As a long time CANSLIM fan, I'm a firm believer in the importance of the 'M' part of that acronym - "Market Direction". According to IBD:
if the overall market is in a downtrend, it will be very hard for even the best stocks to move higher. That's because 3 of 4 stocks move in the same direction as the general market, either up or down.
(The "general market" refers to the major indexes, primarily the Nasdaq Composite, S&P 500 and Dow Jones Industrial Average.)
Simply put: If you buy a stock when the market is in a strong uptrend, you have a 75% chance of being right. But if you buy when the market is in a downtrend, you have a 75% chance of being wrong.
It's critical to me to have a read on what the broad market is doing. I used to use IBD's 'Big Picture' to get my market read but I find that I can reach the same conclusions using my General Market Analysis page. I've written before about how I use the General Market Overview page to get a read on the market as a whole. Last week I pointed out in my notes last week how choppy & trendless the market was looking. I want to go a little deeper into what it's telling me today.
Here's the trend table for the indices from today's General Market Analysis page:Read More ➞
Accessing via a Mobile Device:
I've been asked a few times if there are mobile apps for SwingTradeBot. The answer is
noyes (there are now Android and iOS apps) , however, the site is mobile-friendly and is 100% usable on a mobile device. A good portion of my own usage is from my iPhone & iPad, so mobile usability is very important to me. Having said that, when I really want to power through some charts, I do so on my laptop. It's so much faster to be able to open links in new browser tabs and to see all the information at once. (You can also open links in new tabs on mobile but it's just not as seamless & quick.)
It's "seeing all the information at once" where I had to make some compromises for mobile devices. There are certain places where some of the data is hidden (collapsed) from view on mobile devices. You'll need to make an extra tap in order to reveal the hidden data. On many of the tables you'll see a plus sign on the left side of each row. That signifies that some data has been collapsed/hidden from view in order to make the table fit on the screen.
You can simply tap the plus sign to reveal the hidden data.Read More ➞
I just released a couple of new scans. They allow you to identify stocks which have either rising or falling relative strength ratings. The letter grades that you see around the site are essentially relative strength ratings and these scans focus on those grades. Here are the scans:Read More ➞
I thought I'd share some thoughts I had while reviewing my trading results so far this year. Through today, the end of September 2016, the Nasdaq is up 6.08%, and the S&P is up 7.09% while my swing trading account is up 33.09%. While I'm happy to be outpacing the market by 4.5x, I'm a little disappointed that my account isn't up even more. That's because I know I missed a few trades that could have easily doubled or tripled my gains from where they are now. Nonetheless, I feel good that I've mostly stuck to my rules and that I'm still trading with a positive expectancy. Let's take a more detailed look.
The dark blue line in chart above is my account and the green line is the S&P 500. What stands out to me when viewing my equity curve is that it's been a pretty orderly rise punctuated by some choppy, sideways action -- and then there was Brexit on June 27th. The primary reason for the sideways periods is that the market itself was chopping around and I try to do less when the market is not trending up or down.Read More ➞
I just made some changes to the way the stock scans are displayed. First, I've moved the "Advanced" scans and combined them with the formerly named "Single Pattern" scans. So when you go to the scans page you'll see all of the scans listed along with the number of stocks that triggered for each scan.
The former Advanced Scans tab now is now "Scans by Type". I've taken a first crack at applying categories / labels / tags to every scan. Drilling down through the scans via those groupings should make it easier to home in on scans matching your particular style / strategy.
FInally, you may have noticed that some of the scans are marked as "Pro" now. People with a Pro (paid) subscription have full access to the results of those scans. If you're not a subscriber, the list of results will be limited for those scans.
I have a list of about 10 new Pro scans that I'll be adding over the next several weeks. So stay tuned for those to pop up.Read More ➞
As another example of how I'm using this SwingTradeBot to find and track good trades, here's one I closed out today: CLCD.
