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Friday, August 04, 2006

Friday's action

Did any one catch SFCC? Not exactly a "classic" set-up, but a compelling one nonetheless.

Price gapped down, and the first 15-minute bar shot up through the retracement zone, the previous day's high, and the Fibonacci extension. The second, third, and fourth bars then consolidated, narrowing in range with the third and fourth forming inside bars. The fourth bar was the narrowest of the morning (NRM), and a textbook hammer. Entry was a break of the fourth bar high, and the exit was a break of the eighth bar low. Total gain for the move was just under 10%.

Charts over the weekend, feel free to post your thoughts and trades in "Comments".

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23 comments:

T. Webb said...

It showed up on my list, I watched it unfold, I saw the hammer, but I didn't buy it. I am kicking myself right now.

5150 said...

X...didnt catch that one, however, i have added another arow to my quiver. I had a similar trade yesterday with LEN. A gap down then a hard retracement above all fib levels. Once thees stocks break previous days highs or lows, they explode. Great set up to watch for. Again thabks for everything X....

P.S. I did trade QSII 30 min. Ask yourself three questions. LOL

Trader-X said...

Interesting 5150. LEN was very similar. Good trading to you, and have a good weekend!

Chris said...

Hey X, are you having a lot of problems getting on Trader Mike's blog? It seems that I never can pull it up, or I get a "Not Found" message.

I would post a comment, but I cannot pull it up.

Trader-X said...

Chris - he is having problems with his ISP. He has written about it a few times over the past week. So, it is not just you. But keep trying. His new site looks really great, and he has alot of cool features.

It makes my blog look like its from the stone-age!!!

Trader Mike

Check out others on my BlogRoll too:

Tale of the Tape
UglyChart
Brett Steenbarger

Those are just a few, but they are all very good.

QQQBall said...

great trading guys.

im working today.

10% move in one trade... nice!

John Wheatcroft said...

Best week trading ever. Even made money today (although I missed QSII). I say ye this merry friends - I will raise a glass tonight to Trader-X and quaff a toast in his honor saying loudly so all about can hear - "You da man!"

Have a great weekend.

thiago said...

Nice trade X.
Another good trades were QSII on 4 bar break (15min) and TRMM short on 9 bar break (15min)

Tag said...

Great week. Thanks for sharing so freely!

Trader-X said...

Thanks for the kind words John and everyone else. There are some good trades posted here in "Comments". I was able to catch the collapse in CECO, and am taking off to start my weekend. Have a good one everyone!

Jon said...

MYOG on the break of the 4th bar. I got stopped out.. the volume wasn't there in the move. Any other thoughts on the trade?

AAPL I shorted on the break of the 6th bar and then I went long when it broke back north.

I hit the CECO too on the break of the 5th bar.

Constructive criticism?

Ronnie said...

GREAT BLOG! THANKS!!!

John said...

Hello All,

I apologize for the length of this post, but I need some help. I watch you guys post some terrific trades, so your comments would be appreciated. Below is a summary of my trades this week (8 in all & all on paper). They left me with a net loss of $3. This is a typical week for me and it's getting frustrating. I have been paper trading off and on for 6 years (I hate to admit) and still keep coming up with disappointing trades. Two of them were made using the "Dummies" method, but the rest were X's fib method.

Again, sorry for the length, but at least this should make everyone else feel better about any losses they experienced. :) I am hoping that you guys may spot something obvious that I am doing wrong. I tend to adjust my stop loss too quickly and have been working to correct that. If you want charts, let me know. Thanks in advance, John.

