First Hour Breakout Strategy

[rkkarnani]

Oh absolutely Aw10. There are some parts in this book which can be very useful in any trading system. Most of his techniques have been used by Thomas Bulkowski. He has a site on it. Some good information is available there.

Tc.

I have this document "Encyclopaedia of Chart Patterns by - Thomas Bulkowski".
If interested it may be downloaded from this link :

http://www.4shared.com/file/245809263/71ed467e/Bulkowski_Encyclopedia_of_Char.html

 

[Karanm]

today

at 10:00 Hi = 815.9, Lo = 802.10, range = 13.7.

as per system rules, its NO trade since range is more than 12.

even if traded, short was triggered at 802.10 and low was 793.25, it didnt meet our target, but closed at 794.4 and gave good profit !!!!

Sir, what is the range for Nity Futures and what will be the Stoploss.
Regards
Karanm

 

[AW10]

Can someone explain me what does the last sentence mean?

1. We have to average for 10 days.
2. (Open - Closest Extreme to Open) - This is the point where I am at a loss.
Let us study example.
Open 75 High 75.50 Low 74.40 close 74.70

Here we have to take 75 since open - closest extreme is 75.50 (high) or 74.70 (close).? (I think we should taken high)!!!!!!!!!!!!!!!!!

Hi Veluri,

Stretch = Open - Closest Extreme

This means Stretch = Minimum of (OPEN - LOW) OR (HIGH - OPEN)

If (OPEN - LOW) is smaller than ( HIGH- OPEN) then take (OPEN - LOW) otherwise take (HIGH - OPEN) as stretch for the day. Then calculate 10day average of stretch. Use the Average of Stretch on previous day for today's calculation of the limits along with the first hour high and low of today.

-Anant

Veluri,
Anant has beautifully explained the calculation part of stretch as discussed by Toby.

as I understand it, the move from open to high indicates and bull power of the day.. and open to low indicates the bearish power of the day.
By taking the minimum of these 2, we know the minimum power demonstrated by either party in a day. You average it over 10day or any other period to smooth it further and get minimum force that bull/bear have been showing currently.
And then he has used this minimum force (i.e. distance) in ORB strategy.
If tomorrow, the mkt is within this mini force zone, i.e. no single party is dominating and hence it is not clear entry zone. But once this minimum force area is crossed, then we know the winning party of the day, and take trade according to it.

By adopting this "Concept of stretch", you adjust the calculation for current volatility . When mkt is contracting for few days, the stretch gets narrower and when mkt is expanding, the stretch goes wider. This tunes the entry levels automatically for current volatility.

And if you have got this concept, then it is left to your imagination to use this knowledge to develop any other system, tweak from 10day to 5days or 20 days, extend it to weekly/monthly charts for swing trading etc.

As always, these ideas need to be backtested to show the reality else it is good for reading and forgetting them.

Hope this helps.
Happy trading.

 

[bandlab2]

i think its very important to keep the startegy simple. thats why i trade ONLY one stock ie TataMoto. may be we can add couple more. but there is no need to 'find' the best stocks every day based on some logic like NR, trending etc. you will spend more time, energy in identifying the stocks rather than executing the simple strategy of placing order, monitoring the trade.

if you trade with the same 1 or 2 or 3 stocks every day, you will get to know how the stock behaves and any news on the stock etc. you can increase the lot size if you have more money.

money management is key to any strategy. so always keep the risk to 0.5% or 1% EVERY DAY. dont trade same qty EVERY DAY. instead derive the qty based on the risk. if your capital is 100000 rs and risk per trade is 1%, then you can lose max 1000 rs. the range is 10 rs, then you trade 1000/10=100 qty. next day if range is 5 rs, then trade 200 qty. this aspect is very very very important. also from this week i am going to move my stops to 50% of range (from 100%) if we are in 0.5% profit. you can device your own exit strategy.

thanks AW10, sunil, asnavale, rkkarnani , raunak agarwal and others for their views

 

[SwingKing]

I think one has to do a basic Math first to determine if these trades are profitable. The strategy mentioned by Bandlab is good. I'd say it is the adaptation of work by great traders like Toby Crabel. But adaptation has to be appreciated. In particular, when bandlab has mentioned about following just one stock (here Tata motors), it gives trader a distinct advantage. By doing this, a trader is being both Market Specific (concentrating on one stock) and Strategy Specific (first hour breakout) . With the combination of these, any trader is bound to increase his odds of winning.

