This strategy was featured in the January 2011 issue of Active Trader Magazine.

System Concept:
Dip Traders (using limit orders) are always faced with the risk of Overnight News usually resulting in trades that do not bounce. This method offers two independent filters that reduce Overnight News Risk dramatically. So much so, that Fidelity/Wealth-Lab has automated them for us in WLP 6.1.

Special System Notes:
Article itself reveals many details that will help you take advantage of techniques applied in this system. Meanwhile, read the commented out messages at top of script to get a flavor.
The system introduces 3 unique techniques...

1. How to prioritize trades based on when they appeared during the trading day. This eliminates the issue of your script picking random trades on a day when 20 trades show up & you only have the cash for 3. In real trading, you would take 1st 3 that appeared... this script does that for you without randomness.
2. Avoiding EPS announcements (typically high risk/low return trades). Community.Components now reaches out via the internet to identify forthcoming EPS releases via published Earnings Calendars. And consequently excludes trades with an EPS release in the time window you specify.
3. Opening Gap Filter in Quote Mgr. Large gaps usually indicate Overnight news impact. The new opening gap filter(WLP 6.1) , gives you the ability to automatically filter out trades with large gaps. You get to specify excluded Gap% (up or down).

Entry Rules:

• ATmag article used watch-list of NDX100 components.
• Buy 10% Dip from prior days Close... AS LONG AS
• Price > $5
• Price > 200 SMA
• 10 day Ave. Daily Volume > 250K shares
• No EPS events forthcoming in next 2 days
• Opening Gap (from prior day close) < 5%
• Priority based on which trades appeared 1st intraday

Exit Rules:
Exit 1 day later, Market On Close.

Note:
Requires installed Community Components library.

Warning: This priorty method requires a powerful PC on large watchlists. I personally use a 64-bit laptop w 64-bit WLP 6.1 on the Russell 3000(daily bars) with a sublist of Russell 3000 5min bars(for priority). My 32-bit PC would get memory errors on large watch-lists.

Enjoy!
Ted Climo