are – and will continue to be – very volatile.  Our hypothesis, given this market theme, states that stocks moving up at least 75 cents in the last minute tend to be lower over the next 15 minutes.  The idea is to put short offers out at the time of the alert.  Please note: If certain categories of stocks are excluded from short sales by the government, simply create a short sell excluded list.  A video describing how to edit symbol lists appears here:

Provided by:

Trade Ideas (copyright © Trade Ideas LLC 2008). All rights reserved. This sample Trade Ideas strategy and its configuration are for educational purposes only and may be modified to further reflect a trading plan.  Remember that these set-ups are sketches meant to give an idea how to model a trading plan. Use this ‘as is’ or modify it as many others do. Know, however, that and all individuals affiliated with this site assume no responsibilities for trading and investment results. The indicators, alerts and all other features are for research purposes only and should not be construed as investment advice.

 Description:  Over Extended Up Move

Copy this string directly into Trade-Ideas PRO using the “Collaborate” feature (right-click in any strategy window)

Where 1 alert and 6 filters are used with the following specific settings:

·         Running Up Now: 0.75 ($)

·         Min Price = 10 ($)

·         Max Price = 300 ($)

·         Max Spread = 5 (pennies)

·         Max Distance from Inside Market = 0.1 (%)

·         Min Daily Volume = 500,000 (shares/day)

·         Min Current Volume = 3 (ratio) 

— by Dan Mirkin, Senior Managing Partner, Trade Ideas LLC,