Trader’s Journal: 3/19

The Bottom Line

All 14 stocks in the scan “approaching a 21 day high” closed down. Twelve of them triggered a 1% stop.

13 of the 16 stocks in the new 21 day high scan closed down. One that closed up triggered the 1% Stop, and one triggered the 2% target.

Some context –

Market Index

I used a scan to create my own market.

  • NYSE
  • Price today > $7/share
  • Volume today > 1,000,000

I am starting to rethink this approach. Since I am designing a workshop exercise, I think it would be more valuable to use the S&P500 as the workshop market. Then my scans and my watchlists can be compared to the SPX.

Running late today.


I changed my two scans “approaching new high” and “setting new high” to scan the S&P 500, which got slammed along with my long positions yesterday. Not too concerned because the exercise is just starting, and I will also be developing the short side of the daily spread soon.

Still working out some procedures I need to provide the statics I am after. Also working on the workshop manual. This project is an adventure in progress.

Trader’s Journal: 3/16

I use stock scans to filter out stocks I don’t want to look at. Right now I begin with all of the stocks on the NYSE, and after I run my scan, there are between 40 to 80 stocks that make it through the filter.

I am going to run an experiment this week to gather some feedback on whether it is better to buy a stock approaching a new high, or wait until it establishes a new high. I created two scans  –

  • Scan 1: Stocks approaching a new 21 day high Close
  • Scan 2: Stocks that just set a new 21 day high Close


Scan 1: 3/18

  • NYSE
  • Closing Price Friday (3/16) > 7
  • Volume (3/16) > 1,000,000
  • Head (((H-O)/O)*100) > 1.5%
  • Tail (((O-L)/O)*100) < .75%
  • Close 1% AND 2% ((((C-O)/O)*100)<2) AND ((((C-O)/O)*100)>1)
  • ((((MaxC21-C)/C)*100)<1) AND ((((MaxC21-C)/C)*100)>0)

The last condition identifies stocks that closed Friday 1% or less than the 21 day high Close (approaching from below). This scan produced only 14 stocks. I flagged 8 of them and moved them to a watchlist named Watch 3/19. I then moved my 3 favorites to a watchlist I named Buy 3/19. Only one of the stocks on this watchlist will be my Monday trade.

For all of the scans and watchlist I created 3 custom columns that I can sort on –

  • Percent Open to Close
  • Percent Open to High
  • Percent Open to Low

This approach gives me 3 groups of stocks to look at after the Close on Monday –

  1. The 14 scanned stocks.
  2. The 8 Stocks I moved to the Watch 3/19 Watchlist
  3. The 3 Stocks I will move from the Watch 3/19 to the Buy 3/19 watchlist

Watch 3/19 (approaching new high Close)

The unranked 8 stocks in my “approaching 21 day high Close” 3/19 watchlist are –

  • PCG
  • IYZ
  • ATO
  • VLO
  • MPC
  • AMH
  • PSX
  • STO

The 3 stocks I selected for the “almost 21 day high Close” Buy 3/19 watchlist –

  • MPC
  • PSX
  • ATO (Buy on Open, Stop 1%, Target 2%, 50% Margin)

Charts are from Bigcharts.

Why Do This?

Without feedback, the learning cycle never completes. Monday after the Close I will see how the 14 stocks in the scan performed as a group, and be able to rank that performance. The same goes for the group of 8 stocks chosen from the scan results for the Watch 3/19 group, and the Buy 3/19 stocks chosen from the Watch 3/19 group. Questions to be answered, based on Trade Management Rules of Stop% and Target% –

  • What was the percentage of winners to losers from the scan?
  • Did my hand selection of 8 stocks improve my Watch group performance?
  • Did my hand selection of 3 stocks improve my Buy group performance?
  • Did I bet on the best stock from my Buy group?

The historical research I intend deals only with improving the performance of the scan group. After that, there is no formula to filter it further. You must put your eyes on the charts and make the judgement call. This is how we train the neural net behind our eyes.

  • We look at a lot of charts.
  • We identify behavior patterns that can be traded.
  • We scan for that behavior
  • We pick what looks best from the scan results.
  • We feedback the results into our neural network.
  • We adjust our understanding (story model) of the stimulus/response story.

Scan 2: 3/18

  • NYSE
  • Closing Price Friday (3/16) > 7
  • Volume (3/16) > 1,000,000
  • Head (((H-O)/O)*100) > 1.5%
  • Tail (((O-L)/O)*100) < .75%
  • Close 1% AND 2% ((((C-O)/O)*100)<2) AND ((((C-O)/O)*100)>1)
  • MaxC21 = C (True)

Scan 2 has the same conditions as Scan 1 except for the last. The last condition of Scan 2 selects stocks that set a new 21 day high Close on Friday, 3/16. I followed the same procedure for Scan 2, producing 2 watchlists with my favorite selected as the buy on Open 3/19. (3 hours from now)

Watchlists 3/19 (New high Close)

The unranked stocks from my “new 21 day high Close” 3/19 watchlist are –

  • CUZ
  • NEE
  • LLY
  • WR
  • DEI
  • ETR
  • EXC
  • LUV

The 3 stocks I selected for the “new high Close” Buy 3/19 watchlist –

  • NEE
  • LUV
  • LLY (Buy on Open, Stop 1%, Target 2%, 50% Margin)

After the Close I will publish the results and try to glean some lesson from the feedback. If you click on these charts after the Close on 3/19, you will see happened with these two stocks.

