This thread probably goes nowhere because threads that discuss trading strategy seem to always wither and die. But I am truly interested. Whenever a new trader would come into our office one of my first questions was always "what is your trigger?".

We have lots of posts in the trading thread but never the whys or wherefores. It is simply I bought xyz or I sold xyz. Never what prompted the buying or selling which is much more interesting and informative than the actual buying or selling.

My main trigger for my commodity day trading is a channel breakout. I use a variety of chart timeframes and channel lengths but the trigger is when it breaks above or below the channel parameters. The exit trigger is a reversal above or below a tighter faster channel.

For my equity swing trading my trigger has more slop or variance. The main strategy is buying dips in uptrends on daily charts. It relies on filters to begin with. The first filter is being above the 200 day simple moving average. The second filter is being below 35 on the RSI. From there is gets a bit more murky and subjective but it must pass these first 2 tests to be considered.

I call these 2 filters the "buy zone" but just because something is in the "buy zone" doesn't mean I will buy it. From there I will analyze the chart in more depth and try to quantify the strength of the uptrend. If I like the look of the chart I will drill down to shorter time frames and try to determine a good spot based on shorter term support and resistance to find an entry spot. I will also take a fundamental look at the equity to see if I think if it is over or under priced currently before pulling the trigger. I use this approach for short to medium term trades in both stocks and stock options.

So what is your trigger?

How much do your parameters change for taking short positions?

I typically don't take short positions (in equities) other than puts for portfolio protection. I don't like to short stock because it often costs to borrow and you also have to cover the dividends. The stock market corrects from time to time but it is in a decades/century long uptrend. It is my belief that buying dips in stock market uptrends is as close to a foolproof strategy as there is. That said I still use stops in case it doesn't work.

In commodity day trades shorts and longs are equal and can be taken freely whichever way the market is trending.

I day trade.
1st : the Equity must meet my guidelines and just because it did last week doesn't mean it does this week.
2nd : I must be able to short them without waiting .Ex: CRC which I don't use any more I could short for months , then it became hard to borrow and I dropped it from my rotation.
3rd it needs to have both a wave and volume to meet my parameters.
to simplify ; can I make $150-$300 in less than 1 hour.
formula (volume X swing)
Ex: buy 1000 shares goes up 6 cents only made $50(fees) would need to buy 3000 shares to make $150, so does the trade volume handle 3k shares???
An equity that only trades 20k shares per day doesn't do much for me.
Same as one that has trade volume 100 million shares but moves 1 cent a day.

4th I look at earning, p/e ratio etc....

5th cross ref them with earning releases and dividends and current news;
as all this can turn that wave into a boom or a wipeout.


I used to worry about leaving a little on the table, now I just follow my rules.


I have about 100 in my scope and constantly look for others.

here's an example I don't mind posting.
AMZN with a $3-8$ wave most days with 2-3 waves thru-out the day
If you ride the waves with 50 shares ; it can net you $400 a day

And Yes sometimes the uptick I jump in on quickly turns and per my rules I bail with a small loss and quickly short it to ride the down swing.
Can't win every hand Can't make money every trade.

This is why it is important to quantify the approach. If you haven't done the work a couple of quick losses will spook those who haven't done the proper testing. It's all just a big numbers game and it really comes down to risk management more than anything else. This is why I feel it is important to have a systematic, rules base approach with a trigger.

I have been using a buy dips in uptrend strategy in equites for decades but I never really quantified it but I want to. I do know for certain that the strategy is sound and that it works. Obviously it doesn't work every time but with the proper risk/reward profile it makes perfect sense. But just a few weeks ago I decided to use a screener and just pick some random stocks that met the parameters and then track them on a weekly basis. Typically I would agonize over equities that met the parameters being very selective on what I would do so I just want to run a test that is purely mechanical and mindless other than the initial parameters. In 3 weeks this random portfolio (56 stocks) is up 1.74% on average as of Friday close not counting juice or slippage. Only one of the 56 has dropped greater than 5% which I would consider a puke point. 13 are currently losers and 43 are currently winners. The entry strategy seems solid but any kind of exit strategy needs to still be formulated other than the initial drop dead point.

For exits I always use some sort of trailing stop based and support/resistance which is easy for my personal portfolio but is much more cumbersome when looking at a mechanical exit approach for a large basket.

is yours a day trade approach, long term , combo of both ????
do you use separate accounts ?

I HAVE MY RETIREMENT ACCOUNT SEPERATE FROM MY DAY TRADE ACCOUNT.
to which I take a different approach but still look over daily.
they are more solid blue chips some with dividends which may fluctuate but the foundation is solid. I tend to review that % based goals VS
My day trades are my income and I look at $$$$ made weekly as my goal.

I have found it to be less stress to keep them separate as before I used the retirement for margin leverage and tended to stress over minor daily highs/lows. so just for my piece of mind I moved my retirement to a different brokerage.

My equity trades as stated in the OP are short to medium term but they can turn into long term if they keep going up with insignificant pullbacks. I do keep separate accounts with my commodity day trading in a separate account. But this last post is just a test I am running right now and not actual trades as I want to track the results of a real time hypothetical strategy and work the kinks out of it. If I had a good backtester I would like to do that as well but currently I don't.

Is really everything you do just technical or price based mrbaseball? A hefty % of what I do is just mean reversion and looking for instances where the market is overreacting. People like to sell/short first ask questions later, and or buy into euphoria.

