• Jan

Search and alert routine for Playbook




This article will outline some of my searching routines and alert setting daily when it comes to trading equities, crypto, or a global macro. Over time I found those routines to be very helpful in improving the trading performance (especially patience), reducing the need to watching every tick of traded asset and psychologically draining oneself out and decreasing the opportunity cost where many more assets can be juggled at the same time without missing a play here and there. Those methods are strictly applicable to my playbook and might or might not be useful to trader with the different trading approaches, however, within everyone's trading approach certain aspects can be improved with the use of alerts and some consistent search routines.



To sum it up, very robust alert routine helps trader with:


-Improving patience (performance improvement as a result of it)


-Reducing the time spent on each ticker and mental strain (better clarity)


-Improving opportunity cost (ability to juggle more balls at once)




Scan routine:


The routine outlined below is my usual daily approach, it is a full-time approach scattered across the day, some of which is random, some of which is more clustered with the daily routine. The scan time input is split between each market:

Equities 60%, Crypto 10%, global macro 30% (although the FX and macro are mainly weighted on learning and not actual trading or scanning of the assets).



Equities (small caps 70% large caps 30%):



The scan routine on small caps starts earlier into a trading day at around 7:00-8:00 AM NY time (2 hours before the market open), where the focus is on catching early news or quickly extended tickers on large rallies for potential early short or long trades.

Or in certain cases just to build watchlist as quickly as possible and then input some time into research on each ticker such as float, fillings, historical performance, etc...


Currently, I am using a TC2000 realtime pre-market scanner which is great at picking up stocks that start to move early, where it only takes a glimpse of the scanner every 15 minutes to see if anything new is moving. This aids very nicely rather than just using websites to catch tickers with news as it is a bit slower process. There are however many more scanning softwares besides the TC that provide such pre market scanners.


After this and the start of market open, the main focus is on scanning for extensions in the first hour. TC2000 again comes very handy in this, where custom-built scanner for extensions will help a lot. My usual approach is to take a look at the scanner every 5 minutes and give the market time to set something up. My custom equation for extension scanner is as follows:





Below is as well outlay of pre market scanner on top and the extension scanner on the lower part, both positioned on the left side of the screen (personal choice, but TC2000 is flexible and allows windows to be repositioned as wish).



After the first hour of the market open the whole scanning and searching process cools down a lot (about 3 fold if not more) as the frequency of plays also winds down.

Main scans for rest of the day remain extensions, supply takeouts, parabolers across all top 300 high volume traded NASDAQ equities, not just small caps. The scan routine for those is supplemented with the use of TC2000s quick jump from asset to the asset by pressing down key (after tickers are sorted by volume) which allows completing scan routine within 3 minutes and then repeat such routine 30 minute later, or an hour later depending on how volatile and liquid markets are.


Example of filtering stocks by volume in TC2000 from top to bottom, and the using down key to move from ticker to ticker quickly (all the examples are noted for TC2000 but obviously can just as easily be replicated in majority of softwares, however one feature that cannot be is ability to quickly move from asset to asset just with a pres of a key):




Building the watchlist:



Next step is lacing "promising" ticker into the watchlist to have them on closer watch and not missing the play. One frequent approach that I use daily is to sort any ticker instantly under the custom watchlist section in TC2000 which then puts all potential tickers in the same section, in one place. This is especially helpful for tickers which might have distributions or short squeezes in the play where certain critical price levels need to be on watch, and having those closer on the watch is a great idea.


One thing to note, the majority of traders build their watchlist in pre-market and often do not adjust it after open at all. My approach is to always kick out tickers where the liquidity dries out as they are not worthy of the time anymore and adding fresh tickers into watchlist that might show promise during the day on some playbook play if they come about. This means that trough the day the watchlist is constantly under the cleaning and recycling process so that focus is always kept where the most favorable opportunity might be.


Example of ticker with dried liquidity durring mid-day hours, no need to keep this ticker on watchlist anymore, away you go:





I should note that the scan procedure as shown in this article is especially suited for someone who trades many markets all from a single screen/monitor.

Efficiency on each alert setting and scan routine in software has been slowly worked and improved over time by myself to be as fast and as efficient as possible. However there is a lot of very fast clicking, Alt+Tabbing going on and for someone less experienced it might be one big chaotic mess trying to replicate it, so one has to give it time and perhaps implement it chunk by chunk over time.


The speed does matter, for my trading style being able to locate borrows, put a ticker on TC2000 on primary watch and punching in order into Level 2 all within 5-8 seconds is a major benefit as opposed if it would take 30 seconds, which would reduce edge or miss certain entries altogether.