I will continue publishing these lists before the Open this week (3/19-3/23) with a daily post of the analysis, adjustments, and the next day’s lists. This weekend I will publish some kind of weekly summary. Next week I will focus on shorts.

This daily exercise is going to evolve into a daily workshop newsletter that reports the results of the last spread, analyzes the results, adjusts the trading model, and selects the next spread. This format is essentially the same as the original Opening Move Workshop.

I am going to link at the bottom of these posts to the next day’s report so you can follow the experiment as it happens rather than in reverse order, like the blog presents.

The next post will be located at Trader’s Journal: 3/19

I forgot how much fun this is.

Miss you dad.

Under Construction

I am going to spend the next few months developing the workshop manual, practicing the day spreads I will be using as a manual case study, and building the infrastructure for the workshop community and student competition. For the curious, this is the first letter I sent to the students of the original Opening Move Workshop on April 1, 1999. This advice still applies.

In the meantime, I will be using this journal to chronicle the development and my practice of the workshop exercises. This week (3/19-3/23), I will be comparing the performance of two scans  –

  • Approaching a 21 day maximum.
  • Setting a 21 day maximum.

Do you jump on it early? Or do you wait for it to break through the resistance line?

I will break down the results in my daily journal posts. To follow this experiment in the order it is conducted, start here, and follow the links at the bottom of each post to the next newsletter.

Trader’s Journal: Don’t Feed the Bears

I’m still a little green-eyed. I have my gaze locked on that shiny gold Target up above me while walking over the falls and plunging through my Stop. I like to keep my stops tight, or as my dear old dad used to say –

“Don’t get on the bus if it isn’t going your way. If it stops going your way, get off.”

Over the last couple of days, getting washed out of the game in the first few minutes has reminded me of the original Opening Move Motto –

“First you learn to survive. Then you learn to thrive.”

So I spent yesterday thinking about what is going on at the Open as the price tumbles in a zipper fall, and this is what I hypothesize –

  • The Nervous Nellies: Swing traders who held long positions overnight hoping for a gap up become increasingly panicky, like a herd of cattle, as the upward movement weakens and reverses. They are particularly vulnerable to the uncertainty unleashed at the Opening Bell.
  • The Bears: Sensing the herd’s increasing anxiety, the bears swarm the asking price to reverse the upward move and trigger  a stampede over the bid. This is especially effective at the Open, where many traders just entered and uncertainty is at its highest. As the stock descends, it triggers the stops, adding downward pressure on the weakening bid.
  • The Buyers: What buyers? You kidding me? Step in front of that? The bid becomes a ghost town, making the push downward accelerate. Think I’ll just wait until they all go SPLAT, then drop in and ride the updraft created by the bears desperate to close out with their profits, and the other green-eyed buyers smelling quick profits to the quick footed.

Just a theory, of course. If I were real-time, I might join the bears. In my version of the People’s Story, Fears and Hungers are the forces that move us. A true MMA (Mixed Market Arts) Trader would seek to master surfing both Bull and Bear waves. Even if you trade only one side, knowing your opponent is an Art of War thing, and that, perhaps, is best accomplished by becoming your opponent. So…

I started out planning to make this workshop about “day spreads.” This is an exercise, and I am paper trading because I am just a working bloke with kids to feed and a tight budget. “Buy on Open” and “Sell on Close” are real orders. The Stop and the Trigger are a little sketchy, because they will rarely get filled at the Stop and Trigger prices. But I have to calculate the outcome somehow, so I am setting the rules so that if the Stop or Target is touched, the trade exits at the Stop or Trigger price. Actually, I am using percentages, and FYI, they are currently set at a 1% Stop and a 3% Target, else “Sell on Close.”

If I were RT, I would probably set the Stop below a support line, and manually move it up below support lines that form. Also, I would not “Buy on Open.” I would have my watchlist chart group live at the Opening Bell, and not pick my horse until after the first 15 minute candle.

Today, the first cut I am making on my base scan will be to flag the stocks (out of 54) that I think are not as prone to the opening 1% dagger. I plan to dedicate this first cut to “First you survive.” I will collect the analytics on this daily watchlist to track my ability to survive the opening dagger. The second cut will be dedicated to “Then you thrive.” This workshop uses the daily feedback cycle to try to reduce the percentage of times you get stopped out, and increase the percentage of times you hit your target.

Opening Bell in 5 hours.

In, the end, there can be only one…

Coming soon, maybe, I start working out on the short side as well. The daily spread, one long and one short, should be great training for the MMA Traders who hope to survive and thrive in any market.

