AI
Wednesday, September 17, 2003 9:31:06 AM
Trading From Main Street Class Logs
http://www.tradingfrommainstreet.com
Toni's Scanning Routine
September 17, 2003
Toni: We have a fairly narrow topic for tonight overall, since it will apply mainly to stock swingtraders and those who trade on larger time frames, but I think it is one that most traders should use in some way or another, even if just get a bit of idea what the market is likely to bring the next day. This topic is scanning. Last time Brandon gave his version and you will probably find a great many similarities. When I'm trading stocks, I find that I do better on days where I have a chance to scan the night before. For futures trading, the same applies, but just doesn't take as much time since I am looking at a much more narrow field. After we go over evening scanning, we'll also touch upon intraday scanning as well before we are done this evening.
On average, how much time do each of you think you spend at night scanning? Doing your homework, so to speak?
tj: 3 hrs
jam0141: 2 hours
piper: Do not know how to scan
_cdgm: only began,2-3 hrs
You guys are right about at my average. 2 hours is pretty much the norm on most days as far as how long I scan each evening, longer when looking for position trades as well. I start out fairly simply. The first thing I do is look over the indices. These include the SP500, Nasdaq Composite, and the Dow. I look on the 30 minute, 60 minute, daily, weekly and monthly charts. On these, I try to pick out any patterns forming or looking likely to form.
For instance, if you read over the last week or so of the focus letter, I was looking for a triangle and larger intraday Phoenix. Both of these proved correct, but I was also looking for potential for a daily Avalanche after those patterns. Since the follow through was so strong today though, this pretty much nullifies the potential on an Avalanche, so it tells me I have to go back and take a new look based on the more recent developments.
The key is to use these indices to help provide a bit of guidance. Going into today for example, I was looking for 60 minute breakouts for longs based on the intraday indices and towards Avalanche patterns on the daily charts for shorts. Usually that works out better than we saw with the shorts today though =) From the indices, I then move and flip through the main sectors. For instance: biotechs, semiconductors, wireless, etc. This helps me narrow down the strongest and weakest that have better odds for the next day. Then after taking note of these, which probably takes 15 minutes or so, I move onto stock scanning. I use Jeff Semmel's site at http://www.tradingscans.com and have used his program for at least three years.
How many of you use this site in your own scanning?
joey_greentree: (------
tj: some
jam0141: i use his and another
edearlr: yes
_cdgm: I used esignal for a while,I have only began with tradingscans
Toni: Ok, most of the morning lists you see us post in the room come from scans on his site. The one that I use the most is listed under SwingTrading - Setups, Daily Charts, and Analysis in the main menu. Then, under Trending Stocks Analysis I use the Daily Charts - Uptrending, Downtrending, Sideways Trending. This is main filter I use because overall I do a lot of manual scanning and want to keep the criteria fairly wide. The trend filters just give you lists of stocks that are trending and are either coming into highs or just off highs. I then look at uptrending, for instance, for gradual pullbacks, bases, or even sharp drops back into the support. For the first two I look for continuation patterns. For the sharper pullbacks I look for reversals with 2Ts, Avalanches, and the like. During the bases, what I want to see is decreasing volume and Jeff's scans are sorted by volume with his charts displaying it as well.
Under each scan result you can select the command to display the charts for that scan. This just opens a page with charts of each stock in the scan according to volume. What this does is really cut down on your scanning time because you don't have to type in and wait for each individual chart to load, you can just hit the scroll and keep going until something pops out. Off this initial list, I then go to my Real Tick scan page I made and plug in each to look at intraday and weekly and monthly action. This page has the 30 minute, 60 minute, daily, weekly and monthly charts tied to a level II. So, I just stick in the symbol and all the data changes at once. You can do this by using the link command.
Intraday, after identifying nice daily charts what I look for are patterns on the 30 and 60 minute charts that favor a setup in the direction of the pattern forming on the daily chart. For instance, say XYZ is pulling in gently to the 20 day sma on descending volume. Then, intraday after hitting the 20 day sma, the stock pulls up quickly off lows and starts to base at the 30 minute 20 sma. This leads to a 30 minute Phoenix as the 20 sma breaks, triggering an intraday setup in the direction of the larger daily bull flag, thus decreasing risk and increasing odds on the daily setup. This is your ideal situation for daytrades and swingtrades.