However, there is one thing which will work against most of the traders using an Intraday strategy and that is the Time factor. We all trade to make money in the markets. And if one uses basic math, he can find out that most money is made when you have trades which last longer (that is the trades which have time on their side). Intraday trading is for highly professional traders. Sooner or later everyone realizes that after having lost sizable amount of their equity.

Hence, I will advise all the traders here to try and adapt these strategies on a longer time frame. That's where all the money lies. You can scalp your way for gains of 0.5 - 1.0 % but it will take just one trade to wipe out the profits of many trades. This is how trading works and most of the traders who have years of experience will agree to this.

Good work bandlab. Its always good to see innovation and adaptation.

 

[Karanm]

I think one has to do a basic Math first to determine if these trades are profitable. The strategy mentioned by Bandlab is good. I'd say it is the adaptation of work by great traders like Toby Crabel. But adaptation has to be appreciated. In particular, when bandlab has mentioned about following just one stock (here Tata motors), it gives trader a distinct advantage. By doing this, a trader is being both Market Specific (concentrating on one stock) and Strategy Specific (first hour breakout) . With the combination of these, any trader is bound to increase his odds of winning.

However, there is one thing which will work against most of the traders using an Intraday strategy and that is the Time factor. We all trade to make money in the markets. And if one uses basic math, he can find out that most money is made when you have trades which last longer (that is the trades which have time on their side). Intraday trading is for highly professional traders. Sooner or later everyone realizes that after having lost sizable amount of their equity.

Hence, I will advise all the traders here to try and adapt these strategies on a longer time frame. That's where all the money lies. You can scalp your way for gains of 0.5 - 1.0 % but it will take just one trade to wipe out the profits of many trades. This is how trading works and most of the traders who have years of experience will agree to this.

Good work bandlab. Its always good to see innovation and adaptation.

Sir, What is the way to find trades which will last long.

Regards
Karanm

 

[SwingKing]

Sir, What is the way to find trades which will last long.

Regards
Karanm

The answer to this lies in what Aw10 had written earlier.

And if you have got this concept, then it is left to your imagination to use this knowledge to develop any other system, tweak from 10day to 5days or 20 days, extend it to weekly/monthly charts for swing trading etc.

You need to adapt the concepts to longer time frames. If you need something for start, just follow the system which Anant/SG have on stock to watch out thread. There are even some other excellent threads by users like Aw10 which you can follow and see how to put time on your side to profit from trades.

Tc.

 

[iTrade]

i think its very important to keep the startegy simple. thats why i trade ONLY one stock ie TataMoto. may be we can add couple more. but there is no need to 'find' the best stocks every day based on some logic like NR, trending etc. you will spend more time, energy in identifying the stocks rather than executing the simple strategy of placing order, monitoring the trade.

I agree with you. People with expereince like you post their strategies and new ppl like us are never satisfied with what is being offered, and so we tweak n tweak all good strategies till it stops producing results. I have seen that with 2652 thread as well....I am not saying that all tweaks are bad, but we should stick to something unless we find that it is not producing results at all.

 

[iTrade]

To raunakagarwal & AW10 & bandlab2:
Guys - I saw some of your superb posts on this forum, and the kind of knowledge you folks share in all threads. So, I am asking this question to you.
Are you really earning from intraday trading? I mean, are you making a living out of it. I am not asking how much you earn, but the answer can be as simple as yes or no
Sorry to post this question here, but found both of you watching this thread and I am on the verge of quitting trading

 

[goodstocks]

The success of this strategy for Tata Motors today is partial/negligible and finally hit the stoploss on the down side.However, Tata chemicals gave 50% of the strech and worked succeessfully.