CTRN - Short

I had such a small watchlist today that I didn't think I would find anything. I spotted CTRN as it was consolidating and decided to take the trade. Here's the chart:

• Placed fibs. from 1st bar low to 4th bar high
• Price retraced and consolidated along the 50% fib. level
• Entered short on a break of the 11am bar low as it broke out of the base and below the 61.8% level on increased volume
• Just like SAFM from earlier this week, I was looking to see how price was going to act at the ORL
• Exited on a break of the 12:05 bar high (harami after bullish bar)

CHL - Long

There were a lot of trades I didn't make today because the market's kinda psyched me out lately. NVDA and RIO presented some nice inside NR7 entries but I determined that the craziness prior to entry was too much. I did enter CHL - which had a number of nr7 bars prior to entry. Here's the trade:

• Placed fibs. from 2nd bar high to 9th bar low
• Price actually retraced more than 100% before rising again
• Price then consolidated around the 61.8% level with a series of NR7 bars
• Entered long off a break of the 10:50 bar high on increased volume
• Sold half at fib. ext and the remaining half on a break of the 12pm bar low

NOTE: I credit my exit after coming across the following web page. Just made me more aware that I should really pay attention to candle formations for reversal patterns.

SAFM - Upon further review

What I don't like doing is losing on a trade that I was up in and hit at least one of my initial price targets. So, after looking at SAFM from yesterday, there was something that really stuck out.
 
When price rises significantly after gapping down, if I get an entry signal, I need to play close attention to price action at the OR low as the stock may reverse.
 
Of course, the same logic would apply if I'm going long as well. Now, I've mentioned before that I usually do screenshots of 2-3 charts per day of either trades that I entered or missed and should've entered. This proves helpful because I can pretty much go back to these charts to see how certain patterns would have worked out in the past. Kinda like backtesting. So, after looking at previous charts, I did find other setups like SAFM that reacted similarly. Some also moved further down... but if I keep some shares (say 25%), I may be able to reap further rewards.
 
Here's the SAFM chart that looks like pop ups on steroids:
 

X - Short

I remember a time when I first started trading that I was actually afraid to short a stock. I just really didn't know what I was doing.
Seems like that's all I do lately (thankfully). Here's my trade in X (would've been a better day if SAFM wasn't such a pain in my ass):

• Placed fibs. from first bar high to second bar low
• Price kept bouncing off the 50% level and left 3 very bearish upper tails on bars 2-4
• Entered short on break of 6th bar low on increased volume and a nice down bar
• Exited at the fib. ext. (notice how the intraday fib. ext provided such a nice support area)

NBR - Short

Hope everyone had a good weekend. You know, for the last two weeks or so, my watchlists have been pretty short and while I would prefer more candidates, I like finishing my watchlist prep early (around 10am). This has helped me spot a few trades earlier... like today's trade in NBR, here's the chart (10-min):
 
NOTE: From now on, I'm just going to show my entry on charts... since I may be exiting on another timeframe I don't want to take up too much time just to draw an arrow on a chart.

• Placed fibs. from first bar high to second bar low
• Priced retraced 50% from the morning low and printed a nice down marabuzo bar with increased volume
• Entered on break of the 4th bar low
• Exited right below the 61.8% ext.

Exit plan

I'm all about having a plan. A plan I can stick with no matter what the circumstances or market conditions. I really do feel like I have a great plan for entries, but my exit strategy has really been suspect, especially this past week.
 
As I posted last weekend, I tried to stick with exiting off the 5-min chart, but frankly, that took me out of good positions too early. I had been exiting off the 15-min chart prior to that but I felt I was giving up profits by waiting to be taken out. So... I thought to myself, why not use both timeframes - but with a plan.
 
As most of you know, my entries are almost always above the OR low for shorts and below it for longs. With every trade, I typically have 2 price targets - the OR low (shorts) or high (longs) and the fib. ext. The OR low/high is a high resistance/support area so sometimes it's good to take notice of how price reacts at this level. However, there's no need to exit completely.
 
NOTE: FOR THE PURPOSE OF SIMPLICITY, I WILL WRITE THE REST OF THE POST ASSUMING I AM GOING LONG ON A PARTICULAR TRADE. I WILL USE THE SAME LOGIC (EXCEPT IN REVERSE) FOR SHORT POSITIONS AS WELL.
 
