Trade Ideas: Support Forum

[tbam]

i've been playing around with a strategy for news stocks poised to gap significantly on volume. Trade-Ideas premarket highs and lows with a min count # fo 5 or so to help locate these, along with other sources of premarket gaps, then eyeballing the chart of the premarket action in the stock - looking for a steady trend into the open closing at it's highs or lows. It can be either a go with gap, or fade, what matters is the trend of the premarket. Go long premarket or a minute after the open looking for continuation.

It was interesting to see this article in SFOMag this month where someone describes a mechanical trading system being tracked at Attain Capital, which like FuturesTruth and others, serves as a Consumer Reports of trading sysems. It describes a similar concept of overnight momentum/trend looking for continuation, and it supposably tests out well on everything - overnight crude oil, soybeans, bonds, as well as stock indices and stocks. The description from the magazine is below.

Is it possible to enter premarket, or take the premarket filters into account when using oddsmaker, and what do you think about the rules below as a starting point? it's difficult to get momentum profitable in oddsmaker, but hopelly this is a new angle that will help.

a. trade-ideas configuration
overnight trend - looks for continuation. = trade-ideas, # premarket highs = 10, last premarket high occurred > 9:20 am EST, but before the open at 9:30am EST. Exit 10 minutes after the open.

b. SPYDER trading system described in SFO Magazine:
http://www.sfomag.com/CommentaryTwo/Default.aspx?CommentaryID=148
"It was during this time that Mr. Imgraben began to explore the development of a trading system that used both overnight and intra-day data for short-term position trades. His thought was that the market activity that occurred during the European and overnight GLOBEX trading session should carry over to the U.S. day session.

"SPYDER is a short-term position trading system that is designed to take short-term position trades in crude oil futures, 30-year bond futures, and soybean futures contracts. What makes this system unique is that the strategy analyzes what happens during the overnight trading period before putting on trades during the U.S. session.

After identifying an overnight trend the system will then look for confirmation of this trend during the U.S. trading session. If confirmation occurs, the system will then wait for a small pullback by the market before entering a long or short position.

Another unique characteristic of this trading strategy is its multiple position strategy. The multiple position strategy is an algorithm that will kick in and allow the system to take multiple positions when the market is moving against the original position. This does not occur on every losing trade and is only initiated when the market price action dictates an area of support or congestion. Approximately 30 percent of trades will include an additional position.

For exiting trades, SPYDER uses both a dynamic stop and a profit target that are derived from market volatility. Included in the dynamic stop is an indicator that is designed to predict when a trend is beginning to fail. If this indicator determines that the market trend is beginning to fail the system will cover all open positions at the market. [Disclaimer: Stop orders cannot guarantee an order will be filled at the desired price]

While the SPYDER short-term position system uses overnight data for trend identification, it does not trade 24 hours. The system will only trade during the U.S. trading session and the average trade hold time is approximately one day. Risk per trade is variable as the system uses market volatility to determine stop levels. The hypothetical average loss per trade is close to $1,000 with a hypothetical max loss of $3,000.

The SPYDER strategy can also be used as more traditional day-trading strategy on the full size S&P and E-mini S&P futures contracts. The SPYDER strategy has been slightly modified as it will only take 1 contract per trade (no multiple positions) and will exit all trades at the end of the U.S. day session.

The system will use both daily and 60-minute bars. However, it will not use overnight data for trade decisions. This system is listed as SPYDER SP DT on Attain Capital Management’s website.

The fact that this system works across multiple markets and sectors is another feather in Mr. Imgraben’s cap. It is rare to find a publicly available trading system that has shown the ability to trade in commodities, stocks and bond futures. Typically, this type of system only available to larger traders who have can afford CTA investment exposure."

Would you mind helping getting this into trade-ideas? Would appreciate it.