fairly thin NYSE and ASE stocks, jump in front of someone impatient and taking out a lot of size. Large buyers have trouble accumulating these stocks and when they buy they put the price against themselves. This strategy might not work before for shorts b/c of the uptick rule but that's been eliminated now.
For Buys
- A stock must have an ADX reading of above 30 and its + DI greater than its -DI, or the stock must have an RS reading of 95 or higher.
- The average daily volume for the stock should be under 200,000 shares a day. The lower the volume, the more money you will make with this strategy.
- The stock must be trading higher for the day. This strategy doesn't work for stocks down on the day.
- Most importantly, the buyer must show me he is impatient or I must see there is more than one institution trading this strategy. How do I know this? Because I am waiting for two consecutive higher bid prices where there is size to buy. ("Size" means 5,000 shares or more). For example, I want to see a market that has 5,000 shares bid at 52 and 1,000 offered at 52 1/4. I then want to see the big go to 52 1/8 or 52 1/4 with 5,000 shares to buy again. This means someone is desperately looking for stock.
- In the previous example, if the market goes to 52 1/8 bid (with 5,000 to buy) and 52 3/8 offer, I will pay the offer side. The only time I will ignore this higher bid is if I see 5,000 shares or more offered there. This means there may be a seller who can accommodate the large buyer.
- My protective stop is 1/8 point under the price of the original 5,000 share bid (52).
- Where I take profits is very subjective. Many times, if there is size on the offer side or if I see my new friend has been filled on his order, I will automatically take my profits.
No comments:
Post a Comment