RIMM :A Trading pattern that repeats itself

June 16th, 2011, 06:42 AM

Hello To All
I want to share with you a Trading pattern that repeats itself at the Stock Market , Specialy at RIMM .

First I want to apologize for my English.

I want to share with you the Pattern that i recognized
it look like this pattern can work very nice for swing trading at the stock market .

1. i am looking for a big Gap (above 5% opening gap )
2. i am looking for very big volume ( more than twice than the volume avarage )

When i found this pattern the i mark the high and the low of the bar and i wait for a breakout of the high or the low .

the stop will be few cents above or below the low (depend on the breakout)
first tareget will be 62% of the risk , if first target was hit i will reduce my stop by 62%
second target is 100% of the risk

i want to share with you an example :

in this example at end of the day at 25/9/09 RIMM give us the big gap with a big volume
at the end of the day we had a 13.66% opening gap
the volume was grater then twice the exp MA volume 30 ( volume = 88.8M , 30 exp ma = 18.6M)
now we need to wait for a breakout above or below the low
at 28/9/09 RIMM break below the low
ENTER at 68.46
Stop at 71.52 => its a 3.05 points stop this is our risk
target 1 will be 62% of 3.05 = we will wait with 1/2 of our position at 66.56
if target 1 will be hit we will remove our stop to 69.62 (its 62% of the risk that was 3.05 )

second target will be at 65.4 , its a 100% of our risk (68.46 - 3.05 = 65.41 )

this is the idea that i want to share with you .
we can see that we have the same pattern at 18/12/09
the opening gap was 6.57%
the risk was 3.14 points ( dollars)
we wait for breakout of the high or the low

i found that this pattern repeate itself over and over at RIMM
the money management was hust an example , i am shure that we can find a better money managment

I will appreciate if some one can code this pattern and give us some statistics .

June 16th, 2011, 07:02 AM

So you think this can be traded in either direction regardless of the direction of the gap? For instance, if a stock has gapped up, you will trade either short or long depending on which way it breaks out after the gap?

June 16th, 2011, 08:48 AM

worldwary

So you think this can be traded in either direction regardless of the direction of the gap? For instance, if a stock has gapped up, you will trade either short or long depending on which way it breaks out after the gap?

the idea is took from the Opening Range Concept .( OR = Opening Range )

the high and the low of the candle is marked like OR High && OR Low
a break above or below this levels it an enter .

another thing that maby can help is to look at what price level the stock is ,
take a look at this example :
the stock is trading below its 50 EMA , below its 200 EMA and below its 21 EMA , its look like the stock is in a bearish mode .
then at 25/6/10 we have a 5.4% open gap , the volume is more then twice than the 30 EMA volume

in this case the gap was a down gap in the same direction with the bearish mode , maby its a better case ?

Another example can be found here

what i say is very simple , if you want to trade this pattern you need to have statistics that approve your method

then we can check what case are better , maby we will find that if the stock pass from a bearish area to a bullish area (from below 50EMA to above EMA ) it will be better to enter only Breaks above the high

the problem is i have an future account at NT , so i cant code this
but if some one have Trade Station with Equity account i think that its simple to code this

June 16th, 2011, 09:22 AM

I put here more examples from RIMM and i add more examples that i found on CSCO & AMZN

Again About The Rules :
1. an open GAP that is grather then 5%
2. very big volume , i mean volume > 30 EMA Vo * 2

3.we need to mark the high & the low , its our OR (opening rang high & low )
4. enter at breakout above / below the High/Low

5. calculate the distance between the High & Low ( this is our risk + few cents ) , I was also watching the numbers tell half round and round so if my stop need to be 50.5 i will put it below / above the half number

6. stop will be few cents above / below High/Low

7. Target 1 : will be 62% Of our risk , if its hit reduce the stop by 62%
8. Target 2 : will be 100% of our risk ( the price you enter + the risk )

I'd love to receive your comments
Or if you have other ideas of course

June 16th, 2011, 09:33 PM

Thanks for sharing. I hope you'll share more new threads on different stocks, we need more of that here on futures.io (formerly BMT).

Mike

June 17th, 2011, 04:30 PM

RIMM 17.6.11
Today We Have The Same Pattern : Big Gap With Big Volume
Yesterday close was at 35.33
Today open was at 29.69
an open gap of 15.96% , the volume is 4 time grater then volume AVG

the distance between today High & Low : High = 29.93 , Low = 27.08
need to wait for a breakout above high or below low

Case 1: Break Above High
in this case our stop will be below the low , its mean below the round number 27 , lets say 26.9
the enter will be above the round number 30 , lets say 30.1
the risk will be : 3.2 dollars per share
Target 1 : 32
target 2 : 33.3

Case 2 : Break Below Low
Stop will be above the round number 30 , lets say 30.1
Enter Will Be below the low , below the round number 27 , lets say 26.9
T1 : 24.9
T2 : 23.7

Please Dont Trade this with reall money , i put this stuff only to share ideas and to follow after the pattern for statisticals information

if you have more ideas about this pattern such as better money managment
or if you have statistics about this pattern please share
thanks

June 21st, 2011, 03:27 AM

Hello To All

As i mention in the last post , i follow after Rimm .
RIMM create again the same pattern : big gap (over 5 % open gap )
with big volume (more then twice then volume average)

after these pattern compleate , i wait for break out above/below the hige/low

its look like this pattern can have an edge

June 21st, 2011, 03:58 AM

Thanks for sharing, I look forward to follow other examples.

September 13th, 2011, 11:54 AM

Just found this thread, tried to play with the idea quickly.

Backtest AMZN, RIMM, CSCO from 08/2007 to 09/2011, MSN free quotes, not adjusted.

1/ Used a fixed initial number of shares = 100.
2/ Commission = 0.01 / shares, slippage = 0.02 / shares (stops entries prone to slippage).
3/ Long trades are losers
4/ Very few trades (34) that don't allow to say if there's an edge or not.

Howver, the idea is sound and can be explained as a trending drift after a fundamental shock that changes the future prospects for the company.

Feel free to improve or give a feedback.

Code

Input: Gap(0.05);

Var: SL(0),TP1(0),TP2(0),Trade(false);

if ((O - C[1])/C[1] >  gap and Volume> 2*Average(volume,30))
or ((O - C[1])/C[1] <  -gap and Volume> 2*Average(volume,30)) 
then trade = true else trade = false;

if trade = true then begin
	Buy ("EL") 100 shares next bar at H + 0.01 stop;
	SellShort ("ES") 100 shares next bar at L - 0.01 stop;
	SL = H-L +0.01;
end; 

if marketposition = 1 then begin
	Sell ("XL TP1") 50 shares next bar at H + 0.62 *SL limit;
	Sell ("XL TP2") 50 shares next bar at H  + SL limit;
	Sell ("XL SL1") 100 shares next bar at entryprice - SL Stop;
	if currentshares = 50 then Sell ("XL SL2") 50 shares next bar at entryprice - 0.62*SL Stop;
end;

if marketposition = -1 then begin
	buytocover ("XS TP1") 50 shares next bar at L - 0.62 *SL limit;
	buytocover("XS TP2") 50 shares next bar at L  - SL limit;
	buytocover("XS SL1") 100 shares next bar at entryprice + SL Stop;
	if currentshares = 50 then buytocover ("XS SL2") 50 shares next bar at entryprice + 0.62*SL Stop;
end;

RIMM :A Trading pattern that repeats itself

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RIMM :A Trading pattern that repeats itself