I posted CLCD to my chart notes the night of September 8th after I noticed it on my Calm After Storm scan. (See my blog post about the Calm After Storm scan for my reasoning for creating that scan.) This is a textbook example of the kind of chart I wanted to find when I dreamed up that scan. CLCD made a huge move on the 6th, pulled back on the 7th and on the 8th started showing signs of stabilizing/consolidating. That's what triggered the Calm After Storm.Read More ➞
I just received an email asking me how to remove stocks from a watchlist. It's pretty straight-forward but it may not be obvious if you're using a mobile device. If you're using a desktop or laptop computer (or maybe even a large tablet) you'll see a trash can icon over on the right side of each stock's row. Just click the trash can icon to remove the stock from the list -- note that the table scrolls horizontally & you may have to scroll it to see the trash can icon. The pencil icons allow you to edit the stock's details (The note for a watchlist... stop loss values, number of shares, entry price, etc. for a portfolio).
If you are on a mobile device it a little trickier. For most of the tables on the site, columns get hidden to conserve space on mobile devices. You'll be able to tell when data/columns have been hidden because you'll see a plus sign on the left side of each row. Tapping the plus sign or just tapping anywhere in the row will expand the row and show the hidden columns. Once the row has been expanded you can click the "+" to reveal the trash can. See below:
Read More ➞
People who are subscribed to one of the Pro plans can now specify the default search criteria for all of the scans on this site. I think of this as defining your "tradable universe" of stocks. Until now, by default the scan pages loaded with some settings that I chose -- minimum average volume of 250,000, minimum price of $10/share, stocks only -- no ETFs... If you wanted something different, you had to adjust the settings every time you ran a scan. This new feature will allow you to narrow the scan results down to exactly the type of stocks (and/or ETFs) that match what you're comfortable trading.
Well now you can set your own default values once and have them applied whenever you load a scan with no parameters. You can reach the 'Scan Preferences' page via the main menu. Go to Account -> Settings -> Scan Filter Settings. You'll be presented with the form below.
Just choose the values you want and click save. From then on the scan result pages will only show stocks which are in you 'tradable universe'. (Unless you click a link which has different parameters embedded into itself. Some of the links on the site are like that.) You will still be able to manually adjust the parameters if you so choose, just like before.Read More ➞
Every few weeks somebody asks me why SwingTradeBot doesn't provide real-time quotes. My answer is always the following two things:
- They're too expensive. Real-time quotes cost a lot of money if you want to republish them on a website.
- They aren't necessary for swing or position traders.
That second point is what I want to drill down into. IMHO, one of the key benefits of swing trading is that you don't have to watch the market all day long. It's an approach to the market that makes sense for most people, who aren't trading full-time.
I've written about how I use the site to find trading candidates but now I'll detail how I manage my trades. My goal here is to get the computer(s) to do the bulk of the trade management. Computers are great at always being on (hopefully); following directions/rules; not being emotional; not hesitating; doing things quickly & precisely. I want to take advantage of all of those traits.
Just as an example, I'll choose a stock which made a hammer candlestick yesterday -- SKT. I'll typically enter a (buy/long) trade a few cents above the previous day's high and put a stop loss order at or just below the previous day's low. SKT's high & low yesterday were 40.47 and 40.04. I want to see that SKT is moving in 'my' direction before entering a trade so I'm not going to try to buy it until it clears 40.50. I'll do that by using a buy stop limit order with a stop loss attached to it. The 'buy stop limit' tells my broker's computers to watch SKT and enter a LIMIT order if and only if SKT trades at or above the STOP price. I'm going to enter this order with a STOP price of 40.51 and a LIMIT price of 40.60. I'll put my STOP LOSS order at 39.95.
A critical part of order entry is position sizing. I like to use the percent risk position sizing model. Currently I'm risking 0.8% of my account equity per trade. So let's my account equity is $100,000. If I risk 0.8% per trade that means I need to size my position such that if my initial stop loss is hit I should lose approximately $800. ($800 is my initial Risk, or (R) for short... here's more on R and R-Multiples.) Given that the distance (price change) between my max entry price (40.65) and my stop loss (39.95) is 70 cents, I have to divide $800 by $0.70 to get my position size of 1,142 shares. I'll round that up to 1,200 shares. (I'm rounding UP because I expect to get filled closer to 40.51 than 40.65. If I were to get filled at 40.51 my optimal position size should have been 1,400 shares.)
