I get ready for the day, trying to figure out a market theme that will bias my trading direction for the session and thanks to Twitter/StockTwits, I get an insightful nugget from Brian Shannon of Alphatrends:div/divblockquotediv”When 200 DMAs are DECLINING, rallies typically DO NOT hold, especially when they are advertised so strongly in media, keep guard up.”/divdivSource: a href=”http://twitter.com/alphatrends/status/1773111423″http://twitter.com/alphatrends/status/1773111423/a/div/blockquotediva href=”http://twitter.com/alphatrends/status/1773111423″/a/divdivspan class=”Apple-style-span” style=”font-weight: bold;”span class=”Apple-style-span” style=”font-size: large;”9:20 AM EST/span/span/divdivbr //divdivRummaging through my list of short strategies, I choose one I recently created for an upcoming Technical Analysis of Stocks amp; Commodities issue – we appear in the magazine’s monthly Traders Tips section.br //divdivbr //divdivspan class=”Apple-style-span” style=”font-weight: bold;”"Modified ATR Volatility Stop Part 2″br //span/divdiva href=”http://bit.ly/2tsmt”span class=”Apple-style-span” style=”font-weight: bold;”http://bit.ly/2tsmt/span/abr //divdivbr //divdivClick on the above link and goto ‘Configure’ to see how span class=”Apple-style-span” style=”font-weight: bold;”this strategy looks to short large spikes in price (of at least $0.75 in under a minute)./span/divdivbr //divdivdivThat’s the strategy, but what about the trading rules?  How should the opportunities that the strategy finds be traded?  /divdivbr //divdivFor the stop loss we used one of the more advanced options available in the OddsMaker.  Instead of using a traditional stop loss we selected ‘Another Alert’ as the exit condition called ‘a href=”http://www.trade-ideas.com/Help.html#TSSD”Trailing stop, volatility down/a’.  This alert is triggered when a stock moves down an amount equal to the average 15 minute volatility multiplied by the number of 15 minute bars we decide – in this case 2.  For example if the average 15 minute volatility is 10 cents, this alert would not trigger until a stock moves down at least 20 cents./divdivbr //divdivHere is what The OddsMaker tested for given the following trade rules:/divdivulliOn each alert, sell short the symbol (price moves down to be a successful trade)br //liliSchedule an exit for the stocks 30 minutes after entrybr //liliStart trading from the open and stop trading 30 minutes laterbr //liliSet a stop using the alert, ‘Trailing stop, volatility down’, with a setting of 2 barsbr //li/ul/divdivI have a few other strategies also up and ready to trade, but I’ll watch what comes through here and short the large spikes in price I see from this set-up.br //div/divdivbr //divdivspan class=”Apple-style-span” style=”font-weight: bold;”span class=”Apple-style-span” style=”font-size: large;”9:30 AM EST/span/span/divdivbr //divdivHere we go./divdivbr //divdivTaking THG at $33.74 at 9:34AM EST.  Out at $33.45 at 10:11AM EST +0.29/divdivTaking TRH at $$40.41 at 9:42AM EST. Out at $40.46 at 10:12 AM EST -.05/divdivbr //divdivNot thrilling, but living to see another day./divdivbr //divdivbr //divdiv class=”blogger-post-footer”img width=’1′ height=’1′ src=’https://blogger.googleusercontent.com/tracker/9446784-2310854976105181509?l=marketmovers.blogspot.com’//div

Last 5 posts by David Aferiat

• Tooltip: Spank Father Time While Improving Your Trades - November 5th, 2009
• Format and Themes for Upcoming StockTwits Episodes Videos - October 27th, 2009
• Signposts: A Method of Market Forecasting Which Strategies to Employ - October 26th, 2009
• New Version of Trade-Ideas iPhone Application is Now Available through iTunes - October 14th, 2009
• Like Gump But Without The Smarts: More SOES Stories Trading Lessons - October 13th, 2009