Day trades are 100% technical for sure. Just trying to catch the intra day swings and momentum and ride them until they turn. Obviously they don't always work but with the right approach and risk/reward profile they don't have to. In the more volatile swingy commodities it works very well.

For the equity swing trading which is a very small part of what I do I have tried to take fundamentals into account. But it is mostly just simplistically buying dips in uptrends. The trend has to be well defined though and hopefully dipped to a point where it has found some sort of support. If it just keeps dipping and the trend reverses you just puke it. Again it all comes down to the risk/reward profile.

I firmly believe successful trading all comes down to money management. I believe in trends so I always look for a trigger that gets me in on the trend and then I can design a risk/reward profile that can take advantage of riding that wave.

I'm a portfolio manager of a 5-star rated mutual fund. We can go long or short any asset class.

However, we focus on trying to deliver alpha in two ways: 1) quantitative stock selection when our rules tell us that the stock market risk is acceptable, 2) going market neutral, raising cash, or investing in uncorrelated assets when our rules tell us the stock market is too risky.

Smells fishy. Most US mutual funds don't short stocks, let alone "any asset class."

You're leveling me, right?

A 2012 analysis found 323 mutual funds that had reported short sales on N-SAR reports, out of about ~3,000 funds in the CRSP database:

http://scholar.smu.edu/cgi/viewconte...nting_research

That's about right.

There are 331 share classes of funds in Morningstar's Long/Short mutual fund category, plus another 438 share classes of funds in the Multialternative category and 147 share classes of funds in the Market Neutral category.

Collectively, these are generally known as Liquid Alt mutual funds.

Most of these alternative strategies come in several share classes. We're introducing a third share class next month.

I decided to bump this thread because I am truly interested. As predicted I stated in the OP that this thread would go nowhere

But it seems like we have a lot of more active traders now here and maybe we can get some discussion going. Since this latest surge of volatility I have been trading more equity options in my personal accounts than ever before. Not as much as when I managed and equity options strategy for my old firm but that was a very specific strategy. Now I am mainly swing trading with equity options and upping my options day trading game with the almost daily expirations in SPY. This is taking some getting used to. When I first started making options markets in the bond pit we only had quarterly expirations. Then eventually we got monthly expirations. But expiration was not my strong suit. By the time expiration rolled around I had totally hedged out my positions into risk free synthetics and was concentrating on the further out stuff. But I digress! I am still trying to decide if I want to play with the expiring stuff or just go out in time to my comfort zone.

So what is your trigger? What makes you press the button? Indicator? News? Gut feel? Trend? Breakout? Fade? Reversal? It's gotta be something!

I'm a computer programmer by trade and I have developed my own trading approaches.

1. Backtest, backtest, backtest. I always ask other traders for their z-scores. If you don't know your trading z-score then I refer you to Nasim Taleb, end of discussion.
2. The Trend is Your Friend

ngl, gut feel. made a ton of $ off the march crash swinging 90k in spy puts over a weekend after we headed down thurs/fri. just felt like the bottom was dropping out.

continued bearish stuff for a while, gave up fighting the fed a couple months ago. riding the mania now, hedging with VIX calls.

hard to think technical analysis hasn't gone completely out the window in this environment. people drawing lines on charts in 2020 seem nuts to me.

going to keep riding the wave until we reverse.

Technically riding the wave (ie trend trading) is technical analysis What's gone is fundamental analysis as most of that stuff is out the window while the market ping pongs around on virus news and fed intervention.

The trend is your friend yet many try to fight it. Then again trend is subjective to the time frame you are looking at and can come in many flavors like long term, medium tern, short term, inter day etc. They can all be going different directions which is why it is important to have a plan on what exactly it is that makes you pull that trigger.

You can't say that across the board. It all depends on the market you're trading and the forces that drive that market. Of course there will always be a place in trading for technical analysis, that's not even a question.

what's z-score? return over standard deviation?........ return over drawdowns?

mean reversion is very interesting and popular....... i've done many studies. the problem i see is that it gives you 30% of market return with about 30% of market risk. and of course, if you are investing your own money then you missed 70% of market move.... if you are doing it as your career with OPM, then it's great.

short term reversion

medium term momentum

long term reversion, but not that strong.

why don't things like channel breakouts work in stocks, specifically stock indexes. buying short term strength in stocks has been horrible for many years (until recently)

If you don't know what a z-score is then stop reading right now, stop investing any more of your money and go read "Fooled by Randomness" before you do anything else and you will thank me later.

i am not a big fan of subjective deep technical analysis.

but quant type technical analysis is a great way to summarize alot of info........ and something like RSI or ADX is a great way to track/test/implement mean reversion. it basically summarizes the data and you can backtest to understand your model. subjective mean reversion, which would work too, you can't gain much insight without many many years of doing it.

for people who eschew TA, why ever punch up a chart of spy when you trade it? why not just take the price given?... basically looking at stock price chart for something very liquid is technical analysis..... something less liquid, looking at the chart is detail is really important.

computers obviously changed technical analysis and quant in many ways.

but what role have 1) decimalization (word?) of stock markets, and 2) algo programs for giant money managers (basically, breaking up and routing orders) changed technical analysis. i have heard alot but i haven't found article explaining it.

A lot of people say TA is 100% BS but if you define it like I do, simply a visual representation of the market everybody uses technical analysis. I stick to the basics with support, resistance, trends, breakouts and mean reversion. Putting all of the pieces together can give you some decent risk/reward scenarios.