What I will try to incorporate is following:
 
-use the 15-min timeframe as soon as I enter the trade. If price does not reach to the OR high, I will look for a candle to penetrate or close below the 5ema and then sell on a break of that candle's low
 
-if price reaches the OR high and looks like it's stalling, I will look at the 5-min chart. If a candle penetrates or closes below the 5ema I will sell HALF my position on a break of that candle's low -if I have sold half my position, I will then solely look at the 15-min chart for my exit... no matter what (even if it hits my original stop)
 
-if price does not stall at the OR high, I will solely look at the 15-min chart for my exit. However, if price reached the fib. extension during this time, I can feel good about selling all my position or what's left at or above the fib. ext.
 
Example of selling half at the OR high

Example of selling remaining shares based on the 15-min timeframeI like this plan. I feel it caters to my style of trading (since I enter below the OR high) and incorporates the 5 and 15-min chart - which will help to limit my losses and let my winners run. I will be methodical and follow this plan for the next 4 weeks... without variation.

Today's trades

It's late... just got back from dinner. Had a few whiskeys on the rocks and don't feel like doing to the whole 'chart' thing.
So, went short CFC and sold near the OR low (pivot point on the daily ala King Jamie). Went long WFMI and sold near the OR high. Did alright I guess. Don't think I'll be saving any of these charts. Check back tomorrow for the next Rise or Fall.
Or... just forget all about this week and get ready for Monday. I actually have my fantasy football draft on Sunday night so I'm looking forward to that. Spent a crapload of time ranking my players.
Au revoir.

Great article

Rudy over at Ticker Tape Trader posted this great article that I think everyone should read. Touches on some great points that I firmly believe in, such as this one:

All your trading system does is help you identify high probability trades, enter them correctly, and protect yourself while allowing your profits to grow. Some trading systems are better than others. Find a system you are comfortable with, paper trade it, test it in real time with small amount, then stick to it.

Take some time to check out Rudy's site... he's always posting some great stuff.

Spotting the 'Craziness'

No, this post isn't about the stock market in general. It's about looking at charts on my watchlist and spotting the action before my entry. Oftentimes if I can identify the 'craziness' in the price action and wait for a calmer, more orderly lead up to my entry point this will help get me into a higher probability trade. If I'm going short, I don't like to see lower tails preceeding my entry. If there are, I want my entry bar to 'take out' the tails with a strong down bar. I apply the same reasoning to long entries. Below is an example from last week, FRO (5-min).
 
First, I spotted the 'craziness' and waited...

 
Then, there was calm along the 38.2% level before my entry 'took out' the lower tail...

So, the point here is this... before entering a trade just check for the 'craziness'. It could mean the difference between a nice gain or a quick chop.

Sloppy day

I normally file away 2-3 charts per day. Charts that fit my system and bring a little smile when I look at them.
There are none today.
Goodnight.

AKS - Long

I had a tough time today with my exit strategy. Exiting off the 5-min sometimes gets me out of trades too early (and sometimes with a loss). Honestly, I felt like I put in a 10-hour shift to make my money today. Here's the trade (15-min):

• Placed fibs. from first bar low to second bar high
• Price never closed below the 50% level
• I liked the long lower tails on bars 3-5
• Entered long off a break of the 7th bar high (hammer-like) on increased volume
• Exited off the 5-min chart about 9 cents below the fib. ext.

ASN - Long

Today I found a lot of quick strikes and I was either along for the short ride or I missed out. Overall, I thought today's action was very strange. Here's my ASN trade:

• Placed fibs. from first bar high to low
• Watched price creep back up and above the 50% level
• I thought price was going to reverse after seeing that spinning top at the 10:05 candle, but it didn't
• Price resumed its orderly rise to just above the 61.8% fib. level
• Entered on a break of a nice hammer high on increased volume
• Price soared past the fib. ext. and I was getting ready to cash out as I figured was going to come down
• Sold all shares at the fib. ext (felt fortunate, really)

MRO - Short

Actually surprised myself today by acting on an inside NR7 trade so quickly. What surprised me more about my MRO trade is that the inside NR7 occurred during an up bar on a potential short position. In the end... it was a very good 'dummy' entry and I'm glad I took it. Here's the trade (10-min):

• Placed fibs. from second bar low to 5th bar high
• Noticed an inside NR7 forming during the 10:50 bar right at the 61.8% fib. level. This had all the markings of a trade I'd really regret not taking if I didn't
  
• I liked the long upper tails of the 8th and 9th bar
• Entered short on a break of the 9th bar low
• Sold all my shares just above the fib. ext.

