"Ask Ken" - Trader Q&A

[Ken]

Hey traders, this is where you can ask me anything about trading you wish... and get insightful, specific answers that can help you potentially turn the corner and become successful at Your trading, too.

Let's hear it! Ask and you shall receive, "trade boosting" answers and tips that can really make a difference.

I'm here for you all - let me know what you'd like answers to.

To success,

Ken

[StaticVoid]

Ok I have some questions regarding some order types.

What are the differences between a LMT, STP and MIT? MIT is really what is confusing me, I do not see a reason to use it.

Say I am about to go long on stock xyz which is currently $50. I think it will go to around $55 but to make sure I don't lose too much in case it goes down. So I simultaneously place a limit order for 50.01 (or whatever) and I place a sell stop at $48. Correct?

Ok now this is where I get confused. Say the stock rises to $55 and I want to sell. Couldn't at the time I created the initial order just place a LMT sell at $55 to accomplish this? Or should I place a sell MIT order with a price of $55. I think these both will accomplish this correct? If not where am I wrong and what are the exact type of scenarios one would use a MIT order?

[StaticVoid]

Ok Ken, I have another one for you.

Can you explain the differences between a SSF and an option. They seem very similar in nature. Thanks!

[rokavgustin]

hello Ken,
i have a question. Which sectors are the hottest to trade right now? i am thinking of swing trading short term, lets say a few day flips of stocks in a price range of $1-$10 .i want to start with $500,so the gain that i would like to see is somewhere between %10 and 30% per swing or higher if the situation is right?

Thank you in advance for your answer!!

[Ken]

Good questions, thanks...

Personally I follow order entry live, manually using cybertrader and interactivebrokers, so I don't set conditional orders, for stocks.
So I don't use MIT etc.

Sectors, I like gold and oil right now. And traders can't trade with $500, for daytrading you need at least $25K per the PDT rule, for swing trading one needs at least 2-3K.

-k

[yhawhann]

For the 2-day high/low breakout trade, how do you determine your profit target?

[Ken]

Hi - great question. For my intraday stock trading, which primarily is momentum breakouts/breakdowns during the opening hour, I use the following to help determine exit/profit targets:

+ how long the stock moved in it's immediate past: the biggest single strong move before consolidating/pivoting that it made, looking back at the last 2-3 days worth of data, as the "best case" exit

+ 1/3 to 1/2 of the immediate past day's ATR (for example, if RIMM has and average daily range of 7 points, as it does in the current market (3/10/2008), then my maximum target would be 7/2 = 3.5 points.

+ I'm very likely to exit near the next whole number resistance and/or prior cup pattern s/r lines, especially if the tape is slowing down once in a live position.

+ and of course I primarily just use a .2 trailing stop on open orders, with the assistance of time and sales for live tape reading. If I see a slowdown in the tape, and large prints on the ask, and the market itself is slowing (and/or trin flipping against the trade), then I will likely exit at least 1/2 the position as well.

Remember, the entire concept of "exit targets" is relatively unimportant, the main thing is risk management and trailing stops on open positions of no more than a quarter point.

That's because stocks seldom do what we expect of them; rather our ability to win at this is determined by our ability to take small stops on incorrect entries, and trail small stops to lock in *whatever* profit we're able to take, on the winners.

Thanks for the question,

Ken

[nanakm]

Hi Ken,

SO as it is not necessary to have e signal program, which other program will allow me to 'Setup Charts' included in 'Chart Pack' for 2007?

[Ken]

Hi - obviously you can't use esignal chart files with non-esignal programs; you can set up charts to look similar to those that I have in esignal with other chart software. You can refer to the help documentation for other chart vendors so that you can set up charts. It's recommended however to use esignal because it's the best.

Other questions, traders?

-ken

[Vitez]

Ken, so since you are only a few minutes in a trade you will manage stops manually? What about internet disconnection?

How important is a candle reversal signal on naz/spoz futures vs the tape?

[Ken]

I've managed all entries and stops manually, visually using time and sales with a finger on the mouse button. And I have 2 internet connections with different providers (good point; and of course the 2nd high speed line connected to a backup computer that's also running 24/7) and of course my brokers' numbers on speed dial on the telephone.

Candle reversal signals need to be taken in context with other technicals (vix/adx etc), and there is no tape for the indices, they are a fast trend indicator (vs a leading indicator like ADX> 40 or tape speeding up in size/velocity; or a lagging indicator like macds/stochs/pivot signals).

good questions.

-k

[shirleya]

How do you set up your chart with pre-market, but not post-market data, for the one minute candles? The folks at e-signal have told me that it is not possible to leave off just the post-market data. Thanks.