2007 Apr 02 - Mon

Trading Sites of the Day -- ETFs, Day Trading, Short Time Periods

Yesterday I did a search with the keywords of 'active trader magazine scalp scalping'. The magazine, Active Trader Magazine, wasn't very high up in the results, mostly because they hide most of their content. I'm wondering if they would do better, not that I know if they are doing well or not, if they had a better indexable site. Even Stocks and Commodities Magazine has good teasers to get people interested in their content. But I digress.

Well, I'll stay digressed for a moment. In the recent issue of Stocks and Commodities, at the back of the issue, is an article describing the web site ETF Connect. I've linked to their education page. The web site is a good introductory source to Exchange Traded Funds, in their various incarnations.

Now that I've covered the interesting but unrelated, now I move back to the subject at hand, regarding short term trading, right down to scalping.

PowerZone Trading has a pdf called Trading with the High Performance Intraday Analysis Indicator Suite. The draw back with this document is that they couch all their setups in proprietary lingo. However, by reading between the terms, and reviewing the charts, there are some good points regarding trade setups that can be used. They allude to using multiple time-frames, which I wholly support. Near the end of the document, they go into some scalping setups that could prove to be useful. I'm in the process of writing an article in my Automated Trading Strategy section that goes more into what I've come to learn about scalping. To wrap up, the last page of the article references some of the author's other work in various periodicals. One ariticle that I do have is the August 2006 issue of Stocks and Commodities on page 34 regarding Intraday Market Forecasting. There is a good table in there regarding how to Guage Market Strength with INDU, COMPX, TRIN, and TICK. I think it is good enough to reproduce here because it solidifies what I've learned about these indicators elsewhere:

Market Direction	INDU	COMPX	TRIN	TICK
High Reversal Probability			0.55 or lower	1000 or higher
Extremely Bullish	above 75	above 20	0.70 to 0.55	600 to 1000
Bullish	35 to 75	15 to 20	0.85 to 0.70	300 to 600
Neutral	35 to -35	15 to -15	1.00 to 0.85	300 to -300
Bearish	-35 to -75	-15 to -20	1.15 to 1.00	-300 to -600
Extremely Bearish	-75 or lower	-20 or lower	1.30 to 1.15	-600 to -1000
High Reversal Probability			1.30 or higher	-1000 or lower

In an article at Stocks, Futures, and Options Magazine, there is an article called Precision Trading: Trading Shorter Time Frames Well Still Depends on Method and Psyche discusses various trading time frades, all the way from scalping, intraday trading, up to swing trading. It puts scalping into perspective as fast in out trades, almost without regards to trends and analysis of which other time periods make heavy use.

I've refered to the 1option site previously, but I've come across another article that serves to perpetuate some myths that appear to be prevalent about trading. There is an article called Can An Option Trader With A $100k Account Consistently Make $500 A Day?. In one portion of the article, the author makes mention of Warren Buffet, trading, and scalping in the same breath. I suppose among other things, Warren Bufffet traded. But I think for the most part, he specialized in buying under valued companies and turning them around. I suppose that's what you get when you trade enough stocks in a company to become a primary shareholder. So a trader in companies, maybe, to stretch the definition, or bend it somewhat. The author goes on to say that scalpers aren't rich. The counter argument for that would be BATS (the trading system the specializes in making big dollars in scalping), and Market Makers who make their money on spreads.

'Making their money on spreads'. I've finally clued in to that. Limit Orders and Spreads. Basically scalping. After two years of research, I think I've finally figured out how this stuff works, after spending a bunch of time spinning my wheels on bar analysis and technical analysis. So the thought is to make more than $500 a day on a $100,000 account. Yes it can be done. I'll go more into that in another article.

To finish off this page, I came across a Trading Tips page. At first, with their big Roman fonts and yellow highlighting, I didn't know how seriously to take this page. Well, I still take it with a grain of salt. But unlike most sites with yellow buy me now hilights, this actually offers up some value. There is an article called Making the Market. It, very cynically, but probably with much truth, discusses Market Makers and, as a side-benefit, discusses what scalping does and how to watch where it goes. Be aware that the article doesn't finish, but references a more complete article at traders101. And only on that link's last page does it go into self promotion. But you learn something along the way. And if you pay attention to pivots, support, resistance, and trading ranges, paying someone else for the service may not be necessary, other than to get you over the first few hurdles.

Also at TraderAide is an article called Markets in Profile. Coincidentily, I had made the purchase through Amazon before coming across that article. I'm not sure if the time frames discussed in the book cover the quick trades like scalping, but perhaps it might cover some of the things to keep a watch for in intraday type of trading.

I should have spread these treasures over several days, but I tend to loose my bookmarks if I don't deal with them right away. Happy reading.

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