When I have time, I will also scan through charts at 52 week highs and those pulling back from these, as well as those pulling off one month highs. Jeff has this on his site and many charting platforms will also show you stocks at 52-week highs.
On daily charts, another thing I look at as a bit of a supplement is the CCI (the Commodity Channel Index). I use a setting of P=15 so that +200 is generally considered overbought, and -200 is oversold. I then compare where current action is to prior reversals and corrections and use it as a bit of a support and resistance indicator. Additionally, I use a 10, 20, 50, 100 and 200 day simple moving average on my daily charts. Intraday though I only use a 20 and 200 sma. The reason for simple vs. exponential moving averages is merely a personal choice. I have always used them and go by the motto that "if it isn't broke, don't try to fix it." Any questions on the evening scanning routine before we move into premarket and intraday?
piper: What is the Real Tick scan page?
Toni: It is just a custom page I made for my own scanning.
piper: thanks
Toni: I will post my real tick page on our site for those interested. What you will have to do is save it into Townsend under Pages. You will have to have Real Tick to use it. I can also post an image of it to the site for those who don't have Real Tick, but still want to view it.
ph999: that would be helpful
Toni: http://www.tradingfrommainstreet.com/ScanPagebyToni.pag Here is the link to download the Real Tick page. It is a one-monitor page. "C:\Program Files\Townsend Analytics\PAGES"You will want to save it into this directory. The scan page image: http://www.tradingfrommainstreet.com/Images/img/Scanpage.gif
tj: you mainly trade avalanches and phoenix only? that is why u scan for those setups?
Toni: No, I look for flags and 2Bs and 2Ts and triangles as well.
tj: do u mainly scan the dailies and then down to intraday, like your example but the daily is the main pattern indicies are the trend/? for the next day
Toni: That pretty much sums it up.
tj: got it :)
Toni: When I go through the Nasdaq 100 or SP100 then I scan intraday at the same time because that is in my Real Tick, so in those cases it isn't necessarily the daily that first stands out.
tj: u can do that with the new esignal
Toni: Even with many daytrades I give in the morning though, they come from initially liking the daily charts.
Toni: Ok folks, heading into the new day, my day usually starts out by going over my list from the night before to note any changes, such as gaps. Also, I scan premarket gainers, losers, and gappers. These I just pull up on my Real Tick. I look for stocks outperforming or underperforming the overall market. For stocks that gap up strongly after closing at lows, I look for bear traps continuations and vice versa on stocks gapping down after closing at highs. These often present favorable options for continuations on breakouts intraday. Also, stocks breaking up on a gap after pulling into support or coming out of news are excellent to look for continuation breakouts. I prefer that the gap is less than twice the average day range. For instance, if a stock has an average range of $1, then I prefer the gap to be less than $2. Otherwise they are often too extended and have a harder time continuing.
tj: where is that list
Toni: This list under "TAL Chain Listing" in Real Tick. I then have a minder attached to that... linked. So, when I click on one scan, it pulls all the stocks with that criteria into another minder. Then I just have to click on the symbol and my charts on my scan page, as well as my level II will change accordingly. You can get these under "Favorites/Market Minder".
Once the day is under way, I then look at gainers, losers, new 52 week highs, etc. I also have a trimmed down list of Nasdaq 100 and SP500 stocks that trade well intraday, with a few other stocks that trend well intraday thrown in. The criteria are that on 5 minute setups I can get a minumum of 20 cents on a scalp and preferabley 50 cents, they have very nice average daily volume so I don't get stuck in a position that has a hard time moving or moves so fast I can't get out, and I rule out stocks that get a ton of overlap from bar to bar on intraday and daily charts. For instance, I hardly ever look at MSFT for this last reason. This list gets updated several times a month as charts fall in and out of favor.
Intraday the range of setups I trade is pretty open to whatever is going on at a given time. Most do tend towards breakouts of one kind or another, Phoenixes and Avalanches included.