Crypto:



The typical procedure is to wait for the bull market to resume and place as much attention on crypto then, and avoid the consolidated or bearish markets, as long continuation plays are less present in such conditions. My usual very rough estimation of what constitutes the bull market is just 2k / 30% rally in Bitcoins price, this however changes over time depending on previous moves and how quickly they fade.


The typical scan starts by checking the Bitcoins chart on M15 and M1, to see what might be setting up as likely all other cryptos (or many of them) will be affected by any Bitcoins order flow setups.

Further then scan continues on the next top 10 most liquid cryptos to check if anything is setting up in terms of continuation plays (accumulations), with most focus given on the cryptos that are in very strong bullish move over past few days (no bias whatsoever, the name of the asset is irrelevant).

Additional to that then there is a scan on the H1 time frame strictly for top 5 highest % moving cryptos on the day to see if any decent macro accumulations are setting up.

All of the coins are checked against USDT only, to ensure high liquid and leveraged conditions. For example, this means, ETHUSDT, BTCUSDT...pairing with Ethereum or Bitcoin is avoided as there is far less liquidity and especially volatility, for example,

LINKBTC, ETHBTC, EOSBTC...


All of the scanning is done exclusively in the Binance charting application, and the routine is generally executed only once or twice per day. In certain cases more if the market is very hot, but the average is only once, which takes about 2 or 3 minutes to complete. The reason why Binance is my primary choice for charting platforms is that it is the most liquid, it has the best overview of intraday charts and it has by far the highest rate of market-making activity which means it a must to use as a charting platform.

Crypto markets are not like a stock where the exchanges of Nasdaq for example are centralized, in crypto the exchanges are segregated which means which one you track can have a large impact on the read of the order flow.



Alternative coins that are sorted by large % moves are only checked on the H1 time frame due to liquidity conditions as usually they are lower liquid assets where only higher time frames pack enough liquidity to participate (after commission costs and spreads). Meanwhile, the top 10 liquid high volume crypto does not need such requirement as they are tradeable from the lower time frames as well.



Global macro:



Usually, there is no need for some frequent scanning routine for global macro since the plays only come usually once or twice a week. This gives plenty of room to prepare and to check things slowly. Essentially following the relevant news sources is one of the activities that trader has to do in such a case and the other is continuous learning of the financial markets itself. Personally used platforms are MT4, Tradingview and placing price alerts at certain key higher time frame level from time to time when the asset might be coming into play so that trader is notified when the asset starts to move along the planed macro thesis.



Checking early news for global macro


A good start is to check some news sources and sites if anything new is happening around the globe. I rarely check typical mainstream sources and read random articles, my approach to macro is to first study in-depth on what might be in play over next 2 years in a certain part of global economy/country and then once the specific situation is found my focus in regards to news will be focused mostly only around this particular case. This then takes about 1 month of consistent hashing and calibrating of the news sources before I build a decent sample basis of which sites are trustworthy and objective and which are not, and then mostly paying attention to those that are, with as least subjective/personal bias and intake in them as possible. The more personal inclinations that news source is placing within the articles or video the more likely it is for me to ignore it, as my aim is not for other sources to tell me what to think about the event, rather just getting the info about the event itself is what matter, conclusions are to be made by myself only.


All of this means that each macro play is quite a bit of work. Studying to see what next is around the corner for next 1-2 years, finding the "right people", the right news sources, all of which takes some time, however, because those macros are large and long-lasting the time spent is well worth it as it can often provide many months of trades.


The main routine established for macro is a continuous study of material/interviews / outlays in regards to a macro that is in focus, there is far less time spent on checking actual charts or tape of any of the assets in play since those are all slower trades on high time frames which often take a while to play out. Therefore the only consistent routine is just to study daily. Also, one thing I avoid very firmly is trying to make sense out of every micro move on the chart of a macro asset in focus, which is a tendency of many traders where they try to make sense out of every fresh H4 candle on the chart. This is a sure way to get married to the macro thesis and start making mistakes with too high conviction on the trades. When it comes to the macro you always want to lay back on the chair and see the screen from as much distance as possible, rather than being glued at it, right next to it.


Setting alerts at right places for each play:




Below are outlined some of my approaches on how to set an alert setting routine for each of the play provided from the playbook outlined on this blog. This alert setting routine minimizes the time needed to be spent on each ticker/play, helps with patience as it concentrates traders' attention only at the right places when the price gets there.




Setting alerts in TC2000:





Accumulation / rotation:



When it comes to accumulations or rotations trader needs to gauge where the key rotational behavior needs to take place on the impulsive move, or which level needs to be breached. This is key otherwise there might be too many alerts set leading to too much hassle. Ideally, every play should have 1 alert set only, but this might take time for a trader to figure out where that optimal price level is.


