Mar 28, 2008

Note to self...

Be extremely wary of first bars that close in the opposite direction of the gap. It seems like I'm just freakin' determined to make every setup work. With the faster timeframes it's easy to get caught staring at candles rather than the overall chart pattern. I shorted M despite the very strong first bar. I traded and made money off this kind of trade before but it seems that you just have to be perfect nowadays with the entry (for gap trading). I also shorted APOL to end the day positive but this has been a rough week.

7 comments:

Anonymous said...

made tons on DIV & APOL.
have a nice day

LP said...

first counter gap bars are always trouble. Especially when they close strong.

OONR7 said...

yeah... it really bothers me how I continue to ignore the first bar action. I disregard if the first bar is strong/weak and goes outside the OR but if price is within the OR I've been playing them. No more. I will only enter a stock who's first bar closes opposite the gap direction if price moves below the ORH/L and my entry bar clears the low/high of the day. I really don't mind losing money on what I think is a solid chart... but losing money on a pattern I know has a lower probability of success is careless. For me, I think confidence sometimes gets in the way of sound judgment.

BTW... I'm still trying to get some recipes for you from my in-law. She's a tough one. I think I'll try waterboarding.

QQQBall said...

you talking about "first bar" being the first 15" bar, or the first bar to go in opposite direction of gap. say the third bar moves up on a gap-down play.

OONR7 said...

qqqball... really the first bar on the timeframe in which I see the setup. Sometimes the first bar on a 5-min chart will close 'countergap' but the 15-min's first bar closes in the direction of the gap. So, I'll prefer the 15-min chart instead. In any case... my entry needs to clear any type of intraday resistance if the first bar of the timeframe I enter closes in the opposite direction of the gap.

Anonymous said...

dude, you kid yourself if you think you can convince yourself of a pattern that repeats most of the time..
most good veteran traders have said there profitable trades are less than loser trades..what is know as expectancy ratio..for them it is like 0.4 i think//
a random event will have 50-50 chance..

OONR7 said...

anon... I've always said it's a probability game. This week, I entered a lot of low probability trades. Simple as that. If you're trying to make a point not to follow a particular pattern then you obviously don't know how to trade. Good traders thrive on patterns. To your point, that's not to say all patterns are profitable and I really don't care what my ratio is of winners vs. losers so long as my bottom line is exactly as I want it to be.