That essentially sums up my rountine. Usually heading into the afternoon, I use mid-day (between bites over lunch) to scan for stock patterns going into the afternoon. Anyone have any questions?
tj: this is all manual correct
Toni: For the most part, yes, but I use the scans to look for stocks that are moving and have the best potential for patterns to form.
Here is my initial list for tomorrow, just based on the trending charts:
long: psft, acf, sbux, ip, gdt, nsc, tibx, dclk, sgr, bni, svm, too, c, jhf, iiji, duk, adrx
short: gmh, cal, nbr, rhat, ovti, kft
bg: Toni, Brandon mentioned that he likes to look for ird bars in his scanning and his expectations.......after a day like today, wide range, what would you look for or expect??
Toni: narrower range tomorrow ...probably not an NR4 ot NR7 since yesterday was so narrow, but just a correction to today's action.
bg: k, figured that.....thanks ;)
Toni: yw
carl: Thanks Toni, Your doing all this work sure makes my trading life easier.
Toni: that's what I get paid for =)
tj: thank you
carl: And well worth it
Toni: That.. and to have someone to keep Brandon in line and make sure bbcc gets his daily dose of trouting
_cdgm: TY.
bg: ya, thanks toni.....your view on trading has been very helpful
Toni: thank you =)
jam0141: thanks you make things easier
oldblue: thx toni
ph999: that is quite a work load Toni
carl: and you have time to write the Focus Letter each night!
Toni: and personal mentoring =) I do that about 2 hours a night.. It is great for me because I learn a lot as I help others. That is one thing I would recommend to folks.. if you want to help improve yoru own trading... help out newbies... You learn a lot as you try to put into words the things you are seeing and have gone through. The same type of thing will happen with scanning at night.... With time you will start to be able to just glance at a chart and in a split second realize if it is something that is worth a further look or not. Ok, folks... speaking of the focus letter... need to go get that finished for Carl to get out to you guys. Are there any other questions before I take off?
carl: Get back to work :)
_cdgm: Good night and a gratefull thank you Toni
Toni: ty cd
Toni: Ok folks... I'll see you guys in the morning.. or later this evening for those who stick around when I go over my initial scan list to narrow it down That will be in about an hour... Take care gang!
http://www.tradingfrommainstreet.com
Toni's Scanning Routine
September 17, 2003
Toni: We have a fairly narrow topic for tonight overall, since it will apply mainly to stock swingtraders and those who trade on larger time frames, but I think it is one that most traders should use in some way or another, even if just get a bit of idea what the market is likely to bring the next day. This topic is scanning. Last time Brandon gave his version and you will probably find a great many similarities. When I'm trading stocks, I find that I do better on days where I have a chance to scan the night before. For futures trading, the same applies, but just doesn't take as much time since I am looking at a much more narrow field. After we go over evening scanning, we'll also touch upon intraday scanning as well before we are done this evening.
On average, how much time do each of you think you spend at night scanning? Doing your homework, so to speak?
tj: 3 hrs
jam0141: 2 hours
piper: Do not know how to scan
_cdgm: only began,2-3 hrs
You guys are right about at my average. 2 hours is pretty much the norm on most days as far as how long I scan each evening, longer when looking for position trades as well. I start out fairly simply. The first thing I do is look over the indices. These include the SP500, Nasdaq Composite, and the Dow. I look on the 30 minute, 60 minute, daily, weekly and monthly charts. On these, I try to pick out any patterns forming or looking likely to form.
For instance, if you read over the last week or so of the focus letter, I was looking for a triangle and larger intraday Phoenix. Both of these proved correct, but I was also looking for potential for a daily Avalanche after those patterns. Since the follow through was so strong today though, this pretty much nullifies the potential on an Avalanche, so it tells me I have to go back and take a new look based on the more recent developments.
The key is to use these indices to help provide a bit of guidance. Going into today for example, I was looking for 60 minute breakouts for longs based on the intraday indices and towards Avalanche patterns on the daily charts for shorts. Usually that works out better than we saw with the shorts today though =) From the indices, I then move and flip through the main sectors. For instance: biotechs, semiconductors, wireless, etc. This helps me narrow down the strongest and weakest that have better odds for the next day. Then after taking note of these, which probably takes 15 minutes or so, I move onto stock scanning. I use Jeff Semmel's site at http://www.tradingscans.com and have used his program for at least three years.
