Monday, April 30, 2007

Stumbling Around

Well I stumbled upon a new method to find potential day trades. It isn't completed yet but I'm going to throw it out here and see if any of you guys want to work with it a bit and come up with some solutions.

This is as simple as it gets - for your favorite price range and average volume simply look for stocks where the "Close equals High of day".

That's all there is to it and here is what it looks like -

On 4/26 we had the "flat top" candle (ignore for the moment the fact that there was a completed BOB just before this event). This was a narrow range day (which seems to be important to the method) followed by a wide-ranging day. The wide-ranging day looked like this -

The fact that this day has a Return to 4 and cross over (the sixth candle is the cross over) just adds to the day trade aspect of the filter.

OK - before we get too excited about that BOB - I tested it v32x where the third candle had a flat top and it returned an amazing 200%+ ROI and a 100% win percentage - but in 80 days it picked exactly three stocks which means that it isn't a good filter for picking stocks - but (second but in the sentence) the win percentage and ROI suggests that when you do have a BOB the closer the close is to the high of the day the better off you might be - think about it.

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