Readers Weigh-In on Strategies for Trading Near the Close
Recently, we looked at a handful of execution solutions on exiting a position at the close. These two lessons led to a handful of insightful e-mails sent to me with traders telling me how they execute their trades.
With the permission of John Roberts, I’m sharing his email to me with you. John touches upon a number of points which build upon Friday’s and Monday’s lessons. Thank you John for allowing us to share this.
Hi Larry,
I have been a follower of your trading strategies for a while and am in fact executing a strategy based on some of your techniques from your books. Your recent blog posts have been discussing the mechanics of entering or existing trades at the end of the day. I thought I’d share with you the technique I use.
The strategies I’m using exit at EOD when the stock price is above or below an RSI(2) value of, say, 50. What I do is pre-calculate what the close price would be on my open positions to yield an RSI(2) of 50, and then set a Limit order with a Good After Date/Time set to 15:58. Pre-calculating the RSI(2) indicator was problematic for me until I worked on an AmiBroker routine that does it automatically.
Another technique I use for entries is to set limit orders on all the candidate symbols the night before with an OCA settings to restrict the number of positions entered per day. For example, on a typical day there might be 10 symbols all with limit orders set a certain % below their close prices. The 10 symbols would be split between 2 OCA groups, thus limiting the number of positions opened that day to 2. I may miss some entries this way, but it doesn’t seem to affect the overall results by very much.
Using these two techniques, I can trade without ever being around while the market is open (I have a day job!).
Anyway, thank you for your continued work and ideas which I follow and recommend to other people.
Kind regards,
– John
As you can see, John has taken the steps to automate his fills. There’s some work involved in getting to this point but as I’ve learned from many traders, the time spent is worthwhile.
Thank you again John!
This is from Larry Connors’ Daily Battle Plan which he publishes each morning.
Larry Connors is CEO and Founder of TradingMarkets.com and Connors Research.