I promised loyal reader Alex that I would post something about my stock setup … so…. here are some screenshots.
Watchlist
So, before the open, I go through my top stocks list on this screen:
The radar screen shows signal2noise, the GVol_Osc, and a cycle-adaptive bollinger bandwidth/%b reading. This helps me filter out stocks that probably won’t be interesting to me. I don’t have to review the whole list every night, which is good because I honestly don’t enjoy doing this part too terribly much. When the little squiggly lines don’t squiggle, it’s kinda boring to me. Gotta have some action! (GVol_Osc is an eotpro creation; I coded the other two).
By clicking on one of the stocks, the two charts shown get populated with the price data (that’s the green ‘S’ on the windows, linking them together). The chart on the left is a daily chart with the Madder bias line superimposed in the middle, and the cycle moving average (both eotpro). The chart on the right is a 60-minute chart with pretty much all the ‘main’ eotpro indicators on it, though I prefer GVol_Osc to Shelly’s Volume for use on stocks.
I have been known to also pull up a longer-term PnF chart (with no indicators on it) to see a bigger picture, but aside from that, what you see pictured is how I make my watchlist for the following morning. I whine about it, but it usually only takes about 15 minutes.
Watching
So, just before “showtime”, I put my watchlist stocks (and only my watchlist stocks) on this screen:
For me, the key here is to be very light on indicators of any kind. Now that I’m only playing the open, it’s not so important to me… but when I scan through stocks all day, I want to plays to jump out at me in a pure form… then I will go looking at indicators. If I am hungry to trade and I look at a bunch of indicators, I can construct a story in my head about why they say I should trade. That’s no good for me.
So, on the radar screen, I have signal2noise. This is great for when you have a long list… you can just look at the green ones. Cuts out a lot of wasted effort. I’ve got the GVol_Osc reading. I’ve got the Box Play there, to alert me if a box play sets up anywhere on my watchlist. I have the cycle-adaptive bollinger stats. And, I have the current bid-ask spread. So, I can tell a great deal about what the stock’s up to without even looking at a chart. Between the spread and the volume, I can also tell how many shares I can safely trade. Awesome.
Going around the screen… lower left is a plain daily chart. Middle column is PnF charts on two different scales. Right side is a bare 15 minute chart, which includes pre-market data. Assuming something catches my eye as a possible trade, we move on to….
The Triple Screen
I call this workspace the triple-screen, because I first heard about the idea in Alexander Elder’s books, and that’s what he called it. A few other traders on the web, like The Chart Strategist, use it as well. I don’t really follow the “triple screen” approach as outlined in the books, but I have always like the idea of using multiple data resolutions together (I did a lot of work in college about multiresolution analysis of musical scores, so it’s kinda what I’m used to doing with complex data, I guess).
Now, we’re mostly back to the standard eotpro indicator set again, though I spice it up with some of my own creations from time to time. Pictured here is MRK from today, which set up beautifully with a box play right after I shut the workspace down to focus on ES. Arrgh!
To me, this is important: What I’m looking for on this chart, first and foremost, is an indicator that disagrees with my idea. I already know what I want to do before I get to this screen, so asking if the chart agrees with me is the wrong way to go. Your brain will make it agree, even if it doesn’t. Sad, but true. So, it helps keep me honest to ask why I shouldn’t trade. If that’s a hard question, then the charts must agree with me pretty well. That’s not to say I pass if I can find one thing that looks wrong… this is just to help me find the wrong things, so I can think about them instead of glossing over them.
(all this has to happen in a split second, because I usually only spot the trade a few seconds before I need to be entering it. Also, for most trades it’s part of my strategy to look at the plain bid/ask/last info a little bit to make the final go/no-go decision. That also takes several seconds to assess. So, if there’s no time for the triple-screen, I trust myself and enter the trade first, then check for reasons I should get right back out. That’s not for beginners!)
Anyway, you’ll note that the 3-min chart has the full EOTPro_JMK indicator, while the 15 and 60 minute charts just have the madder line. I got tired of agonizing over what it means when I get a 15-minute signal but no 3-minute signal, for instance. In the end, I decided that I’m trading off the 3-minute chart, and so that’s where my signals should come from. The 15 and 60 also don’t have Fib Extensions, for the same reason. They are there for reference and not entry/exit. I’ve made the same adjustment to my futures charts, and am happier that way.
