Trade SMART

nick721156 · #**171** 24th May 2008, 10:40 PM

Quote:

Originally Posted by SMART_Trader

SMART(Significant Move Analysis Related Trades) is an absolute strength based system. Stocks that have moved significantly over the past one year only is considered for trade. Stocks appreciated more than 100% during the past one year makes the trading universe.

The trick is to enter these stocks on a 4% plus breakout after a consolidation. if the entry is successful, we can catch the start of a new uptrend.So we are looking for yearly growth of 100% plus , 10 to 20 day weakness or consolidation, and a 4% plus high volume breakout.

Position sizing: use 10 % of the capital on a single trade and never lose more than 10% inclusive of brokerage on any trade. Never Lose more than 1% of your capital on any trade

Stops: Initial stop is pre breakout days low .Time stop of 5 days.( If the price is not going up above the entry price within 5 days , just get out).if Price appreciates more than 10% trail with 2 days low stop.

If you find too many stocks in breakout list use these to short list.

A) Prefer a smooth chart.
B) Closeness to year high is good
C) Prefer the one with high volume
D) Absence of recent 4% downward breakout is good
E) Preference for first breakout after consolidation
F) Small capital base
G) Institutional holding
H) Sector with high relative strength
I) Clear catalysts like

" Result announcement
" Bonus/Split announcement
* Sales Acceleration
* New Orders
* New Product
* Regulatory Policy Change etc.

Trading is all about probabilities, never certainties.If you are familiar with some patterns or other indicators which can turn the odds in your favor , use it. I will be posting the breakout list regularly.short list and trade at your own risk.

Dear friend,

I am not an expert in trading nor do I know alot about TA. I am trying to learn from knowledgeable people like you. Fortunately, today only I have discovered your thread and gone through some pages. But at the beginning itself one thing is not clear to me.

You have said, "Stocks that have moved significantly over the past one year only is considered for trade. Stocks appreciated more than 100% during the past one year makes the trading universe.
The trick is to enter these stocks on a 4% plus breakout after a consolidation. if the entry is successful, we can catch the start of a new uptrend.So we are looking for yearly growth of 100% plus , 10 to 20 day weakness or consolidation, and a 4% plus high volume breakout."

I have checked with one of the charts, "Bluebird" that you have indicated in the break out list. What I can't understand is that on 25/05/07, its closing was 70.45 and after 01 year i.e. on 23/05/08, its closing is 45.75. It shows that the stock has not moved up in last 01 year. Even during the year, its highest closing was 89.05. Of course, on 23.05.08, it had moved more than 4% break out with high volume.

Therefore, if we go by your trading system, "Bluebird" does not qualify to be considered in the break out list.

Please clarify my understanding of your system.

With regards,

Nick

SMART_Trader · #**172** 24th May 2008, 11:06 PM

Dear Nick
You are correct.Blue bird has not gone up 100 % in one year.
After the crash , very few shares qualify in the original scan which I call "Momentum Plus"
I have modified the scans to accommodate shares that are bouncing back. These are 65 and 135 day momentum trades called "Early Birds".More information can be find on my blog.

Scans are not at all important. Concept is. We are entering a high momentum stock on a breakout after a minor consolidation or weakness,hoping the stock will continue the up trend .Longer term momentum is preferred as short term momentum can mean revert.

nick721156 · #**173** 25th May 2008, 10:36 AM

Quote:

Originally Posted by SMART_Trader

Dear Nick
You are correct. Blue bird has not gone up 100 % in one year.
After the crash , very few shares qualify in the original scan which I call "Momentum Plus"
I have modified the scans to accommodate shares that are bouncing back. These are 65 and 135 day momentum trades called "Early Birds".More information can be find on my blog.

Scans are not at all important. Concept is. We are entering a high momentum stock on a breakout after a minor consolidation or weakness,hoping the stock will continue the up trend .Longer term momentum is preferred as short term momentum can mean revert.

dear friend,

thanks for your prompt reply. i could find 65 & 135 day early birds in the XL sheet. is there any reason for choosing 65 and 135 days for scanning? again, once we recognise a breakout, when to enter it - i mean at the closing price on that day or at the current price the moment breakout is identified?

regards,

nick

SMART_Trader · #**174** 25th May 2008, 10:59 AM

Quote:

Originally Posted by nick721156

dear friend,

thanks for your prompt reply. i could find 65 & 135 day early birds in the XL sheet. is there any reason for choosing 65 and 135 days for scanning?

regards,

nick

No special relevance to 135 and 65 days.Calendar half year is approximately 135 trading days and a quarter around 65 trading days.Brought down the momentum time frame from year to half year and quarter.select the ones with higher price appreciation in the time frames.

Please note that the appreciation is calculated from the lowest low price of the time frame period
Dont worry much about the exact scans . Logical concept is more important.need not perfect the system to the 10th degree of perfection and sophistication.Trade the concept

SMART_Trader · #**175** 25th May 2008, 11:29 AM

Nick

Most of the shares consolidates and starts moving sideways after going up 20-25 % from breakout days low.If you can watch the market during trading hours enter on the day of the breakout.Otherwise enter next day open.Get out if there is no follow through within a reasonable time say 5-10 days. sells if it falls to the breakout days low. Stock selection is the key.
Look for trending stocks . let it consolidate and show a minor weakness. Enter on the next high volume significant up move .If this is the beginning of a new up leg you will make money , otherwise cut your loss short and move to the next trade.Purely a probability game.Trade the concept. you can use different tools and tactics.

SMART_Trader · #**176** 26th May 2008, 08:32 PM

Breakout 26/05/2008

EICHERMOT

More Breakouts

Further Deterioration in broad market conditions.Stay out.
FII net selling at Rs 500.50 Crores.

SMART_Trader · #**177** 27th May 2008, 08:48 PM

Breakout 27/05/2008

ABAN

More Breakouts

Broad market worsened.Stay out
FII net sellers at Rs 1115 Crores.

nick721156 · #**178** 27th May 2008, 09:27 PM

Quote:

Originally Posted by SMART_Trader

Nick

Most of the shares consolidates and starts moving sideways after going up 20-25 % from breakout days low.If you can watch the market during trading hours enter on the day of the breakout.Otherwise enter next day open.Get out if there is no follow through within a reasonable time say 5-10 days. sells if it falls to the breakout days low. Stock selection is the key.
Look for trending stocks . let it consolidate and show a minor weakness. Enter on the next high volume significant up move .If this is the beginning of a new up leg you will make money , otherwise cut your loss short and move to the next trade.Purely a probability game.Trade the concept. you can use different tools and tactics.

thanks friend for your simple explanation. will try to follow the concept as suggested.

regards,

nick

SMART_Trader · #**179** 28th May 2008, 08:38 PM

Breakouts 28/05/2008

TATASTEEL

GESHIP

More Breakouts.

Market condition not favourable.
FII net selling Rs 354.20 Crores.

SMART_Trader · #**180** 29th May 2008, 07:57 PM

Breakouts 29/05/2008

LUPIN

IFCI

More Breakouts

Stay out. Further deterioration in market condition
Net FII selling at Rs 733.90 Crores