EOD scanner Daily and Weekly criteria

[jkeech]

Hi,

I'm told I should really only take a type 1 or type 2 EW trade if the daily and weekly EOD charts indicate similar and not opposite move expectation.

How can I therefore ask my search to only show stocks who's daily and weekly both show an up move or both show a down move? ... or both show a type 1 buy etc etc.?

[Nate McCartney]

jkeech,

I do not subscribe to the theory that the Daily and Weekly must show the same in order to take a trade. A Type One trade taken on a Daily chart may last up to a week or two tops, which is only one or two bars on a Weekly chart. There is usually plenty of time for a trade to play itself out on a Daily chart before the Weekly picture takes over.
Let's take a hypothetical situation: You are looking at XYZ stock, and the Daily is a Type One Buy. You move over to the Weekly chart, and it is showing a Type Two Sell. Those don't match up. However, you check back a week later, and the Daily Type One Buy worked out, and made new highs which you missed out on. The Daily NOW shows a Wave 5 up, indicating what?... A Type Two Sell, just like the Weekly STILL shows. I've seen this happen time and time again. There was enough time for the Daily Type One to work itself out before the Type Two Sell on the Weekly comes into effect. Now, you have BOTH Daily and Weekly showing Type Two Sells, which is a great confirmation.
To answer your question on how to set up the search, I will need to know whether you are using the End Of Day search built into the program, or if you are using the Advanced GET Scanner, which is the Real Time search.

End of Day search: You will need to run the search for the Daily first, and, once the results are shown, right click in the list of results, and select Make Portfolio. Once you have saved the listed results as a portfolio, run a search using that portfolio for Weekly listings. The results you receive from this second search will meet the requirements on both the Daily and Weekly time frames.

Advanced GET Scanner: You just need to make sure you have both Daily and Weekly checked in your Filter listings, and make sure you have "Highlight Time Frame Convergence" selected as well.

I hope that is helpful. If anyone has any more questions on this, please let me know.

Nate McCartney

[jkeech]

Thanks for that - yes I'm using just GET EOD.

You make a point though about your typical type 1 trade length using EOD. I have not found that any of my trades have been that short. In fact on the initial chart they show as generally 2 to 6 weeks (just looking at CVX right now as an example which is 2 to 4 weeks). Once the trade is underway, the MOB often then blows out by an additional 2 to 4 weeks and I've been caught a couple of times with having to exit my position at 30 days without having reached the re-drawn MOB price/time frame.

Could you please comment further on the above, thanks.

Regards, John.

[MR]

I wish it were easy to state how long it takes for a Type 1 setup to materialize, or fail, when using a daily chart. It really is not a very easy answer. It can depend on many other variables, that I honestly don't think I can give you an absolute answer on this.

For some people it might be a week or two, for others it could be much longer.

My personal preference for an hourly chart, from time of entry I will allow up to 3 to 5 days for that trade to materialize before considering scratching it? For a daily chart, I might grow uncomfortable if it does not reward me within 2 to 3 weeks for it to evolve as I would like. For a weekly chart, it could take 4 to 6 weeks, but also depends on how much I have to risk for that setup in the first place.

Again, these are preferences. These variables might change if it were, say, a dynamic futures contract which is very dynamic, or a stock with a very high beta.

For example, I have a good friend who is playing with penny stocks. I warned him to be careful. When he enters his daily charts he is lucky if he gets 1 to 2 days to confirm his daily trades.

I once bought a daily Type 1 and it took two years to confirm. It was not a problem because my objective was long-term, the trade never caused me any emotional worry because the most drawdown ever was $1, so I stuck it out. I was mostly concerned with teaching my kids a lesson on investing.

Because you mentioned CVX, I just posted [see below] the chart after reading your comments. It has attractive qualities that make it a legitimate Type 1 buy setup. However, how do we buy it now and how long hold it?

If I were an aggressive trader, I might like to attempt an aggressive CVX soon because of the current Ellipse arrival. At this time, I think I will follow Nates advice and allow a week, but no more than two for this setup to develop into a winning trade, or I really might scratch it. If it drops below a certain price, I would scratch it.

But if it did drop lower later to one of the target price areas, CVX would then offer a better risk/reward ratio, so if I were to buy it then, I would allow more time for the setup to get going because I have a better risk/reward to work with.

[jkeech]

Many thanks for your very comprehensive assistance Marc.

I must do some reading on ellipses too - I've not investigated this tool or feature at all up til now.

Thanks again, John.

[Nate McCartney]

I may have been a bit hasty on my "week or two tops" comment in my reply. That is not entirely realistic in all circumstances. My point was just that there is usually enough time on a Daily chart for the trade to play itself out before the weekly chart takes over. My apologies for being a bit quick on the trigger with limiting the time frame of the Type One. Thank you, Marcus, for bringing a bit more light to the subject.

Nate

[pj909]

Nate,
I seem to remeber somewhere in the videos a comment to check your trade on a higher time frame. I agree with jkeech - I find it very useful to know if the trade I am contemplating is going with the trend or against it. Because I like to trade options I tend to prefer to scan on an hourly and confirm on the daily. In fact using the real time scanner I found the ability to cross reference time frames very handy in reducing the number of charts I was looking at. The point is the EOD scanner while more versatile in some respects is lacking some much needed and I think very basic capability to cross reference. (While were at it wouldn't it be nice if we could test for the ellipse and the MOB? But then there wouldn't be much work left for us. ) Wouldn't it be nice to know your XTL breakout on a 60m chart is confirmed by a wave 3 on a daily? Or if your Type 2 buy on the 60m is also a Type 1 buy on the Daily can you confirm the OSC pull back and PTI on the daily are in line?

[Nate McCartney]

It is good confirmation on any trade to have time frame convergence. However, it is not needed in order to take a trade. That, alone, was my central point. I see your point as well about the EOD search. One must complete TWO searches in order to do the same thing that can be accomplished in one with the Advanced GET Scanner. However, that is why the EOD search is included with the EOD program at no extra charge, and the Advanced GET Scanner, being the more powerful program, is an extra fee. I will take the suggestions back to the programming staff and the Product Manager for them to look at to see if anything like that can be added. We very much appreciate customer feedback.

Nate McCartney

[pj909]

Nate,

As long as you are forwarding suggestions I would like to elaborate on the scanner issue. Except for the ability to cross reference across time frames, IMHO the EOD scanner is actually more powerful than the RT. It allows you to set specific parameter values where the RT is mostly “pre-built”. For example on stochastics I can set the length, %d, %k and at what level I want %k to be above or below. Same is true with the other indicators some of which aren’t even available in RT.

RT, when it was introduced was a breakthrough product. But it needs to be enhanced. First it should allow me to specify search parameters (just like EOD). I also think it should allow searches on lower time frames. For example if I am doing a T1B on a 15 minute how about a cross ref to a T2B on 5 minute. Ultimately there is no substitute for the chart, but better quality searches would enhance our results and increase your subscriptions.

EOD. Cross reference on time frames. And because the market is open 6 ½ hours add 30 minute bars!

[pj909]

On RT scanner: Forgot to mention that we should be able to have more than 1 scan window open at a time. And having refresh rates of less than 2 minutes would be nice also.