To trial or not to trial...

I was considering starting to play with the Williams %R charts with some live money, as is my way, then decided that I had best try something different.

While I know that trading with "virtual" money is not the same, I feel that I know the execution and pitfalls associated with using real money that I should be able to easily duplicate the same effect. Unlike day trading where the pulling of the trigger is so subjective and based on live data feeds these tests are based on next day opening numbers. I don't have to sit in front of the computer to see what I would have got as I either place a market order and get my fill or I place a limit order and see if I get filled. Checking the EOD data or watching the data live makes no appreciable difference as I am deciding ahead of time what the strategy is going to be.

I set these trades up in a free portfolio page on a free data site to track. I'll keep adding to it and see where it goes. The thing about the number of possible trades is that I may end up needing the higher quantity to keep both diversification and win/loss rate manageable. Trying to cherry pick the stocks can very easily backfire.

If I were trying to use options I think my results would be different but I need the stock results to prove the theory then I can apply it to the options afterwards.

I ran a scan for stocks between $10 and $50 with volume over $1M shares per day and have mid 500's to choose from. Running a separate scan on just those stocks looking for %R on the 6 and 18 day period resulted in a dozen or so, most of which were short or multiple short ETFs. I ended up with only four that closed yesterday at the right point and have decent "at a glance" chart characteristics. One was a stock that I bought the option for on Wednesday past, interesting.

So, I can only trade so many at once, and if I traded these stocks I could only do two, so how to choose and what happens tomorrow when I may have four more to choose from. Obviously I have to pare these down from the original 500 to a few that follow the %R pattern well which should leave me with a handful that I can rotate through at any given time.

This is the benefit of the option service that I am currently playing with... but that is another topic, just the fact that I am playing with options is enough as a $50 stock may only cost $1 to $3 for the option, depending upon strike and volatility at the time.

Jeff.