cuttshot

These cheap stocks can be very volatile and unpredictable. Many times they are drug/pharmaceutical companies. All it takes is a rumor of a new drug coming out and these companies can pop big time. As a result traders make a cheap bet with call options to try and capture a big winner. So you will see a large open interest in the options. One call option gives you control of 100 shares of stock. So to purchase 100 shares it will take $38. Your other option is to buy a call which let's say is selling for .02. This would cost you $2 to control the same 100 shares of stock. The trade off is that the option is only good for a certain amount of time. In your example of looking at the $1.00 call, should the stock make a big jump on news that call is going to have a really nice precentage return on that call. All that to say the $1.00 call has a lot of open interest because of traders making a cheap bet on a large move in the stock (news, rumors, earnings).

Take a look at tradermike.net. It is an interesting site in itself but the blogroll on the right hand side has a number of good sites. The kirk report and slope of hope are two that I go to quite often. Cuttshot

OK let me clarify before you guys start to think I'm some cocky trader who thinks he needs 10 screens to look at 20 different markets. I currently daytrade 2-3 markets each morning. I could do that with 2-3 screens as my start times are staggered on each market. However, the difficult part comes in when add my swing trading charts as well. I like to have some stock charts up that I might be tracking for entry, a screen for market internals, and because I use a different broker for my swing trades I need to have that platform up as well with my options quotes. I'm sure I could get by with my 3 screens but like I said earlier if it's only a few hundred bucks to add another screen or 2 why not.

I love the idea of a walk away approach but I'm going to agree with wrbtrader the russell is not a good market to try it on. This market can move on a dime (especially rencently) and you can miss things very quickly. If you have a detailed trade plan that you can stay committed to then it should be an issue to track the trade. If the trade plan has been proven to put the odds in your favor then it shouldn't be a problem watching the screen and staying disciplined to the rules. It just seems to me walking away from a TF chart would make it difficult to make stop adjustments and all other money management decisions. Not to mention I'm sure you would miss new setups that come on. My plan calls for looking for 2 wins and a positive result or the first 90 minutes of the session whichever comes first. I don't typically find it difficult to stay focused for that amound of time. This is assuming you are talking about a daytrading approach. With swing trading it is totally different. I will only look at my swing charts a couple of times a day. I feel just fine walking away from these.

Mark, You have to make sure you are going back to the same day each time you load up your charts. If you don't you are going to be starting at a different point which is going to change the range sequence. So when you test just set a date and then make sure that is the starting point each time.

Mike, I haven't shown any charts up to this point because I know how it gets on forums with people posting charts of paid for systems. I'm not here to promote any system at all. After buying many different systems, the one I'm currently using is by far the one that has fit me the best. If you want more details on the system I use, send me a private message and I'll send you some screen shots. indytrader you already have some great advice available to you. I would second Jajuan2 and amcan. It is very important to take your time. The markets will be open next week, next month, and next year. Make sure you take the time to create a trade plan for yourself before putting any money on the line. You will also want to take some time getting to know your charting/broker platform. There are a few of us here that are trading the NQ so feel free to bounce questions off of us. I'm not an expert by any means but I have been in your shoes and know how important it is to soak up as much knowledge as possible.

Lol thats funny AmCan. Might have to try convincing her the more monitors you have the more money you make which means more money that she has to spend. Of couse an idea like that might be one reason I'm still single. I have people walk in my office and wow and 3 monitors. It sounds crazy to people but when the markets move I need to see everything in front of me. Good luck convincing the wife!

it would be interesting to experiment with different ways of calculating the setups. I would think going for some kind of a fixed target initially also with a fixed risk would provide a better framework than just going with reversals. Obviously it's going to take some work to dive in and test. I don't know about you but there just aren't enough hours in the day to get to things like this.

dinerotrader, CL has been very difficult to trade this week. We haven't seen the nice early movement that we have been used to in the past. The moves are either happening premarket are later in the session. This has thrown a wrench in my trade plan because the moves are happening outside of my trade times. I had a feeling we would see a late session breakout today but after the choppy morning I didn't want to risk it. This is one of the first down weeks I have had on CL in a long time. Let's hope things get back to normal next week.

Ynos, It sounds like he is aware of the risks in the market with the experience he has had. It's obviously your call so I wouldn't let us influence you too much. You know your relationship with him better than anyone. I made the decision to trade money for certain family members but have also turned other ones down because I have a different relationship with them. If you are going to be swing trading stocks then you could just have him open the account and you advise him on what trades to take. This way you are seperate from the account just in case things go bad or something happens between the two of you. This would not be difficult to do. You are not making trades that are as time sensitive as day trading would be. That would be my choice to start things off.

With the volatility that we have seen in the markets over the past few months the VIX has been all over the map. Has anyone traded options on a market that tracks the VIX like VXX? VXX is the ipath S&P 500 VIX Short Term Futures contract. Looks like it has decent volume and open interest. Looking at the daily chart, if we get the VIX to pop over 30 again it might be an interesting long trade. Will have to keep an eye on it. If anyone has any experience with this product let me know.

