Sep 7, 2007

CHL - Short

Not sure if I missed out on some nice setups or not as Prophet's scan decided to take the day off again. So, I was left with my IB scan and was able to find a nice setup in CHL. Here's the trade:

  • Placed fibs. from first bar low to 8th bar high
  • The 10:10 - 10:30 bars formed what looked like a bearish falling three pattern
  • Entered short on a break of the 10:35 candle low on increased volume
  • Exited on a break of the 11:35 high after if formed an nr7 with volume. This really did seem like a good place to exit... kind of a dummy exit of sorts. Place the stop at the top of a very bearish candle with the thought that if it gets taken out... a reversal is possible. I was able to pocket some nice change at this point so I didn't mind.

13 comments:

Jerry said...

Good finished for the week.

For me, I finish today with a happy meal. :(

Jamie said...

I think you meant 11:25

Prospectus said...

Nice exit! What was your stop level? If I used the entry candle high (as I probably would), the next candle would have stopped me out.

greytrader said...

Prospectus,

No you would not have been stopped out. He entered on a break of the indicated candle which occurs on the next candle. Prices never went over the high of the indicated candle after entry, even though they did go over the stop value prior to entry.

OONR7 said...

jerry: thank you.

jamie: yes, you're right. My bad.

prospectus: I entered on a break of the 10:35 low. If you look at the 1-min chart, you'll see my entry didn't get broken till around the end of the 10:40 candle on the 5-min chart.
My stop in this case was indeed to opposite end of the entry candle, but I also use the 50% fib. level as a stop point as well.

gt: right on.

John S. said...

Thanks 00NR7 on the info. . I like Trade-Ideas, just trying to get a comfort level with it. . Plus, they have scans for NR7's as well. I was trying to see if I can make it as a living Daytrading? Do you? What are the realistic chances of it happening? : ) I actually bought Steve's book not too long ago and love it.

Do you normally wait the 1st 30 minutes of trading before you enter a trade?

Thanks again,

OONR7 said...

John S: there are lots of folks who daytrade for a living so I know it's 100% possible. What's necessary is a system that can provide enough opportunities per week to sustain a living. I do currently daytrade for a living and have been doing so since I moved over here to France. Although, it hasn't been until the first quarter of this year that I've been able to turn a profit. I'm very happy with my results over the last 4 months or so and look to add more strategies to the mix in the future. However, it's important for me to know one way to trade and do it well... do it to make a living before I can venture out and add to the mix. I think it all comes with experience. The more you trade one particular way... the more you start seeing patterns develop and refine your entry and exit strategies.
I've broken down daytrading for a living into three questions: How much do I want to make per year? How much am I willing to risk per trade? The first two questions naturally lead to the third... how much do I need to average per week to get there? I use R because I think it's easy to track and I don't really like divulging personal info like income. I've stated before that 6.3 is my goal per week. If I hit that number for 46 weeks out of the year... I'm a very happy camper. I haven't had a year under my current system to determine if I've been successful in that yet, but so far so good. It's been a good summer and summer is usually a tough time to make some moola. I'm excited about the remainder of the year which is nice because with a 'normal' job... you can't wait till your next paid day off. I love trading and I find it to be one of most rewarding things I've ever done. When you tell someone you're a successful daytrader you're telling them you're successful at something 99% of the world's population has no idea about (okay... just made that up). But really, daytrading is such a mystery to many folks. Making good money with your own money is a dream for many people and I get great satisfaction knowing that I can do it.
Want to know what my dream is? Here it goes: Fast forward 20 years from now and I'm still daytrading. But I'm not the only one. My sons, seeing how much fun I've had, have also decided to daytrade for a living and ask me for guidance and advice. That's my dream.

Anonymous said...

on Nison.... i like his samurai trading video. you can keep an eye out for it on ebay and get it quite cheap. i get something new out of that video every time i re-watch it.

i also like mark fisher's (fischer's) book called "logical trader". he has a system he uses based upon opening range. he also incorporates pivot "ranges". its not a "magic bullet", but i think his approach dovetails quite will with the various gap plays.

QQQBall

John S. said...

00NR7,

Thanks for the great response. .Could you explain a little more in terms of R. I'm having a hard time in terms of Risk/reward ratio, and what you mean by 6.3.

Thanks, John

OONR7 said...

john: Reward divided by risk = R. In the context of a trade, risk is the spread between the high and low of an entry candle and reward is the difference between your entry and target price. In the context of income... R multiplied by your risk per trade = income. So, if I'm willing to risk $100 per trade and at the end of the week I've made 6.3R on all my trades... my income is then $630 that week.
Some folks don't enter trades unless there's a potential to make 2R per trade. I think that's certainly valid, but I sometimes take a lower R value if I see a good setup. Nice to keep the Rs rolling if I can.
I also use my risk per trade to determine share size. You can find that in the 'My trading style' link in the Miscellaneous area of the blog (to the right).
Some people don't like using R... but I've grown accustomed to it. I think for the purposes of someone writing a blog (like me) it offers privacy as I really don't like divulging personal income information.

John S. said...

Thank you for the great explination of the risk versus reward. Do you think sometime it would be possible to put that into a candlestick chart set-up and show at what point you decide whether you go long or short on a trade based on the risk/reward. If you can't or it takes a long time, no biggie.

By the way, on the Trade-Ideas, if you decide to go with that, download the Trade-Idea Pro since the Web-based version isn't the greatest. You can do a lot of filtering in terms of minimum stock price, minimum share volume, etc. . Had a couple of more questions if you have time.

1). Is there a minimum stock price you prefer? 20 bucks, 30, 100 bucks? etc. .
2) Do you prefer Nasdaq or NYSE stocks since they are so much more volatile?
3) Is there a minimum spread price you prefer? I put in a filter in Trade-Ideas not to trade any stocks with more then 5 cents spread.
4) Do you normally trade more going long or short on a stock?
5) Do you ever trade Pre-Market?
6) Does it ever do any good to follow Level 2 action or is that just a total manipulation game. .

Well, I won't bug you with anymore questions. Thanks for evertything.

John

OONR7 said...

john: my watchlist prep usually eliminates candidates that don't have a high enough r:r ratio. I pretty much don't enter for less than 1R and it's pretty rare that my watchlist includes that low of an r:r.
As for your questions:

1). Is there a minimum stock price you prefer? 20 bucks, 30, 100 bucks? etc.

$5 is my minimum... no max.

2) Do you prefer Nasdaq or NYSE stocks since they are so much more volatile?

Doesn't matter, although Trader X used to talk about using Nasdaq stock if you're just starting out (helps reduce your watchlist)

3) Is there a minimum spread price you prefer? I put in a filter in Trade-Ideas not to trade any stocks with more then 5 cents spread.

I don't like more than .10 spread and the setup has to be perfect at .10

4) Do you normally trade more going long or short on a stock?

I trade stocks based on what my scans produce. Some days it's more short, others long. I don't lean one way or the other. I do like going long because I know I can always get in.

5) Do you ever trade Pre-Market?

No.

6) Does it ever do any good to follow Level 2 action or is that just a total manipulation game.

Don't really know... don't follow level II.

John S. said...

Thanks for the responses. I appreciate it.

John