Jun 3, 2008

WHQ... damn it

Here's part of my conversation with PDT yesterday:

"With that being said... I am starting to think about placing my stop based on the previous bar's (to entry) low instead of my entry bar low. That would give me some cushion (but also increase the spread). I may just use it on stocks where the entry bar isn't as close to the 5ema (like FTO)."

So, today with WHQ, had I followed this concept of placing my stop one bar prior to my entry... it would've been a very good day. I entered long off a break of the 10:20 bar high and was stopped out. Had I placed my stop 2 cents below the low of the prior bar to entry I would be sitting pretty. Now, I entered again on a break of the 11:25 bar high... and was stopped out. Had I placed my stop 2 cents below the low of the previous bar... I would not be writing this post.

Lesson learned. At some point these lessons will pay off in a big way.


Anonymous said...

OONR..you forget that tight stops also limit your losses better.
In hindsight everything works. But there is a reason why most good traders expectancy ratio ~0.4

PDT said...

Sorry to hear about the bad luck.

It's always a trade off. Do you want to get stopped out less and make less, or stopped out more and make more.

wolverine said...

Ouch that is frustrating. Trades like that are why I've gone back to primarily focusing on the 15' timeframe. BEXP, ANF, and (sorry) WHQ for me today.

bl said...

FYI, WHQ is a M/A co and usually mentioned by Briefing, but Jamie's Briefing wasn't up. I traded it too. I stay away from those if I know it's an aquired, BUT look to short the aquirer SII +5 pts forst 1/2 hr.

OONR7 said...

anon: you're right... the losses aren't so bad but missing the opportunity by just a few cents is very frustrating.

pdt: you're right... good points.

wolverwine: nice trades. As I was entering WHQ off the 5-min, it set up a great entry on the :15 (and the stop is where I wanted it to be). Oh well... always tomorrow. I did make some cash with WNR before it dropped.

bl: Didn't know about the M/A... thanks. It certainly didn't trade like an M/A stock.

bl said...

WHQ merger with SII at 93.55 so not much potential. Look at the aquirer for beta move. I bot SLM(to be aquired) a yr ago at 52 or so. 22 now. Too many behind the scenes crap that we don't know about that will affect price. Another: HAR 118 to 44 though a nice short.

Jamie said...

I was in this trade - break of 11:45 NRIB on 15 min. with a stop 2 pennies below the trigger bar. Did not get stopped out for a loss, but didn't like the choppy price action.

After the BO bar, it started to come back in and I looked at the 1 min. time frame and saw a lot of whippy looking candles with big shadows. I suspected I was in an M&A gapper.

Anyway, I use the 15 min. previous bar high/low plus 2 cents as my initial stop on gapper type setups that you trade and it works well.

If I don't care for the trade after I've committed money to it, like WHQ, I trade not to lose. Excluding the BO bar, I tighten stop to previous bar low after each new high. This assumes that each new high is a head fake and that the stock will reverse, so I'm basically always moving my stop except when price consolidates inside or sideways.

Yada yada yada, Hope that makes sense.

OONR7 said...

really interesting comments. I particularly like the 'trade not to lose' part. I'm definitely going to use the prior bar's high/low for stops on the 5-min chart... and if it makes sense on the 15-min chart as well (in relation to the 5ema).

Tomer said...

I was in this trade aswell, and it fooled me too hehe so don't take it too personally..