Rise or Fall - Revealed

Stock: KFN
Bottomline: KFN was a great countergap trade candidate and if you were thinking short at this point, you'd be correct. Did I enter: No, I decided early last month that I would stick to trading the direction of the gap for the summer.

What I liked:

• After gapping up, price proceeded to drop below the 50% fib. level
• The 10:10 bar is of particular interest as it closed below the 61.8% fib. level, was an offsetting bar and - most importantly - was an inside NR7 bar. I mentioned in this post that I will be actively looking for inside NR7 bars at the 61.8% and 38.2% levels

It's important to note that the low of my entry bar was not broken on the next bar which would have also prevented me from entering. I'm still debating whether this rule should be broken during consolidation periods. Meaning, if I see an inside NR7 at a key area... maybe I will wait to enter when the high/low is broken and not solely on the action of the following bar. I'm not a big fan of breaking rules when it comes to my system.

Some thoughts

I mentioned in the comments section that I still have room for improvement with my system. Particularly, I need to do a better job of entering trades that give me a signal according to my rules/style. Right now, I'm entering anywhere between 55-65% of the trades that present themselves to me. I'd like to get that up to 90% and that is a number I believe is achievable. Why don't I enter all the trades I see? Well, can't sum it up with one answer but I believe the following factors come into play:

-fear of losing more money if I'm wrong on an entry (especially if I'm already down for the day)
-fear of messing up my current profit (especially if I'm doing well on the day)
-fear of being flat out wrong

This past week was a good example. Overall, I did ok and ok will pay the bills. I like my system right now and I plan on increasing my risk per trade very soon in order to truly reap the benefits. However, this week I only entered 66% of the trades that presented themselves to me. Of the trades I decided not to enter for one reason or another, that represented and additional 4R in profit. That may not sound like much... but for me, it's money that should be in my pocket. The difference between paying the bills and living well. These are the things that grind in my mind every single day. Of course, I do realize that - in the end - I am profitable and that does mean a lot. Daytrading is not an easy career and, except for Thursday (thank God for Thursday), this week proved it.

So, there's a couple of other things I'm going to do to improve my system. The first is to exit off the 5-min timeframe (when price crosses above the 5ema). This may change, but I have found this exit method to be more profitable in the long run than exiting off the :15. I WILL stick to this. Secondly, I will also pay more attention to NR7 bars that form near the 61.8 or 38.2 levels (especially if they're inside bars), regardless of whether there's increased volume from the previous bar. I think this will add a few more candidates every week that should really pay off.

Finally, it's so encouraging to see traders become successful. In particular, Prospectus over at movethemarkets.com have had some really good days lately along with TraderBubs. I've followed these guys for the past year and have been there when they haven't been doing well and it's great to see them doing so well. I know that this week has probably meant the world to them... a sign of possible things to come and a potential career that will certainly reward the time they've put into the research and chart analysis. I mean, Prospectus made like 20R in one day... incredible. For me... it's steady as we go. My goal is to constantly make 6.3R per week, for 46 weeks. If I can get into 90% of the trades that present themselves in my system... I can easily surpass that every week.

Rise or Fall - 8/18/07

And the next Rise or Fall installment. Take a look at the last candle on the chart and let me know if you would go long, short or stay out based on the information on the chart and the last candle. I will let you know what I did (or didn't do) on Monday.

5-min

Daily

VMC, EWH - Short

Not that my guarantee had anything to do with it, but I did find some nice setups today. It always helps when the bottom falls out of the market and I'm short... but I like to think my trades would've gone that way anyway. So, here's a special 2-chart bonus:

VMC (:15 chart)

• Placed fibs. from 1st bar high to low
• Price made a nice bearish move during the 8th bar
• Entered short on break of 9th bar low on increased volume as it broke below the 38.2% fib. level
• Sold all my shares at the OR low (not risking anything this week)
  

EWH (:05 chart)

• Placed fibs. from 2nd bar low to 4th bar high
• Price bounced around a bit from the 61.8 to the 38.2 fib. level
• Entered short on a convincing 11:30 down bar as it broke below the 61.8 level on increased volume
• Sold all shares just above the fib. ext. (again, not risking didly)
  

Next

Since today was like yesterday, I just figured I'd use the same headline. Shorted ERJ and FRG and lost out on both (full R on FRG, half on ERJ). FRG had a nice setup later in the day (12:10, :10 chart) but I missed it. Would've been about 2R worth or so.

