Jan 8, 2009

Active day...

But breakeven in the end. Market is just so indecisive right now. I'm holding positions as long as I can only to see nice profits evaporate. Today I traded the following:

COH (twice, wish I traded it 3 times), ANF, CVC (wish I traded it twice), VAR, AU and ES e-mini.

I was stopped out of CVC and ES, made good money with ANF and the rest were washouts. I also had an order ready for BLUD (break of 12:15 bar, 5-min) but in my hesitation price jumped too far away from my entry. Would've been a good trade (cup & handle setup). What made me hesitate? Well, mostly I was watching the DOW chart and it looked like the market was going to take a downturn. Not sure I like following or relying on market direction for entries. It's done me more harm than good. Thinking about resorting back to taking the DOW info off my screens and solely looking at the charts.

First chart
Shorted ANF off a break of the 10:50 bar low after it found hard resistance at the 38% fib. level from yesterday's high to the morning pivot low. Stock performed well but just didn't have enough steam to finish the move. I was lucky to have scaled out of this one to protect profits. Completely exited at 21.91.

Second chart
Shorted COH the first time at the black arrow after yesterday's low was showing resistance. Stopped out. Entered again at the red arrow and made my money back from the first trade. The blue arrow is where I wanted to enter again but didn't have the cojones. But you can see is was a nice cup and handle setup that moved higher and eventually tagged the 38% fib. level from yesterday's low.

Third chart
BLUD - I didn't take this trade, but I wanted to show it anyway. Another nice cup and handle setup. I really don't look for c&h setups but there seemed to be a lot today and the 5-min chart really makes them pop. In a very indecisive market this stock knew exactly where it wanted to go... the fib. extention.

While I'm bummed this hasn't been the kind of start to the year I was expecting I am pleased with the fact that I'm making good decisions overall. Seeing multiple entries in a single stock is a sign that I'm understanding price action and how it relates to resistance and support levels. I still have hope I can salvage the week with a few good trades tomorrow.


TraderAm said...

Probably good idea: Go back to keeping it simple.
Personally I found that following market direction has kept me out of some losing trades, but I have done ok without it as well (particuarly earlier in the year).

TraderX does not use it , nor volume either. So it can't be a bad way to trade can it ? just candle price action of stock as per the master :-)

Going back to market direction, I'm still kind of in two minds about it myself. Leaning towards using it more as a "relative" tool rather saying market is about to turn down > so let's not open a short position. By "relative" I mean, behaviour of a stock when the market is rising/falling. Is it inherently weaker/stronger than the market. Then actual trade is based on stock price action (NR7, IB, hammer etc).

Anyway....ramble over.

QQQBall said...

take partials?

rudy said...

TR: nice observations. I find that watching the general market action encourages hesitation and self-doubt. I prefer to trade "what I see" I remember reading somewhere, it is akin to throwing a ball up in the air and catching it - you have to be in the moment of NOW, and not being distracted by external forces.

OONR7: what works for me is to keep it as simple as possible. The end result is less overtrading, more focus, and just showing up to bat every day. What makes trading so difficult is precisely why it should be easy ... following a precise routine each day, focusing on two simple set-ups (base & break and pullbacks are fine), and using money management to plan your exit points (capital preservation, break-even for a free ride, banking some profits, and letting profits run).

Trading should must never be a daily marathon, but a leisurely morning stroll in the park. And this is exactly why so many traders fail ... they are fighting the markets every day, which extract a physical and psychological toll.

Keeping it simple with a dily low key regemin is the way to consistent monthly profits, measured in R's, not dollors.

My 2 cents,


Anonymous said...

come on TR & OO: Guru TraderX opined in his blog the reason he eals w/ gapper so that he doesn't have to deal w/ the broader market as momentum behind the stock is substantial. Looks like students are getting confused.

Anonymous said...

Rudy, if it was so easy every trader will make money. Thing is 70%+ fail as daytraders and this statistics come from bullish times in 90s

OONR7 said...

traderam: one thing I have noticed by following the market is a lot of stocks, especially futures follow the general action of the market. So, in essence, if I'm already seeing market action in the charts I'm trading... I'm really only concerned with support and resistance levels of the DOW. Then, the S&R of the DOW and futures are different so I'm caught looking at those as well. When everything lines up, it's perfect but that doesn't happen too often.

QQQ: yeah, took partials per my standard procedure (after 1R and such).

rudy: I agree with all you say except the leisurely stroll in the park. Trading is a tough job and the stress surrounding every trade can be intense. I think having a good system helps relieve the stress levels a bit, but in the end you're still dealing with the will and actions of others. Leaving my fate in others' hands is never easy.

Anon: Just because a stock gaps up doesn't mean it's completely on its own. A lot of the times it too follows the general market action... it just takes a giant leap or fall at the beginning.

TraderAm said...

I agree with you. For info, I just use the DOW Index for general market observations. I don't watch the futures at all.

Yes TraderX doesn't use market. But he will be the first to say that you can't just copy a strategy and make money with it. You may need to change it to fit in with your own trading views and experience and psychology.

Anonymous said...

In its basic simplicity, trading is nothing more that buying and selling of securities. What we trade is our anxiety, which is why it is important to be as mechanical, and hence, non-emotional as possible. Once orders are placed, walk away from the slot machine. Let your open market orders go to work for you.

Anon: I believe the reasons most traders fail is because they don't consistently exploit their edge with sound money management. In addition, the criteria for defining a trader is lacking. A medical doctor is certified only after years of education. What then should it be for a trader? Just saying you're one does not entitle you to be consider one.

My 2 cents,