Quote:
Originally Posted by hapaboii
>You see a gap up in the morning. Stock rises excessively mid day. There's 15-30 mins left before close. What do you do?
@smokey, so you think you've identified a profitable setup, great. from what you've provided, no one here can tell you whether or not it works. it's too vague. if you expressed the strategy algorithmically, what would be the entry and exit criteria? there are a handful of parameters you'd need to specify and questions you'd need to flesh out, such as what % threshold qualifies as a gap up, what % gain from open qualifies as an excessive intraday rise, when is the entry decision time (is it a specific clock time e.g. 15:30:00, or constrained by clock time + event time? e.g. any time between 15:30:00 and 15:45:00 where XYZ occurs/becomes true), does it make a difference if the HOD occurred early in the day, does it make a different if the price 30m before the close isn't near the HOD, are exits always on close, do you use a stoploss, is the setup valid for all symbols or only a subset, etc.
once you come up with all the details and express them algorithmically, code it up and simulate it. try to account for spreads and market impact. if you are taking on both entry and exit, the trade should be easier to model. this gives you the best chance of assessing whether you've found a real alpha.
hope this helps.
You're right, I need to put in more effort with backtesting and setting actual parameters for the trade rather than speaking in generalizations. Because you're right, I don't know if it's 15:30 or 15:45, and I think it depends a lot on market sentiment. I usually wait for an indication that the selloff is beginning, and scale in up to the close.
Unfortunately for me, i'm not a professional and trade rather irregularly from work. Clearly not the most efficient way to make money in the short term. Even with the limited information and time I have there still seems like there's interday opportunities to make money as a retail investor.
Quote:
Originally Posted by ToothSayer
Rarely a truer statement has been made. Fees, spread, and unavoidably slower reaction times for retail traders guarantee this is the case.
I mean this is the "Trading" thread right? We have plenty of other threads on index funds and value investing, what are we supposed to be talking about in here other than good entry/exit opportunities, ideas etc.
I would agree that slower reaction times is an absolute killer for me in terms of things that i'm missing, Fees and spread aren't as imposing unless you're talking thousands of shares on 1-2 penny moves or something.