Monday, July 31

COH – Dummies 30 min
•Long 500 above 10:30 hammer. Filled at 11:01 at $26.68 with stop at $28.33.
•1pm adjusted stop to below 12:30 hammer.
•3:00-3:30 candle exit at $28.9 with a fill of $28.93 when it hit resistance at the $29 level.
•Profit: +.25 or $115 after commission


Tuesday, August 1

SCT 15 min
•Long 1000 above second candle at $5.09 with my initial stop at $4.93 and target at $5.80. Entered a buy order for $5.12 and was filled at $5.10 at 10:07.
•Stock was looking weak to me around 10:15, so I entered a sell order for $5.55. Price immediately jumped into the .60s and I received a fill at $5.64.
•Profit: +.54 or $530 after commission

PSPT 15 min
•Long 1000 on break above 6th candle (10:45) at $14.67 with initial stop at $14.38 and a target of $15.50 with the half target at $15.00. Entered buy order for $14.68 and received fill at 11:01 for $14.65.
•Price dropped fast at 11:30 to $14.55 but recovered before I could react. At 11:44 I adjusted my stop loss to the bottom of the 11:30 candle (hammer type candle) at $14.54. Stopped out at 11:53 for $14.53.
•Loss: -.12 or $130.00 including commission

Wednesday, August 2

ALVR 15 min
•Long 1000 above 9:45 candle with a buy at $6.28 and a fill 10:12 for $6.24. Initial stop at $6.15. Exit at 10:46 with a sell at $6.35 and a fill at $6.38.
•Showed weakness at the ½ target, so I exited with the profit I had. In retrospect, this was again an instance where I should have held for my stop loss as the stock rallied and moved up to hit the original target at 1:15.
•Profit: +$.14 or $130.00 after commission

AQNT - Dummies 30 min
•Long 600 above 11:30 hammer with a buy at $23.97 and a fill at 12:14 for $23.97. Exit at 12:44 for $23.99.
•Difficult trade. Hard fill as it quickly moved beyond my buy price. I kept the order open since I'd been watching the stock fluctuate – up a little – back a little – and I did finally get the fill.
•Continued to chop up and back and I held in as it gained ground. On the 12:30 bar it fell almost back to my entry in just a couple of trades. I exited to cover commission.
•Profit: +.02 or $2.00 after commission


POZN 15 min
•Long 1000 above 2:45 bar with a buy at $10.48 and a fill at 3:04 for $10.45. Exit at 3:44 for $10.35.
•Another difficult fill. Entered above a green hammer above the O.R. Range and the 13MA. Sat in stock for 40 minutes while it chopped sideways and down. Exited on weakness at 3:44.
•Loss: -$.10 or $110.00 after commission

Thursday, August 3

PSUN 15 min
•Short 1000 below 2nd candle with a sell at $15.26 when it hit $15.28 and received a fill at 10:02 for $15.28. Initial stop $15.53 and target $14.75. Stopped out on 1:00 candle at $15.48.
•PSUN started to run well on the 3rd candle, then went into a very narrow range. 11:45 was an engulfing reversal. I was aware of this, but was determined to give the stock room to fluctuate. It very nearly stopped me out on 12:00 candle, but it closed weak and essentially formed a large shooting star off the 13ma with a close below the O.R. I adjusted my stop to the the high of this candle. Stopped out 3 candles later.
•Loss: $.20 or $210.00 after commission

Friday, August 4

FVE 15 min
•Long 1000 above 2nd candle with a buy at $10.42 and a fill at 10:02 for $10.40. Initial stop at $10.28. Target $11.00. Exit at 10:45 candle with market order as price gapped thru my stop and fell quickly. Filled at $10.10.

•Loss: -$.32 or $330 after commission

Anonymous said...

Jon, my thoughts:

COH - I don't know what "Dummies" is, so I won't comment.

SCT - good trade. I am not sure why you exited...you said it looked weak, but on the 15-minute no bar took out the previous bar's low until it was above 6.50.

PSPT - should have been a winner for you (I would have probably took a riskier entry on a break of the 4th bar high). You said price dropped fast at 11:30, yet it never closed back below the high of the first 15-minute bar (X calls OR high). Price rarely goes straight up...it has to "ebb and flow".

ALVR - you made money. You said it showed weakness at the 1/2 point, and I see that it did encounter some resistance. I look for an actual sell signal at this area, and personally did not see one.

AQNT - again, dummies trade and I don't know what that is.