Tomorrow I guarantee a chart with a winning trade!!!!

Next

A great benefit of trading on Paris time is that when you have a crappy day, bedtime isn't too far away. However, I have all morning to think about it.
It wasn't that bad, but the stocks I entered didn't really move and I ended up trying to just limit my losses. I shorted WMT (twice) and SWY and ended up down .7R for the day.

Eh... I won't lose sleep over it. Hope you all did well.

Daytrader's toolkit

Jimmy from forexblog.org sent me this link which contains some useful information about market analysis, free quotes, scanners, etc...

Thought it was interesting enough to share with you all (don't worry, doesn't focus on forex trading).

Early day

Not sure if there was something wrong with my scanner (prophet) but I didn't have a huge watchlist, which is good sometimes. I had a nice, easy going trade in ARW early and was out of all positions by 12:30. Not a bad start after being off for a week. I also hooked up my laptop to my desktop monitor and was able to trade on two screens which I liked a lot. Here's the trade:

• Place fibs. from second bar low to fourth bar high
• Price retraced below the 61.8 level, but never closed below it. Bounced back up off a nice hammer
• Entered long off a break of the 10:05 candle high (nr7) with increased volume
• Exited at the fib. ext. as I saw price far away from the 5ema and didn't want to risk losing profits (glad I did as price quickly went back down)

Back from Vacay

Had a great time in Greece, but I'm really looking forward to trading again. Hope today offers some nice setups as a 'welcome back' gift.

Good luck.

Summer vacation - part deux

The fact that I've taken multiple vacations this year is a good sign I'm assimilating well to my adopted country. These guys live, work and breathe for vacation... no kidding. My family and I are heading out to Greece next week which is a country I've wanted to visit for quite some time.
So, I won't be blogging nor trading and I don't even think I'm taking my laptop (that's a gametime decision right now).
The market was pretty quite today for me and I thought about entering CHK on a break of the 10:40 candle high (10-min) but didn't and missed a nice gain.
See you all in a week or so!!

Quotetracker tip

I plot out fib. lines on all stocks in my watchlist every day. So, there are many times when I've already drawn fib. lines on a stock previously and now I need to clear it out. Just takes 5 secs to remove, but this seems like a useless step.

I emailed Quotetracker about this and there is no button or feature right now that allows me to clear out all the fib. lines I've ever drawn on any chart. What they do recommend is the following:

If you want to clear all drawings on all charts, you can do so be deleting CHLINES.DAT file in the QT folder while QT is not running.

IMPORTANT: Quotetracker is usually located in your Program Files folder on your computer. This will clear out everything, so if you have some long term stocks or something that you don't want to have to redo... don't even think about this. However, if you're purely a daytrader, then knock yourself out. You can say thank you now.

Quotetracker support really is the best. Speaking of them, did any of you guys ever send them an email asking them to add automatic intraday fib. lines?

BKS - Long

BKS looked really nice on the 5-min chart as it gapped up then retraced - almost gently - back down to the 38% fib. level (never closing below the 50% level). This was a fairly easy going trade and a welcomed one at that. Here's the trade:

• Placed fibs. from 1st bar low to 3rd bar high
• Price retraced and based around the 38% fib. level
• Entered long on a break of the 10:45 candle on increased volume (very strong bar)
  
• Stop was at the 50% level (been doing a lot of this lately and may stick with it)
• Exited at the fib. ext.

CEPH - Short

Action was pretty weird today but at least I found a lot more setups than what I've seen lately. Here's my CEPH trade:

• Placed fibs. from 1st bar low to 3rd bar high
• Price came back down and started basing around the 50% level (there were a lot of base plays today)
• Entered short on a break of the 10:15 bar low (shooting star with a long upper tail bar prior to it)
• My stop was at the 50% level and I thought I might get stopped out but price quickly reversed
• Exited during the 12:35pm bar near the fib. ext. (wanted to grab profits)

EDIT: I just noticed that volume on the entry bar in the chart above is not 1.25x greater than the previous bar. I went back to my trading computer (I post from my laptop) and did a screenshot since my chart was still up. Anyway... you see that the volume did show it was 1.25x. Guess the data might have been wrong and corrected itself later on.