Finding Doty is a study set and trade set up that works with the study set. A ThinkOrSwim study is basically a custom indicator that can be selected to display on a chart. There are many studies available by default within the ThinkOrSwim platform. Custom indicators can be written using ThinkOrSwim’s coding language called ThinkScript (.ts). Studies and study sets can also be shared and imported. Below is a link to this custom study set that I have shared.
This study set consists of:
- A strength indicator (adds dots to candles. Yellow dots indicate strength, Blue dots indicate weakness)
- Adds a green line and a red line to the chart. Green line is the high for the first 10 minutes of the trading day. Red line is the low for for the first 10 minutes of the trading day.
- Adds a blue line (on the time axis) at 9:45 am est.
- Adds a red dotted line (on the time axis) at 10:15 am est.
The Trade set up:
- This study set gets added to a chart. Look at a specific set of “daily in-play” stocks on that chart and see if any fit all the criteria to “trigger” a day trade. The specific set of stocks can be selected using on of the scans on this website, a default ThinkOrSwim scan, or your own custom scan. You will need to observe, real-time test and/or back-test to see which specific set of stocks this set-up frequently works with. THIS IS THE MOST IMPORTANT PART of this set-up. You cannot just apply it to any random chart on any given day and expect to get anything more than random results. Find a scan for a sub-set of stocks that this set-up works consistently with more than 65-80% of the time, then you can start using it to place real trades.
- Ticker on my GAP UP scan triggers. Apply findy doty study set to the chart.
- Between 9:45 am and 10:15 am EST stock price moves ABOVE the green line (i.e. high for first 10 min of day). This must happen before 10:15 am EST. After 10:15 am this trade set-up is void.
- Wait for 4 candles with yellow dots in a row.
- Go LONG.
- Set a stop-loss point and a target close. Your stop-loss point can be if it goes back below the green line, or back half way between the red and green line, or previous support. All depends on range, volatility,price action, etc.
- Close trade at target sell price. This needs to be determined at your secretion based on why the stock is moving, price action, overall market conditions, historical price movement of the stock, etc. There are too many factors involved in determining the target sell price and stop-loss point to make it a technical decision that applies universally to all trades using this set-up.
Note: this set-up can also be used as a short set-up using a different scan to find your watch list (sub-set of stocks) and the red line and blue dots as indicators of weakness to open short trades.
The screen shot above shows a close up of the morning price action between 9:45am-10:15am EST. Price above green line and 4 yellow dots (strength) . The screen shot on the top of this post shows the chart later in the day
Or just copy and paste this link into your ThinkOrSwim application:
Go to setup>open shared item>paste link into box.