My main trading system
I use this system to capture the most obvious and explosive stock moves at the opening of the US markets on a daily basis (stocks between $30 to $200 are my sweet spot). This is a semi automated trading system, the candidates are discretionary selected before the open.
I coded this system using Multicharts and EasyLanguage (this programming language was actually created by 2 cuban musicians! How ironic knowing that cuban music is one of my strongest specialty!).
What are the most obvious and explosive moves at the opening of the market?
Gap exhaustion. See the chart above, $ONCE, way over sold on the daily chart and capitulating pre market giving hints of a high probability strong bounce at the open.
Key change in fundamentals (mostly negative such as full year guidance down, 1st setup taught to new traders by elite trading firm SMB Capital). I do use my robot in this situation if technical analysis is in my favor as well (extended daily chart).
$RH on the 6/2/17 after a terrible earnings report
I automated this setup for these reasons:
High probability winning rate + great risk/reward with a high chance to trend all day and finish at the highest/lowest of the day; in my data it is much more interesting on the short side than on the long side though,
I want to avoid spending hours in front of the computer which is extremely unhealthy,
Things are moving faster and faster at the open; technology allows us to capture these setups in a more efficient way; it also allows me to focus on other potential setups,
40% of daily activity used to happen at the open, it is now 60%,
If you have great trading mentors, they will push you to become bionic and/or fully automated.
All executions are completely automated.
The white line is the buying/short selling level,
The red line is the hard stop transforming into a trailing stop after a certain time (I delayed the trailing stop to allow for some juggling time),
The green line is the minimum target level with this condition: if the trailing stop/hard stop didn't get hit and if the momentum slows down above/below that level, profits are taken,
The cyan line is the previous close,
All these levels are based on ATR (daily average true range).
The entry is based on multiple conditions (candle stick patterns, time of the day…)
A true edge: for a long, the robot is waiting on the best bid to get hit unless it moves too far away from the 1st time it bided (reverse the idea for a short),
If the positions are still open 5 minutes before the close, the robot closes them,
I set it up so that it is sending me text messages with the details of what it is doing in case I’m not home,
The robot talks each time it is doing something with a female voice (I called 'it' Eva since 'it' sounds like the 'Ex-Machina' movie’s main character. By the way I spent a whole week where that movie got shot in Norway! ).