A shift in techniques for core strategies

I thought this was an important concept to talk about for any trading experience level:

I shifted my techniques for entry for one of my core strategies or trading methods. Call it what you want. For me, a strategy is a set of entry and exit rules you use to enter the trade.  The technique allows the trader to slightly shift his/her methods of entry against the core strategy.

The past week I have started to “anticipate” break out moves prior to range expansion days. I like getting in small then adding as my thoughts firm up and the tape tells me what can happen. This only works if the markets are stable and trending. I don’t like buying pure breakouts after the fact so I either wait for pull-backs, or in this case, I like to get in small and trade around the ranges to keep risk low. Then leverage up at the key moment. This has worked well for me in both equities and currencies. But, this can go to hell- in- a- hand basket if the markets reverse trends. That’s why it’s very important to start off small, I keep losses small and like to trade and manage risk around ranges until they break, if they break.

The only problem with this technique if you can often miss the explosive stock of the day or huge trending day in the $SPX due to management of other trades as your pick wait to break out above resistance. Or your totally wrong and in the wrong stock(s) as the markets extend higher without you.

Some chart examples are:

CL, MUR, AUDUSD, AUDCAD see this post on the AUDUSD:

http://wp.me/p2oNy1-5U

Other stocks that worked out very well for me with this “technique” were:

POT, MOS, MON, CF.

DAILY BAR CHART : CL

DAILY BAR CHART : CL

Top and bottom charts: The blue down arrows are the breaking point that I anticipate should happen in a strong market. Again, this can take days or even weeks to break, if they break?  Once I see range expansion (usually on a series of 60 minute bars) I leverage up as price breaks. This keeps my cost down due to prior entries in the lower part of the ranges.

DAILY BAR CHART : MUR

DAILY BAR CHART : MUR

DAILY BAR CHART: POT

DAILY BAR CHART: POT

This what should happen as your trade the range very small patiently wait to leverage up with range expansion.

DAILY BAR CHART: MOS

DAILY BAR CHART: MOS

Nick Pirraglia

TradersThinkTank

@Liquid_Trader

About Nickolas Pirraglia

Nick Pirraglia started his career in trading in 1991 after returning to the US as an Army Officer deployed in Iraq. He began as a bond broker and worked his way into trading. Expert mentoring, hard work and a disciplined approach to the markets has allowed Nick the ability to maintain a very successful career in Capital Markets and Trading for over 20 years as a professional OTC Market Maker and independent trader. Nick has also managed the trading desks for a two Dallas based capital management companies and traded equities for a Dallas based hedge fund. Nick has trained and mentored thousands of customers in the rigors of trading, technical analysis and risk controls. Recently, Nick had broadened his market experience through the design and product management of two automated trading platforms. He has the pleasure of working with some of the brightest minds in the trading community and has collaborated with experts in data, design, engineering and trading psychology. An avid long distance runner, Nick completed several marathon events, qualified for the Boston marathon, completed several long distance Triathlons to include finishing a full Ironman triathlon.
This entry was posted in Trader. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s