Sep 22, 2007

Rise or Fall

Take a look at the last candle on the 10-min chart below and let me know if you would go long, short or stay put... and why?



John S. said...

Thanks 00NR7,

Just like you, I caught in HAR halting afternoon. . Saw it bounce to $88.50, shorted it and 1 minute later the dang tock was halted. . Luckily KKR balked on the acquisition and the stocked tanked more in afterhour trading after it reopened, I was able to cover at $82.50... That was the scariest $600 bucks I ever made. . Felt like I had won the lottery since I could have been down bigtime. . It didn't really occur until that point how risky trading can be, especially if you are using a lot of daytrading buying power and a stock halts on you. . I was sweating it there for 20 minutes, thinking I might have to cover at $112 - 115 if the deal went through. .

Thanks for the comments on the volume. . My problem is when I see a pullback on a stock, I hesistate pulling the trigger since it could tank even more. . Right now I have plotting the 5, 10 and 20 EMA. Is there a general rule of thumb turms of on a 5 minute chart if the stock penetrates through the 5EMA, and comes down to the 10EMA, if is still a good setup to go long? Guess it depends on the candlesticks. .

Thanks again, John

John S. said...

By the way, I'll take a shot at your question even though I'm still a newbie. . I would go short a break of the 11:00 a.m candle. . Some NR's there, so place a stoploss right above the high of the 11:00 a.m. The daily chart is showing some hanging men, and the 10 minute chart was showing the shooting star. . Probably not a good answer, but from what I have learned so far, that is what I would do.


OONR7 said...

john... glad HAR worked out for you. I can only imagine what you were thinking. However, I wasn't in HAR but mentioned that Trader Eyal was and what a nightmare that must've felt like. With pullbacks, I wait for confirmation of a turn back to the original direction. I won't enter a pullback based on one candle at a particular support or resistance area. As for the EMA question, I only use the 5ema on all my charts and I want my long entries to have closed above it and my short entries to have closed below it.

John S. said...

Sorry, didn't read close enough on the HAR comment. . Guess I probably wasn't even close on your question, was I?

Jerry said...

I miss this game a lot the last 2 weeks. Too busy?

Here we go.

Since mid last week, (unless it was a good reason) I tried to avoid this type of stocks that are open within previous day range as it may bounce at around the ORH/ORL or yesterday Hi/low.

1) Daily chart it was basing at around $30 and almost supported by the 50ma and there is a rising 20ma

2) 10 min chart / 5th bar bounce from $30.10 and the last 3 bars based at there as well.

Now if one were to short here base on OONR7 system, last candle almost was 1.25 volume than previous and was an IB and covered by 5ma.

Still, since last 3 bar is a roll over, I will stay put as it may reverse and traded higher from here.

How I Day Trade said...

I would have stayed away from the trade - resistance on the Daily. I liked the volume on the stock.

greytrader said...

I would pass on the trade. Second bar was a strong reversal bar and went well above OR high. Looks like it could reverse or chop around at current levels.

gurlate said...

all answers are correct! since day trading is mostly crap shoot..for example

1. Short 2--day 10 min chart it is kinda making head/ high probabilty it will break down//last candle is bearish and close is below 5EMA
2. But it (ha ha)
look at volume dude.. All green candles are high volume. 50 daily SMA is supporting it nicely..besides 20 is crossing over the 50 (bullish too)..what more do you want..
3. You know what..i am not could go one consolidating here for some time ..i know. i don't like that 10 min descending triangle...but why risk money here?

OONR7 said...

gurlate: what you've just outlined in your comment is called deductive reasoning. We use that in every part of our lives... not just to trade stock. We take a mental inventory of every situation and then decide what we SHOULD do. However, traders need to make decisions every day on every trade they make. These decisions are based on a variety of reasons some of which you touched upon. Obviously, you don't know if all answers are correct, and no, all three cannot be correct based on your argument because if any one answer is correct... it negates the other two.
But I think your answers (based on great rationale) are the reason why I presented these exercises. We don't know what's going to happen... we have to go with the highest probabilities at the time of entry (at least for my style of trading). So, based on the information on the charts... and the last candle on the 10-min chart, would you go long, short or stay put? Simple question, but only one answer.

Anonymous said...

interesting chart, because i love the shooting stars that move above the .618 fib, but then close below it, so i might have gotten short on the next bar after the shooting star... if you go long on the current bar, you get a tight stop of like .15 or so, but you are sitting on minor intraday support.

im cheap, but i'd make this one break the 29.90 LOD, which is about the low of yesterday.

im short on a new LOD, preferably a close below LOD.

thanks for taking time to post exercise.


bl said...

I would short break of 30.10, or next to last green bar. Volume is increasing, 5 ema pinting downward, consolidation and descending triangle pattern.

Anonymous said...

I would short below 3.10. Gap down, a few NR bars in a row, below 5ema all day, no reason to think it would bounce any higher. Besides, I would be looking to short stocks that showed little followthrough after the rate cut. Seems to me it only rose after 2:15 announcement.