Next up in Trader’s Journal – Stock Scanning

Trader’s Journal: Watch this…

This is the first post in my new trading adventure – The Game of Guessing Right. I think of this as following in the cleat-steps of George Plimpton, a sportswriter who tried out for third-string quarterback on the Detroit Lions to write Paper Lion. While my body will be spared the abuse his suffered, my ego may not survive. Reason enough, in my opinion, to challenge this Goliath. Ego is terrible at the Game of Guessing Right.

This also explains my financial incentive. Like George Plimpton, I am writer, and the lessons gleaned during this public self-abuse will perhaps become a cautionary trading tale of more value for advising you what not to do, than instructing in the alchemy of creating golden eggs.


I am preparing to create a daily practice cycle to accelerate the education curve. My original Opening Move Workshop was based on the practice of making ONE trade a day. I believe that some of the advantages of this approach are-

A Daily Learning Cycle

Stimulus/Response/Consequences/Analyze/Adapt: With long term trading you place a trade and wait weeks or months to find out if it was a good play. The Opening Move Workshop completes the learning feedback cycle every trading day. A few years back I got into trading with neural nets. The most valuable thing I took from that research was the power of the iterative training cycle. We all have a neural net behind our eyes. Some exercises are far more powerful in training our neural net from the feedback cycle.

Daily Play

I actually use to regret weekends because the market was closed. I got a little taste of that again waiting for this last weekend to be over so I could begin the trading cycle. I work full time during market hours, but I have a (paper) horse in the race. This adds some juice to my work week.


I created the first Opening Move Workshop back at the dawn of day trading after reading Secrets of the SOES Bandit. I was working with my father, Ralph Pierce, author of Stocks, Options & Spreads, in our family trading room. I quickly realized the less distance into the future and the less magnitude in price movement that I had to predict, the more consistently I should be able to predict accurately. Day trading “scalpers” can make hundreds of trades a day, which sometimes last only seconds.

Back then they were scalping 1/8 of a point spreads between the Bid and Ask, before prices went decimal. I was day trading with a $5000 account, while day trading now requires a $25,000 minimum. In a sense, Opening Move is a swing trading approach, but you get only one play a day, and you never hold overnight. This means that if your account is under $25,000, you can only trade 3 times a week. This forces you to discriminate, looking deeper and harder at your one opportunity, which intensifies the exercise of trade selection.


I have already mentioned the powerful advantage of a daily feedback cycle. This extends to earning potential. This exercise places your entire trading account, at 50% margin, on the table every trading day.

Trade Management

I work full time, or I might very well spend my days sitting in front of a screen watching the market happen. However, there is also a powerful learning advantage to an automated trade management approach. I mentioned the Trade Selection Exercise. There is also a Trade Management Exercise intended to tune your Trade Management parameters to your Trade Selection choices. The theory here is that depending on what behavior you are selecting trades for, optimal management parameters can make the difference in outcome. An Opening Move Trade Rules follow this format –

  • Buy on Open
  • Sell if Stop touched (Percent below Open)
  • Else Sell if Target touched (Percent above Open)
  • Else Sell on Close

Golden Egg (Not!)

The most valuable thing I hope to provide workshop students is not the Golden Egg Surefire Trading System. This is not the Goose that lays Golden Egg Surefire Trading Systems Design workshop. The most valuable thing I hope to provide workshop students is training in the process of evolving your Golden Goose’s ability to lay increasingly valuable Golden Eggs.

The Opening Move Story is the story of how your trading story evolves. It is designed to both deepen your understanding of the Buyer and Seller Forces moving prices, and feedback a quantitative reality check on how well you predict price movement. It is designed to help you tune your Trade Management Parameters to your Trade Selection Parameters.

The Workshop Competition

This time, I intend to add a student competition to the workshop. The theory here is that you enter your trade before the market opens every trading day, and the trading result analytics are revealed after the close. This data created by the student competition may be extraordinarily valuable. You will be able to see the Trade Selection and Trade Management histories of the students who are most successful. Think about that as you back away from exposing your secrets.

If you ARE one of those demonstrated master traders, that could boost your reality-based community chops if you are in the industry. If you are a 14 year old trading genius, a masterful demonstration may motivate a job offer, such as trading their account and splitting the profits. Also, you can win free months to remain in the workshop. You can also subscribe to ongoing membership at a reduced cost once you complete the workshop if the ongoing access to the competition is of value.

In Conclusion

These are just some rough notes on where this site is going, perhaps. I got my ass handed to me again today, which is to say, stopped out. I am going to start publishing my daily trade and what I learned from it. Still working out the format of the journal posts. What I don’t want to do at this point is publish my pick until after the close. I suppose you will have reason to suspect I am cheating if I start killing it. Haven’t figured out how to resolve the conflict between credibility and potentially influencing the outcome by publishing before the Open.

More likely, this is going to be a story very much like that time I spent three months in Costa Rica trying to learn how to surf, and barely survived. Every day I am going to paddle out and get my butt kicked. Every day I am going to try to figure out what I did wrong and how I can fix it, then paddle back out.

One of my favorite authors, Robert Heinlein, once wrote – “Never precede a difficult task with anything more specific than – Watch this…”

Next in Trader’s Journal – Don’t feed the bears…