Friday, October 31, 2008

My set up

To slow time down and make it my ally, I use only 5 minute and 15 minute charts to trade. I use 3 monitors. From left to right here is my set up.
On 3/4 of the left monitor is my 1 day , 5 minute chart. On the remaining space is my 1 day, 15 min. chart. All charts are set on a black background to alleviate eye strain. I use a 7 and 17 day exponential moving average(EMA) of the close on the 5 min chart to keep me in trend. I have the volume along the bottom. No grid lines no time lines. The 15 min is alone with only the candles nothing more. It is a clean and clear set up and uncluttered, information can be disseminated easily and quickly.
I believe that using 5 min charts for the majority of my decision making helps me smooth out time and slow it down. A shorter time period has the effect of too much information and movement and true trend is harder to see. I would say 80% of my decisions are based on what the 5 minute chart is telling me. However when the 15 minute chart talks you have to pay attention and listen. A great example are 15 minute dojis. Odds are it is a reversal that can be played profitably.
On the middle monitor I have tall but thin 5 min charts of the S&P and QQQQ showing an hour or so worth of data. Then comes two watch lists stacked on top of each other. The top one contain some stocks that I am familiar with or watching. The bottom one contains what I am presently trading. Then comes my order entry window with level 2 box showing bid/ask level and size and ticker.
Monitor #3 has a daily chart with 200 or more days displayed. Two hitting highs and hitting lows tickers are overlayed on this. One for the QQQQ stocks and one for DOW stocks. A positions and orders box is also overlayed on this.
My goal is to have enough information, but not too much, presented in a way that is clear and will compel me to make decisions based on what I see.

5 comments:

Blue said...

Good stuff FNG. You clearly know how to scalp big size effectively. I'd love to learn more about how you do it. You're making my monthly haul in one effective trade. I've been trading 1,000 shares of SKF (2k would be full margin for me) all month, but continually leave a winning trade way too early not being able to stomach the swings. If you've been trading like this all year long you're clearing over 1mil.

I found that my winning SKF trades this month were all on 5min charts. I started using the 1min chart and panicked out way too often. SKF will probe HARD and I often bought the top on the 5min candle losing the momentum on the next bar. Earlier in the month I was catching the run, these last few weeks I've been catching the top of the candle. How do you handle your stops on these types of trades? I usually have to market in and market out using Fidelity. They blow my stop orders all the time, sometimes freezing my order in a cancellation process because the stop loss couldn't fill and trapping me in a losing trade. When the bid ask swings .50 I have no chance getting decent fills and having my stops hit. It's been easier to market in when it sucks back down and market out when the bid keeps advancing.

I'd like to know how you compare 7 and 17 day EMA's vs 20 and 50 day MA's. I've been using simple 20 and 50 day MA's and wondering if I should change?

I would love to emulate what you're doing if I can pick your brain some more. I think we all would. Thanks for being a new resource to some of us amateurs on Wallstreak.

Market Monk said...

Great post. Is there anyway you could post a screen shot of each monitor? You could open up the jpg into paint and block out any account #s or other information you don't want us to see.

Scott said...

Make certain you first have direct access traing and not online trading. The order execution with DAT is faster. Sounds like you need to do business anyway with a company that doesn't give you problems like you descibe. You're losing money and/or opportunities otherwise.
During the last few weeks it has been nessesary to change trading tactics. There is more volatility and less steady trends. Taking quick profits is more normal during these times.
AS far as stops go, I sometimes use the previous candle bodys high or low or just take a decent profit when it is offered. I use mental stops and draw a line where that point is. I constantly adjust that line depending on what the price action is doing.
Trading is an art and not a science so you definately need to feel what is volatility and what is a real move.
I do pay very close attention to the clock. Many times when the clock is about to change to a new 5 minute period, moves happen that are not real, as in a nice down trend and then the candle shoots up 10 seconds before the change over, only to drop back down afterwards. I keep a clock with the seconds displayed right below my 5 minute chart.
I really don't use the 7 and 17 day average s for much, it's just to remind me of the trend so I can't comment on how 20/50 days would compare.

Blue said...

Thanks Scott. A digital clock sounds like a good idea. I too have a clock, but it has no second hand.

What broker are you using?

Sounds like you keep things very simple, understand the ebb and flow of the market, and have created a nice simple system through trial and error. More gut based trading with simple market indicators on short time frames to give you the direction of the trend. Trade the trend, take your profit, trade the trend...

Scott said...

Simply double click on your computers clock to display it and the move it to where its always visible.
Since I'm in Canada I use Penson as a broker and Realtick as my trading platform.