How many of you use this site in your own scanning?
joey_greentree: (------
tj: some
jam0141: i use his and another
edearlr: yes
_cdgm: I used esignal for a while,I have only began with tradingscans
Toni: Ok, most of the morning lists you see us post in the room come from scans on his site. The one that I use the most is listed under SwingTrading - Setups, Daily Charts, and Analysis in the main menu. Then, under Trending Stocks Analysis I use the Daily Charts - Uptrending, Downtrending, Sideways Trending. This is main filter I use because overall I do a lot of manual scanning and want to keep the criteria fairly wide. The trend filters just give you lists of stocks that are trending and are either coming into highs or just off highs. I then look at uptrending, for instance, for gradual pullbacks, bases, or even sharp drops back into the support. For the first two I look for continuation patterns. For the sharper pullbacks I look for reversals with 2Ts, Avalanches, and the like. During the bases, what I want to see is decreasing volume and Jeff's scans are sorted by volume with his charts displaying it as well.
Under each scan result you can select the command to display the charts for that scan. This just opens a page with charts of each stock in the scan according to volume. What this does is really cut down on your scanning time because you don't have to type in and wait for each individual chart to load, you can just hit the scroll and keep going until something pops out. Off this initial list, I then go to my Real Tick scan page I made and plug in each to look at intraday and weekly and monthly action. This page has the 30 minute, 60 minute, daily, weekly and monthly charts tied to a level II. So, I just stick in the symbol and all the data changes at once. You can do this by using the link command.
Intraday, after identifying nice daily charts what I look for are patterns on the 30 and 60 minute charts that favor a setup in the direction of the pattern forming on the daily chart. For instance, say XYZ is pulling in gently to the 20 day sma on descending volume. Then, intraday after hitting the 20 day sma, the stock pulls up quickly off lows and starts to base at the 30 minute 20 sma. This leads to a 30 minute Phoenix as the 20 sma breaks, triggering an intraday setup in the direction of the larger daily bull flag, thus decreasing risk and increasing odds on the daily setup. This is your ideal situation for daytrades and swingtrades.
When I have time, I will also scan through charts at 52 week highs and those pulling back from these, as well as those pulling off one month highs. Jeff has this on his site and many charting platforms will also show you stocks at 52-week highs.
On daily charts, another thing I look at as a bit of a supplement is the CCI (the Commodity Channel Index). I use a setting of P=15 so that +200 is generally considered overbought, and -200 is oversold. I then compare where current action is to prior reversals and corrections and use it as a bit of a support and resistance indicator. Additionally, I use a 10, 20, 50, 100 and 200 day simple moving average on my daily charts. Intraday though I only use a 20 and 200 sma. The reason for simple vs. exponential moving averages is merely a personal choice. I have always used them and go by the motto that "if it isn't broke, don't try to fix it." Any questions on the evening scanning routine before we move into premarket and intraday?
piper: What is the Real Tick scan page?
Toni: It is just a custom page I made for my own scanning.
piper: thanks
Toni: I will post my real tick page on our site for those interested. What you will have to do is save it into Townsend under Pages. You will have to have Real Tick to use it. I can also post an image of it to the site for those who don't have Real Tick, but still want to view it.
ph999: that would be helpful
Toni: http://www.tradingfrommainstreet.com/ScanPagebyToni.pag Here is the link to download the Real Tick page. It is a one-monitor page. "C:\Program Files\Townsend Analytics\PAGES"You will want to save it into this directory. The scan page image: http://www.tradingfrommainstreet.com/Images/img/Scanpage.gif
tj: you mainly trade avalanches and phoenix only? that is why u scan for those setups?
Toni: No, I look for flags and 2Bs and 2Ts and triangles as well.
tj: do u mainly scan the dailies and then down to intraday, like your example but the daily is the main pattern indicies are the trend/? for the next day
Toni: That pretty much sums it up.
tj: got it :)
Toni: When I go through the Nasdaq 100 or SP100 then I scan intraday at the same time because that is in my Real Tick, so in those cases it isn't necessarily the daily that first stands out.
tj: u can do that with the new esignal
Toni: Even with many daytrades I give in the morning though, they come from initially liking the daily charts.
