Saturday, March 24, 2007

Using BOB as a Day Trade Starter

When I began day trading one of the more difficult problems to solve was finding stocks to trade. I used gap-up and gap-down screens right after market open and these work well but sometimes some of the best trades are neither gap up or gap down.

So I think that that I have solved that problem for good by using the BOB set-up filter to find potential day trades. And had I been at my station Friday instead of beating a white ball around I would have had a beauty – IN.

The BOB set-up filter finds the first two candles of the set-up and then relies on you to find the third candle.

Here is how IN looked on Thursday with the BOB set-up – you can see how the set-up converted to a full BOB on Friday – it opened and went up – i.e. the low of the day Friday was above the low of Thursday. And that is key and critical to a BOB set-up.

The 15-minute chart looked like this so if you didn’t want to take the crossover entry off the BOB set-up you could have taken one of the returns to 4.

Here is how those looked with the pivot points in place. I used the extended pivot points to illustrate this trade.

This chart also has a couple of other interesting features – one is the dummy spot on Thursday coupled with the RSI(2) < 2 and the other, not annotated, is the last three 15-minute candles on Thursday have a BOB, an RSI(2) < 2 and a tweezer bottom all in the same three candle set-up. I never recommend starting a day trade overnight on something like that but it would have lent credence to the next day’s action. And as soon as you saw the crossover you could have taken the trade with confidence.


Anonymous said...

Wow, that would have been a sweet trade. Thanks for the education. Does a tweezer bottom low have to be exactly the same on both candles, or can it be off by a couple cents?


Marlyn Trades said...

It has to be exactly the same - at least for my trading it does.

Anonymous said...

After reading "...extended" relative to Pivots, I looked again at my indicator list in QT and found Pivots Extra. Duh. That helps define a clearer picture on some of the larger gapping stocks. Thanks.


Ramón said...

Hello Marilyn,

thanks a lot for the training. However, for me is not clear which is the entry point in your BOB filter. Would you so kind to give further details?

many thanks in advance!!

Ramón said...

in you IN example:

Stop buy one tick above 22/03 high and stop loss one tick below 03/22 low?



Excellent trading info.