My usual practice is to set 2 alerts , one at expectation of higher low and second at key rotational level where the supply might be breached. This is a lot of trial and error meaning that there are plenty of alerts that trigger each day for nothing, but thats the cost of the business.





Supply takeout:


On supply takeout play it is often worthy of setting one alert under the supply level, because in many cases once the supply is breached often a quick push will follow and a trader might miss a play in such case, therefore it is worthy to be pre-alerted and prepared.

A trader can also set an alert at the expectation of higher low in case if there is a higher conviction on the play to start participating with a small long position before the supply is breached. This is often good practice on plays where consistent higher lows are established.




Additionally, supply takeouts are structural plays, and not many really develop into worthy plays but trader still needs to track the development of the structure on many to catch a few of those worthy of participation. This means setting alerts on the plays a few times and keep repeating it as long as the structure is progressing correctly. Examples below:






Parabolic extension:



Typical alert setting on parabolic is within stages and moving new alerts higher and higher as long as the price behavior still suits potential parabolic play, which means no significant counter-move rejections or pullbacks. As soon as such behavior is present (deep pullbacks which invalidate paraboler) the alerts should be canceled (to clean up any further future confusion) and move on.


To place alerts efficiently on paraboler make sure that you can gauge the curve well, the alerts should be set around the area where the curve of price movement (green line below) becomes vertical (potential last stage of extension). If alerts are set too soon there will be too much frustration set for a trader with too many alerts getting triggered.





Normal extension:



On normal extension (non parabolic) the alerts setting depends on how many candles current extension is at. Ideally trader should not be setting alerts before 8 extended candles. It also depends on volume, if ticker is trading on high volume it is okay to place alerts sooner, if ticker is trading on softer volume the extension needs to be much longer to be valid, thus placing alerts with more of a delay (higher on bullish extension).




No need to be glued to single asset



One of the common overlapping issues along with larger losses is tracking every tick of the trading instrument across the entire day. The more that trader watches the asset closely the more likely it is for trades to be initiated, which often pushes short-sellers into overdrive on executions especially on tickers that keep moving higher. This is a very common issue leading to large losses, it is not an issue per se for everyone, but it is for quite many traders from time to time.


I found a great balance somewhere in the middle of how time should be dedicated and spent on each traded ticker, there is a well-struck balance of not watching every tick of traded asset, but observing just close enough so that you get an idea on the order flow, where the major sized traders participated, where key levels are, etc. And solid alert routine can be a major aid in supporting such tactics. Not just that it helps with the issue of being glued to only one asset, it frees up the time where a trader can put it towards other assets finding secondary opportunities elsewhere and extract more R than just trading a single asset.


There might be traders who will argue that observing every tick on traded asset is needed as only this way you get a "feel" on the order flow but in reality that is not the case. A lot of order flow on any asset is just 1000 shares in, 1000 shares out, neutralized order flow without much clues provided and there are about 30,40 or 50% of such ticks present across any asset trough the day, which doesn't provide the trader with much additional edge watching such action closely. This will apply to about 90% of traders, there are perhaps some exceptional traders good at reading the tape who can make sense out of the majority of intraday actions, but again those are exceptions.




Additional help from the fellow traders



It should go without saying that there is also a solid help given every day from fellow traders especially in equity space. While in crypto and macro I am fully on my own in regards to scan and trade routine, there is always significant help given in equity space when it comes to noting the tickers that are all of sudden moving with a lot of fresh news releases hitting the market. It serves well to be in the right communities, as long as there is not too much clutter which is a distracting trader and impacting the search routine on a negative scale.


However, on the other hand, my personal routine has been worked out over time up to the extent that it does not need to rely on anyone and can be traded in the vacuum more or less, which is probably very beneficial as it gives trader full focus and very stable daily approach without the reliance upon anyone.



Conclusion



This routine might shine some light for those wondering if it is possible to trade multiple markets from just a single screen or if there is such need as to track every minute of a traded asset through the entire day to build valid trades. This is not to argue that having multiple monitors might not be beneficial or that there is no benefit in watching Level 2 of traded assets very closely, it just means that there are more optimal ways to go about it and there is some middle line of balance to everything.


It is not up to me to give any strict rules on how trading should be approached or what kind of daily routines are to be set, because every individual is different, in the end, you need to establish the routine that fits you as good as possible. If you consider yourself a multi-tasker and someone with interest in many markets then routine above might be decent to replicate. However, with that said, since the routine is strictly made for the plays from the playbook outlined on the blog, it means that the trader needs to study and learn this part first before the actual scan / alert routine can be put into place successfully.

SUBSCRIBE VIA EMAIL

Follow on social media about latest trades or macro plays on stocks , FX or crypto:

  • Twitter

TradeTheMatrix.net