Mechanics of Buy Zone Trades

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Prospectus
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Mechanics of Buy Zone Trades

Postby Prospectus » Mon Dec 17, 2007 2:26 am

Okay, I'm interested in using the Buy Zone to make AAPL juice. I got the simple concept--long when it moves into the long zone, short when it moves into the short zone. Take a profit when it stalls, unless you have a cushion to wait for more. Use statistics to determine the typical price target (seems to be $0.50 in AAPL). I'm all good there. The principle is easy.

What about a stop point? This method is too quick for actual stop orders, so when do you cut off a loser? if it retraces back to the open? If you buy at the first line in the buy zone, should you give it the whole $0.20 until you get a signal into the short zone, and then just reverse? Basically, enter and hold until you get a profit or have to reverse and take the opposite signal? Or do you bail if you get 1 tick below the buy zone? Something else? While the principle is simple, the execution can make or break the expectancy.

Also, how would you execute--market orders or limit orders? Say the open is 40.50. Price moves to 40.60--go long limit placed at 40.70? A limit at 40.60 might not get filled if things are moving, but you could easily get 20 cents or more of slippage with a market order...

Any other explanation of the mechanics of the trade is appreciated.

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Postby TheRumpledOne » Mon Dec 17, 2007 2:41 am

It's all been explained before...

LIMIT ORDERS ONLY...

STOP LOSS IS NATURAL AT EITHER THE OPEN OR OPEN +/- .10.... .20 should be the max you lose....

Yes, it's quick, that's why you have to be quick... this is NOT for the slow.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

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Postby Prospectus » Mon Dec 17, 2007 3:54 am

TheRumpledOne wrote:It's all been explained before...

LIMIT ORDERS ONLY...

STOP LOSS IS NATURAL AT EITHER THE OPEN OR OPEN +/- .10.... .20 should be the max you lose....

Yes, it's quick, that's why you have to be quick... this is NOT for the slow.


Thanks for your reply. I spent about 6 hours this weekend Googling and searching the Kreslik forums, and I found the answers to all of my questions but the ones I posted. You answered my stop questions; thank you. The limit order mechanics still are unclear to me.

I see using a limit for getting in, placing it when price crosses the first boundary of the buy zone with the limit at the far boundary of the buy zone. Limit at a profit target is also clear.

Do you use a limit order for a stop-loss rather than a market order? Maybe another example would help. It would help me, anyway!

Say we open at 99.25, price goes to 99.35 and I place a limit buy order for 1000 at 99.45, and I get filled at 99.38. So far so good. Price then immediately turns around and we go back to 99.25 (the open). Time to get out.

Sell market? Sell limit at 99.15? Sell limit at some other number?

Using a limit for your exit seems very dangerous--if you miss your fill price by a few ticks, you could be in a bad situation fast. Or am I missing something?

Apologies if it's all been explained before, but with respect I didn't find the answers to these questions in my research.

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Postby TheRumpledOne » Mon Dec 17, 2007 4:28 am

I never use market orders.
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Postby Prospectus » Mon Dec 17, 2007 1:35 pm

TheRumpledOne wrote:I never use market orders.


How much room do you give it on your limit then? If you want to get out, and we're at 99.25, what price do you put in your limit?

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Postby TheRumpledOne » Mon Dec 17, 2007 3:05 pm

SELL at the BID, BUY at the ASK.
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Postby TrvlWanderer » Wed Dec 19, 2007 1:42 am

TheRumpledOne wrote:SELL at the BID, BUY at the ASK.


I can see how someone would get frustrated by asking questions.

In the first 20 minutes of AAPL, no way in hell are you going to watch any bid or ask remain for more than a second. I gotta see this in action. I have no doubt the strategy is sound based on probability and statistics. That is what I use to trade as well. But a plus or minus $.10 on AAPL? I'm gonna freeze T&S tomorrow and review the first 20 minutes to see if it even possible to get a limit order in on a range of .10 let alone .05 or .03.

I know what's coming, bring it on. Hopefully with a better explanation.

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Postby TheRumpledOne » Wed Dec 19, 2007 5:16 am

People are doing this successfully.

The only question to be answered is whether or not you want to be one of them.
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Postby TrvlWanderer » Wed Dec 19, 2007 12:16 pm

People are doing many things successfully.

That evades the question all together (as usual). The OP said he did his searching and posted the unanswered question.

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Postby TheRumpledOne » Wed Dec 19, 2007 3:51 pm

Can someone please help TrvlWanderer?
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!



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