Dummy Trading – “Creative” Entries?

September 21st, 2006

After seeing Jamie post his watchlist yesterday, and having JOYG on my radar since it was poised for new lows, I was stalking it all day looking for an entry. I’m dummy trading so I’m looking for narrow range bars to trade against.

I tend to trade the 15 minute bars earlier in the day and then switch to 30 minute bars around mid morning. Alas, most bars in JOYG were too wide. The only way I could’ve traded JOYG today was to trade against (and size my position against) not the previous bar, but the one before the previous bar. That is, trade against the 11:30 bar entering the trade during the 12:30 bar (30 minute bar). Here’s the chart where I’ve attempted to illustrate the situation.

Creative Dummy Entry in JOYG

I was IMing with Trader Mike the other day where he pulled a similar stunt with AAPL when it broke 75 a few days ago. I also know that Ugly occasionally gets creative with the 15 minute candles, but this is a little different.

My question is: are there any dummy traders out there who ever take the occasional trade this way and how do you decide that it’s a good idea and when do you pass on this type of setup? I’m looking to formulate some rules for my own trading to prevent myself from “creating” a trade when there really isn’t any, yet still be able to capitalize on a profitable situation like JOYG today.

BTW, I was waiting for Trader Jamie to post his trade of the day – I knew it would be JOYG and was interested to see how he played it. He entered during the opening range which is something I don’t have the stomach for yet. 😉

4 Comments

  1. Jamie Said,

    September 21, 2006 @ 7:37 pm

    Hey Dave,

    I played this one on the open because I was confident that everyone was, as you said, “stalking it”. However, I did get nervous around noon, when it came back up and tagged yesterday’s low. There were no dummy entry points, however, that tag and immediate pivot was probably the best intraday entry point (with a stop 10 above yesterday’s low).

    Cheers to the great new stuff on this site!

  2. zen-trader Said,

    September 23, 2006 @ 10:10 pm

    That set up, to me, would be a totally valid trade.

  3. butterboy Said,

    September 27, 2006 @ 5:28 pm

    I dummy trade strictly off the fifteen minute candles. I think the key is not entering the trade as early in the day. Some stocks that are candidates are choppier in the morning and then tend to make the move after it’s midday consolidation. If you notice, lots of trades on the 30 min bars happen after the third or fourth bar. By using the fifteen minute candles during that timeframe I can still get a reasonable stop. The key is to not get in so early in the day and just wait. Sure you’ll miss some oppurtunities, but most of the time you’ll catch the big movers. On that same day (9/21) there was an opportunity to short on the fifteen minute candle with a stop of approximately 20 cents if you include slippage at the time you thought about shorting. As far as deciding whether or not to take the trade, I’m not qualified to answer that. Personally, I’m horrible at choosing the “perfect” setup, so I just setup my criteria, and whatever shows up, I just take the trade. Through time I’ve created more rules just to filter out the stocks that are less probable to make a move , i.e. a bar opening on one side of the 20 MA and closing on another. I hope this comment was helpful. Good luck on your trades.

  4. Dave Said,

    September 28, 2006 @ 4:05 am

    @butterboy

    Thanks for the informative comments. It’s funny that you mention that you use the 15 minute bars to trade later in the day. I’ve been using them to trade earlier in the day and then switch to the 30 minute bars around mid morning.

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