Currently working on small coding project. An algorithm that filters stocks from the TSX, TSX Ventures and CSE who’s price closes below the lower Bollinger band (80). I’ve been reading some of the work from Matt at Trader University and he calls it the rubber band stocks. Even though the purpose of this project is merely recreational, it got me thinking of a few questions I need answers to. Please feel free to comment and leave your thoughts. I like learning from the experienced day traders out there.
1) what time period should i use if i want to shorten the time i hold the stock? I find that with the 80 day bolllinger, if the stock closes below the lower band, It usually takes around 4 to 7 days for it to bounce back to the middle band. My goal is to reduce my holding period for a maximum of 3 days.
2) the goal of the algorithm is to filter stocks that are being oversold in order to have enough room for the price to bounce back at least 1% per trade. Is this an unrealistic goal? My reasoning behind it: get a 1% weekly return, which annualized is around 56% when compounded without much risk involved.
3) do the experienced day traders out there even follow a certain strategy? Or do you guys make your trades based on other research?? If you follow a strategy, may a please have the name to research more about it
4) do the experienced day traders place stop loss orders? I’ve noticed that the algorithms from the institutional investors pick up on those orders just to fill them up and trade the stock up again.
5) if you use stop loss orders, what’s the level of risk you put into every trade? Even if you don’t actually set up a stop loss order, what’s the level of risk you are comfortable with before deciding to exit the trade at a loss?
To my all my powerful and smart men reading this, please help this girl out with some answers. Please leave a comment or thought you think will help me :)
I find it interesting when using Bollinger Bands no matter the time frame it is a matter of the top and bottom squeezing to a point where the energy release to the up and to the bottom. Instead of the Bollinger Band I wrote an algorithm to track Fibonacci levels over a 420-period cycle no matter the periodicity used, it amazingly accurate. It resembles the Bollinger Band but uses the highest high and the highest low on WMA of 420. On a 5 minute chart I was able to find GNUS early when the red green and yellow lines existed within the same band width
BoneFunkenstein
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@BoneFunkenstein, I know it is a lot of color but I am used to it :) Follow the Rainbow
normaescobarca
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@BoneFunkenstein i like what I see. The price increase was really really good considering the time frame. I think it looks great. So is you entry signal the cross of red green and yellow? And is there a way you could share your algorithm? Or maybe just a better way to contact you for some questions
BoneFunkenstein
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@normaescobarca, it is a ratio of all 3 red yellow and green and where they are in relation to the price. There I can literally site and bottom feed all day long with my scanner wait for price to dip below 0 Fib and buy when it crosses the blue line
BoneFunkenstein
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@normaescobarca, sure I am still working on my thoughts and I tinker alot. This is where I am in thought. Perhaps since you have been thinking along the same path we can share ideas. IM me and maybe we can ZOOM chat and share screens. I will give you the code and perhaps you can take to next level!
watsonexchange
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Do you use any formal scanners in your stock search?. if not" trade ideas" would be a tool to use in your search for good stocks to trade. As a day trader I don't hold positions overnight to often and don't find it hard to make the targeted 1% goal you have by trading "stocks in play" but if your goal is to swing trade on a short term basis as in get in on a Tuesday close out by Friday type of trade you can usually do this with the same stocks that are in play for short term day trading. eg. CCL, ZM, HTZ etc.
normaescobarca
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@watsonexchange excellent information I really appreciate your input!!
watsonexchange
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@normaescobarca, No problem at all. Always looking to connect and build with other serious traders. keep me posted on how things are going as you tweak your strategy
jtcamphoto
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Check out mastersintrading.com Hey trader mentor on Wall Street basically taught this to all new employees at his firm… i’ve seen a few other programs like this and I’ll say it’s one of the best ways to go ( as far as the rubber band trade… Not sure about Bollinger bands though)
techserve2020
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Looks like q great project; wish u all the best. I am not an experienced trader, just started in April. I have learned from the community out there that the stop loss is a must for day traders! not sure though, tried this a couple of times it works 50:50. Let me give you an example: an experienced seasoned trader recommended to buy several stocks and I did my due diligence and picked up only 2 out of 10: CNP and TXN; here is what he recommended; CNP: E@17.61 TP 19.02-19.99, SL 17.33, Risk 3/10; this means your risk is only one percent. which sometimes works but sometimes not you lose the stock and stocks go up after you hit the SL. Since my 50% trades are in the Canadian market, I would be very much interested to solicit your help.