Trade Ideas Blog

Strategy-Session: 2 Patterns You Want to See As They Happen

Jan 28, 2009

I mentioned in yesterday’s post that a bunch of traders gathered online to see and hear my present how Trade-Ideas PRO can model any pattern.  

They let me have it.
I took almost 20 descriptions 30 minutes before the presentation began and picked 3 to model and walk everyone through the process of modeling the requested chart patterns.  Here’s what we did with 2 of them (I’ll save the 3rd for another post):
Pattern Question: “How can i set up a scan that will look for 45 degree power trends?”

Click on any of the icons below for a detailed explanation of each alert/filter.
Alert:

Running up (intermediate) Running up (intermediate) Ratio: 2

Filters:

Min Price 5 (Dollars)
Max Spread 15 (Pennies)

Max Distance from Inside Market 0.2 (%)

Min Daily Volume 300,000 (Shares / Day)

Min Current Volume 2 (Ratio)

Min Up Days

2 (Days)

Min Up Candles 2 (10 minute candles)

Min Up from the Open 0.05 ($)

Min Position in Range 50 (%)

Min Position in Previous Day’s Range 90 (%)

Min 20 above 200 Period SMA (5m) 0.05 (%)

The scan of the pattern is only half the battle.  The other half concerns the trading rules that generate the highest odds of generating a profitable trade.  Those readers who use our pattern-based backtesting tool, The OddsMaker can model their position management rules and determine what probabilities they have of consistently making profitable trades.
For example after backtesting several different position management scenarios for these event over the past 30 days, I discovered that (by far) the best way to profit from this event with an intraday hold time is to sell SHORT every opportunity presented from this scan.
Pattern Question: “Scan for relative strength of a stock to market?”

Alerts:

Sector breakout (from open) Sector breakout (from open) 3 (Minimum % up) 

Positive market divergence Positive market divergence 3 (Minimum % up)

Filters:

Min Price 5 (Dollars)
Max Spread 15 (Pennies)

Max Distance from Inside Market 0.2 (%)

Min Daily Volume 300,000 (Shares / Day)

Min Up 5 0.1 (%)

Min NASDAQ Up 5 0.05 (%)

Min Up from the Open 0.05 ($)

Min Position in Range 92 (%)

Min Current Volume 2 (Ratio)

This strategy also appears to do well when I sell SHORT each opportunity intraday.  The OddsMaker showed that trading only the morning session (after waiting out the first 30 minutes) proves to be the time that generates most high probability trades.  That’s great knowledge with which to go into trading.
See if that works for you. To get the opposite view of these strategies, configure this and then use the “Flip” button.

Footnotes and Related Articles:

  • Check out the whole category of articles written about patterns we’ve modeled from various other authors and articles we’ve come across called: Strategy-Sessions
  • Use The OddsMaker to further understand what trading rules would produce the optimal trading outcome for this strategy in the recent market. Trading rules would include the answers to these questions: How long to hold each opportunity? When during the market session should this strategy be traded? Where should the stop loss be set?
  • Remember that these set-ups are sketches meant to give you an idea how to model your own trading plan. Use this ‘as is’ or modify it to your own liking as many others do. Know, however, that Trade-Ideas.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, alerts and all other features are for research purposes only and should not be construed as investment advice
  • See this video on our Collaborate function to learn how to open these strategies inside Trade-Ideas PRO