Toni: Ok folks, heading into the new day, my day usually starts out by going over my list from the night before to note any changes, such as gaps. Also, I scan premarket gainers, losers, and gappers. These I just pull up on my Real Tick. I look for stocks outperforming or underperforming the overall market. For stocks that gap up strongly after closing at lows, I look for bear traps continuations and vice versa on stocks gapping down after closing at highs. These often present favorable options for continuations on breakouts intraday. Also, stocks breaking up on a gap after pulling into support or coming out of news are excellent to look for continuation breakouts. I prefer that the gap is less than twice the average day range. For instance, if a stock has an average range of $1, then I prefer the gap to be less than $2. Otherwise they are often too extended and have a harder time continuing.
tj: where is that list
Toni: This list under "TAL Chain Listing" in Real Tick. I then have a minder attached to that... linked. So, when I click on one scan, it pulls all the stocks with that criteria into another minder. Then I just have to click on the symbol and my charts on my scan page, as well as my level II will change accordingly. You can get these under "Favorites/Market Minder".
Once the day is under way, I then look at gainers, losers, new 52 week highs, etc. I also have a trimmed down list of Nasdaq 100 and SP500 stocks that trade well intraday, with a few other stocks that trend well intraday thrown in. The criteria are that on 5 minute setups I can get a minumum of 20 cents on a scalp and preferabley 50 cents, they have very nice average daily volume so I don't get stuck in a position that has a hard time moving or moves so fast I can't get out, and I rule out stocks that get a ton of overlap from bar to bar on intraday and daily charts. For instance, I hardly ever look at MSFT for this last reason. This list gets updated several times a month as charts fall in and out of favor.
Intraday the range of setups I trade is pretty open to whatever is going on at a given time. Most do tend towards breakouts of one kind or another, Phoenixes and Avalanches included.
That essentially sums up my rountine. Usually heading into the afternoon, I use mid-day (between bites over lunch) to scan for stock patterns going into the afternoon. Anyone have any questions?
tj: this is all manual correct
Toni: For the most part, yes, but I use the scans to look for stocks that are moving and have the best potential for patterns to form.
Here is my initial list for tomorrow, just based on the trending charts:
long: psft, acf, sbux, ip, gdt, nsc, tibx, dclk, sgr, bni, svm, too, c, jhf, iiji, duk, adrx
short: gmh, cal, nbr, rhat, ovti, kft
bg: Toni, Brandon mentioned that he likes to look for ird bars in his scanning and his expectations.......after a day like today, wide range, what would you look for or expect??
Toni: narrower range tomorrow ...probably not an NR4 ot NR7 since yesterday was so narrow, but just a correction to today's action.
bg: k, figured that.....thanks ;)
Toni: yw
carl: Thanks Toni, Your doing all this work sure makes my trading life easier.
Toni: that's what I get paid for =)
tj: thank you
carl: And well worth it
Toni: That.. and to have someone to keep Brandon in line and make sure bbcc gets his daily dose of trouting
_cdgm: TY.
bg: ya, thanks toni.....your view on trading has been very helpful
Toni: thank you =)
jam0141: thanks you make things easier
oldblue: thx toni
ph999: that is quite a work load Toni
carl: and you have time to write the Focus Letter each night!
Toni: and personal mentoring =) I do that about 2 hours a night.. It is great for me because I learn a lot as I help others. That is one thing I would recommend to folks.. if you want to help improve yoru own trading... help out newbies... You learn a lot as you try to put into words the things you are seeing and have gone through. The same type of thing will happen with scanning at night.... With time you will start to be able to just glance at a chart and in a split second realize if it is something that is worth a further look or not. Ok, folks... speaking of the focus letter... need to go get that finished for Carl to get out to you guys. Are there any other questions before I take off?
carl: Get back to work :)
_cdgm: Good night and a gratefull thank you Toni
Toni: ty cd
Toni: Ok folks... I'll see you guys in the morning.. or later this evening for those who stick around when I go over my initial scan list to narrow it down That will be in about an hour... Take care gang!
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