getting trading edge and idea - diamondwisechartingsorting - ye 2010

Getting Trading Edge and Idea by Diamondwise Charting and Sorting By Dr. Jay “EdgeMe” Ye http://yesInvests.com Copyright © 2010 by Jay “EdgeMe” Ye, All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording and/or otherwise, without the prior written permission of the author. The author has used his best efforts in preparing this book, and the information provided herein is provided "as is." The author makes no representation or warranties with respect to the accuracy or completeness of the contents of this book. Under no circumstances shall the author be liable for direct, indirect, special, incidental, or consequential damages resulting from the use, misuse, or inability to use this book or the software associated with this book. The product names and services known to be trademarks, registered trademarks used throughout this book are in an editorial fashion only. http://yesInvests.com V0.1, updated in 12/30/2010 Show me the charts, and I'll tell you the news. - Bernard Baruch Table of Contents 1. Introduction 2. Good and Bad Behaved Stocks 3. The UP and DN Numbers 4. The Hint and RV Numbers 5. Look Thru Many Charts Without Typing the Symbols 6. Spatial Searching 7. Hint Searching 8. RealTime/Intraday Support Introduction This Excel-based tool has two major functions; one is diamondwise charting, another is spatial and hint searching; I also call this tool “The ideas generator”, because it can find many trading ideas/opportunities for you. What is diamondwise charting? To answer this question, I’d like to present a geometry problem: In triangle ABC, let D be the midpoint of BC. If angle ACB=30 degrees and angle ADB= 45 degrees, find angle ABC. Try to solve the above the problem, the answer will be presented near the end of this article. I don’t know about you. I cannot solve this geometry problem without drawing auxiliary lines. I still remembered in my middle school years. Many times, I got stuck on a geometry problem. However, after my teacher drew some auxiliary lines, I knew the answer right away, “Ah-ha”. I like to call “auxiliary lines” as “helper lines”. These helper lines will give you the “Ah-ha” moment. Diamondwise charts are charts with “helper lines”. There are two sets of parallel helper lines in the plot, one is up slope helper lines, and another is down slope helper lines. These two sets of lines form many diamonds (That’s why I called them “diamondwise” charts). Below is an example of diamondwise chart for SPY: The price and time space is divided into grids of diamonds. The size and the shape of the diamond (the slope and distance of these helper lines) are determined by the behavior of the stock. Good and Bad Behaved Stocks Stocks are like people. Some people are good people, while some others are people with bad behavior. You want to be surrounded by good people, just like you like to play with good behavior stocks. Look at the two stocks (FSLR and NFLX): FSLR moves all over the places, while NFLX moves nicely within 2 channels; FSLR is an example of a badly behaved stock. On the other hand, NFLX is a good behaved stock. The ISRG is also a good trending stock, it moves down within 2 channels. AMZN is also a stock with good behavior. Its movement (down and up) are mostly within channels. The diamond edges can be supports or resistances, i.e. both up slope and down slope helper lines can be support or resistance line. The lines above the current price are resistance and lines below the current price are support lines. The UP and DN Numbers • UP number: The distance to the critical UP trend/helper line. If it is above the UP helper line, then the number is positive, otherwise it is negative number • DN number: The distance to the critical DOWN trend/helper line. If it is above the DOWN helper line, then the number is positive, otherwise it is negative number For JNY, the distance to up trend line is 3 (UP=3, 3 is normalized number, no unit), and the distance to down trend line is 6 (DN=6). You can also think of UP and DN numbers as trends: • UP number: the longer term trend, positive number means up trend, negative number means down trend • DN number: the short term trend, positive number means up trend, negative number means down trend For example, MEE’s chart shows UP= -1 (longer term is still negative, i.e., down), and DN=12.(short term, the UP trend is very strong) INTU’s UP=2, DN=4, both long and short term trend are up: [...]... sheet, choose Use Real Time Data and the click “Get RealTime from TOS” button, Now all your charting and sorting are based on realtime mode All the diamondwise charting will be based on end-of-day data up to yesterday and real time current price and volume for today You can also search for Hint and Spatial in real time mode Therefore, this tool will generate lots of ideas for you to trade real time... Hint =-1 or Hint =-2 with RV>1 If you like to sell short on low volume bounce then Hint =-3 with RV1; search for stock up over 1.5 stdDev with above average volume Hint=1, RV>1; search for stock with big white candle with above average volume Hint =-2 , RV>1; search for stock down over 1.5 stdDev with above average volume Hint =-1 , RV>1; search for stock with big black candle with above...You can use UP and DN numbers to rank/compare two stocks to see which stock is better On Dec.29, 2010, AAPL (UP=4, DN=2) is better than GOOG(UP=2, DN=1) in terms of trending strength: You can also use UP and DN numbers to find the stocks with the similar spatial pattern In “Spatial Searching” section below, I will describe how to search stocks using UP and DN numbers The Hint and RV Number A “hint... white candle up hint day” near trading range may means a break up for the stock Numeric numbers are used for Hint for easy searching The hint number is defined as • • • • • • • Hint = 1, the stock’s open to close (white candle body) is over 1 stdDev Hint = 2, the stock move up over 1.5 stdDev Hint = 3, the stock had hint=2 or 1 within last 5 days Hint = -1 , the stock’s close to open (black candle body)... stocks per their UP and DN numbers You can easily find stocks in certain spatial diamonds Go to Sorting sheet, 1 Click the Update button to calculate UP and DN numbers for each stock Please note this button only needs click once unless new stock data have been downloaded again 2 Type the UP and DN number into C1 and D1 cells 3 Click Spatial Sorting button The stocks which met your UP and DN numbers will... stock move up over 1.5 stdDev Hint = 3, the stock had hint=2 or 1 within last 5 days Hint = -1 , the stock’s close to open (black candle body) is over 1 stdDev Hint = -2 , the stock move down over 1.5 stdDev Hint = -3 , the stock had hint =-2 or -1 within last 5 days Hint = 0, normal stock fluctuation days RV, relative volume, is defined as current volume divided by 20 days moving average volume RV is used... with UP=2 and DN=2 will be shown In the C1 and D1, you can also use > or < in addition to the numeric value, For example, you can type >1 in C1 cell, than >2 in D1 cell; that means you want to search for stocks with UP higher than 1, and DN higher than 2: Just click the symbols on Column A, the diamondwise chart will be drawn As indicated earlier that UP number is really longer term trend and DN number... the middle of AC, and add point F so that AFB is a right angle Add auxiliary lines AF, FB, FE, and ED Now triangle AFE is an equilateral triangle, and triangle FED is an isosceles triangle Angle AFE is 60, thus angle EFB is 30, then both angle FED and FDE is 75, then angle EDC is 105 degree Because line AB and ED is parallel, so angle ABC is equal to angle EDC, which is 105 degree . Getting Trading Edge and Idea by Diamondwise Charting and Sorting By Dr. Jay “EdgeMe” Ye http://yesInvests.com Copyright © 2010 by Jay “EdgeMe” Ye, All rights reserved. No. 12/30 /2010 Show me the charts, and I'll tell you the news. - Bernard Baruch Table of Contents 1. Introduction 2. Good and Bad Behaved Stocks 3. The UP and DN Numbers 4. The Hint and RV Numbers 5. Look. Excel-based tool has two major functions; one is diamondwise charting, another is spatial and hint searching; I also call this tool “The ideas generator”, because it can find many trading ideas/opportunities