Here's the order entry for matching that:
That's the entry form for my broker -- Interactive Brokers. Stepping through the order entry form from left to right and top to bottom... I chose to BUY 1,200 shares (QTY) with an order type of STOP LIMIT (STP LMT) with a LIMIT price of 40.65 and a STOP price of 40.51. The order will stay "in force" for the day (meaning it will only exist in my broker's system for the NEXT trading day if I entered the order while the market was closed or the CURRENT day if I entered the order while the market was open).
You'll also see that I clicked the "advanced" button, which opened an additional form. That's where I attached a STOP LOSS order. That order will only go live if the attached buy order gets executed. The stop loss order will then be set to trigger a sell (at market price) order if SKT drops to 39.95. Note that the stop loss has GTC (good til canceled) for its time in force. I want the stop loss order to stay active day after day for as long as I'm in the position.
Here's the confirmation for that order:
And here's a visual representation of the order on the SKT chart.
The green line shows where the order goes live -- note the label: 'BUY STP LMT 40.51'. The red line shows where the stop loss will trigger -- note its label: 'SELL STP 39.95'. I always check for these lines on the chart to get a nice visual confirmation of what my order will do. I typically want to see the last day's bar/candlestick bracketed by my entry and exit orders.
You should be able to accomplish that type of order at other brokerages as well. The way you enter it may vary based on the broker's user interface but the results should be the same. Here's how I'd enter the same trade at my other brokerage -- eTrade:
So I go to the "Conditional Orders" page and choose a "One-Triggers-All" order type. For a "One-Triggers-All" order, once the first order executes, the attached order(s) get entered. You can also do some interesting things with eTrade's bracketed orders (trailing stops or profit takers) and contingent orders.
Orders like that allow me to NOT have to watch the market at all during the trading session. I know that my entry order will get executed if the stock hits my entry trigger price and I'll be protected with my stop loss order. What I don't know, though, is if my order will be filled. Because I'm using a LIMIT order to enter the trade it's possible that the order will not be filled or will only be partially filled. That will happen if the stock moves past my limit price too quickly for my order to get executed. I try to prevent that from happening by only trading liquid stocks and by having at a reasonable distance between my BUY STOP PRICE and the LIMIT price.
Once I'm in a position I'll try to stay in it until my stop loss is hit. That could be my initial stop loss -- in this case at 39.95 -- or a trailing stop. If I get 1R ($800) of profit in this trade I'll move my stop loss up to my entry price to ensure that at worst (barring a gap down past my stop or a lot of slippage when I sell) I break even on the trade. Once I reach that point I'll adjust my stop to keep locking in more and more profit as the stock rises. I could enter auto-adjusting trailing stop orders but I prefer to manage "rolling my stops" myself. One stop loss adjusting technique that I often use is the Chandelier Exit:
Developed by Charles Le Beau and featured in Alexander Elder's books, the Chandelier Exit sets a trailing stop-loss based on the Average True Range (ATR). The indicator is designed to keep traders in a trend and prevent an early exit as long as the trend extends. Typically, the Chandelier Exit will be above prices during a downtrend and below prices during an uptrend.
If you've added stocks to your portfolio on SwingTradeBot, you've seen that there's a place to enter your chandelier exit parameters. I typically set my Chandelier Exits to 3 ATRs. Each night when the Bot updates its data and processes alerts, it also recalculates the Chandelier Exit values. So part of my after-market process is to check if I need to adjust my stop loss orders to match their current Chandelier Exit values.
So that's my process for managing trades. It doesn't require me to pay any attention to the market during the trading day. So I can work my day job, be on vacation, be offline, be asleep, etc. and my orders will get executed. This process has worked really well for me over the last few years and I can't imagine going back to staring at quotes & charts all day like I used to do years ago. If and when I do need a real-time quote I simply use by broker's smartphone app.Read More ➞
Pro users can now customize the appearance of the stock charts on the indivudual stock pages. So if you'd like to see the phases of the moon on your chart instead of the default Bollinger Bands, here's how you change the settings.
Navigate to the 'Account' menu and choose the 'Chart Indicator Settings' sub-menu. That will take you to a page where you can select from the following idicators:Read More ➞