I have mixed feelings on this one. I do manage some funds for family members and it has gone just fine. You need to make sure your relationship could make it through a tough stretch of trading/losing money. I understand some of the above comments on it being a bad idea. I guess it would all depend on who it's for. It it's someone that is going to hound you for daily results and freak out at a losing session then no it's not a good idea. If it's for someone that understands up front they need to be in for the long haul then I don't have a problem with it.

amcan, the book is worth the read. it has some interesting ideas in it. he basically outlines his approaches throughout the book so you get a feel for his trading style.

scalper4, the NQ had another perfect session today. 3 wins for 36 ticks of profit. the best part was i got done in the first 15 minutes of the session. just a heads up you can always click on the thanks button on a post to save the time of writting a sentence out. not a big deal just thought i would throw that out there.

Pickone, I have not used them either. When looking for a system make sure you find one that works on multiple markets and time frames. Markets will change over time and you want a system that can adapt to those changes. If the system is locked in to one market and one time frame you will most likely struggle to see consistent results over time. As a result you will find yourself looking for a new system whenever you consider a different market.

I have had a few times already this week where 3 monitors is not enough. Monitors are so cheap that it doesn't take alot to upgrade. Looking for a stand to hold my 4 new monitors. Anyone have any suggestions?

1 Range, 1 tick interval

Method, You want to be really careful with that type of an approach. I personally don't know any successful traders that don't have a documented trade plan in place. Discretionary decisions will lead to very inconsistent returns and is a recipe for a blown out account. I'm not saying you need to go drop $5000 on a system out there. However, you do need to have rules for yourself to follow each trade. You need to know exactly where to enter and then once you're in where you will get out. If you want and wing it as you go the emotions will take over and you will find yourself getting in and out and the worst possible times. Obviously we all just want to trade but there is more to it than that. I have been trading for a number of years now and can tell you from experience I spend much more time testing and recording my trades than I actually do trading. You need to treat this like a business if you want to be successful. If I were you I would put my trading with live funds on hold until I have a detailed plan in place. Why go into it knowing you will blow out an account when you could put the work in up front and give yourself a chance at success? Protect that capital until you have a proven system in place. I'm only telling you this because if I had someone there in the begining telling me all this I would have saved myself thousands of dollars.

Yeah I have seen variations of this before but have never done anything with it myself. I know John Carter uses it quite a bit. In fact I think he just had it programmed for thinkorswim charts and has been doing some free training on it. Not reinventing the wheel here by any means. However, adding a twist here or there could lead to something interesting.

davey, It is very important that you focus on building your account before even considering taking any money out. Trading full time on a $10,000 account just wont cut it. You can start with a small account but you need to leave the profits alone. Pulling money out right away will just lead to you spinning your wheels. How much money you pull out and when you do it depends on your lifestyle. Keep in mind there are fees when you pull the money out so you don't really want to be doing this too often. I have found it best to start with a budget for yourself. This way once you have built your account size up to make a living off you can pull the minimum amount out monthly/quarterly to cover expenses. The budget will also help you guage when it's possible to trade full time for a living. You should make sure you can make money for an extended period of time before you consider going at this for a living. Making money for 2 months in a row will not guarantee future success. You could run into weeks or even months where you don't make any money. Hopefully you are using a system that doesn't let this happen very often but it is possible. You have to make sure you are able to ride these times out. traderwill gave you some great advice. Having a successful system in place is very important. I would also recommend getting that budget in place so you know what you need to make in oder to cover expenses. From there you will be able to schedule your withdrawals.

I was thinking the same thing AmCan. A simple start would be looking at ATR and taking a multiple of that for a target. It would be interesting to see what tick/volume/range charts it would work on as well. Day trading vs swing trading? If I can get motivated I might have to look into some of these ideas over the weekend.

I figured it would be a long shot to get a response but hey it was worth a shot.

Well said traderwill. Automation can be a nice tool for the situations described. However, you want to make sure you are completely comfortable with the system before you do this. Many traders want to buy a system out of the box and just flip the automation on to do the testing. The problem with this is you never really get to know the ins and outs of the system. You also want to make sure when you go to trade live you can execute the trades in a similar way that automation was showing you. The results can look great on a test but if you can't follow the plan it won't mean a thing. Trust me I have been burned with this over and over again. I also agree that it's very important to manually place the trades.

Yeah thats very true jajuanm. With the 1 range I'm typically able to get done within the first 30-60 minutes when things are active. We just aren't seeing the powerful moves through targets this week. I have had a lot of trades give a quick tough of my target and that doesn't always guarantee a full fill. System did great again today considering it was fed day. 3 wins and 1 loss for a positive 17 ticks.

It's always a tough call on Fed day. I didn't trade it this morning myself due to the Fed and the rebalance going on this week. My system did make it through decent with 3 wins and 2 losses for a positive 9 ticks of profit. I wasn't expecting much out of the Fed release this afternoon and boy was that the case. Almost a non event in the afternoon trading. Still could see a selloff going into the close but so far a very choppy day.