POZN - this is the first time I will say this out of your trades so far - I think this was a bad one. I don't see the rationale for entering where you did, and that late in the day. X always says probability declines the later in the session you go...and, I don't think an entry above the OR high of a gap down is high probability to begin with (although Tom C. posted SBUX yesterday, but that is the first one I have really seen on this blog and it was a better set-up!!!)

PSUN - not a trade I would have taken. It was above the OR low, and that second candle left a little lower tail (of course the first one had a big lower tail). Not a good set-up for me, as there were a lot better things to trade. I do think you should have covered once that engulfing took out the previous candle's high...that is a pretty strong signal as opposed to something just retracing up with a few bars (imo, that would have been fluctuation).

FVE - this is a classic example of what X says was way too wide range on the first bar. He always says that those really wide range 1st bars can mean the stock made the entire move alreasy, and FVE really fizzled out and collapsed a few bars later.

I feel you pain as I have been at this 10 years, and only profitable the last few. I know X has been doing it longer than me. You had several good trades mixed in here, but did not take full advantage of the potential. Keep looking and trying to spot them. Are you papertrading or risking real money? If real money, you need to lower your position size. It seems you usually take 1000 shares, as opposed to adjusting your position to the risk you are going to take - see X's money management discussions. Maybe you bail out of the winners because you have too much at risk?

Anyway, believe it or not I would say you are on the right track. I don't know if this helps, but have a good weekend!

TJ

John said...

TJ,

Thanks very much for your comments. I'll review my trades again and see if I can learn from them.

Best Regards and Good Trades, John

Jim C. said...

John, Try the following - review all of your trades over the last several weeks with the goal of finding 1 or 2 common denominators (or basic rules) that will eliminate 2-3 of your worst trades (losers) each week. Eliminate = prevent you from taking the trades.
For example, from this week's trades, notice that your biggest two losers (PSUN and FVE) did not show enough volume increase relative to the previous action. The probability of an entry pattern working tends to increase with liquidity/volume. Note that X sorts his watchlist by volume and only follows the top 20-30.
Also, TJ pointed out two other basic rules that could easily eliminate a couple of bad trades per week - 1) avoid gappers with OR that is too wide, and 2) avoid entries late in the day.
If your are able to see this effect over several weeks of data, I believe you would be surprised at the impact to your bottom line. Hang in there.

Charles (in San Fran) said...

Good points. One of my favorite X posts is as follows (it is taped to my monitor):

"IMO, the job of a trader is to wade through all of the set-ups presented to him every day and discard the bad and mediocre ones...if you do this, you will be left with the set-ups mentioned above and trading will be a lot easier and a lot more rewarding."

John said...

TJ,

I was looking thru your response to my post, and I had a couple of comments.

FVE-You're absolutely right about the wide range. I usually spot these and throw them out. I must've been blindsided by the hammer.

ALVR-You said, "I look for an actual sell signal at this area" concerning the 1/2 mark. Could I ask what that sell signal is? I exited on the 6th bar when it dropped below the low of the 5th.

POZN-Your are correct again, none of my late day trades work very well. I am now trying not to trade after 1pm.

Finally on your comment about risk factor, I also agree. I am just starting to consider risk/reward ratio on my trades. I have a small trading account and I find I have to use the bulk of it to take any trade of 1000 shares. I used to trade 1-200 shares, but I found even with a hefty move in the price, I wasn't making enough on the winners to cover my losers (& still am not!) and that prompted my move to 1000 share blocks.

Anyway, thanks again for your comments.

John

John said...

Jim C,

Thanks for the response. You have a good point about volume. I do sort my list by volume and try to stay clear of any stock that doesn't trade 100K shares in the first 1/2 hour. FVE was actually lower volume than I would have liked, but I don't think I saw anything except that darn giant hammer.

One thing I have stopped doing since starting with X's method is checking current volume levels against previous ones. I actually took the volume off my charts. I guess I figured if the stock was gapping that the volume would automatically be increased. A not so brilliant deduction!

When I put volume back on, I see FVE was increased today over yesterday which is surprising, but PSUN yesterday was pretty mediocre until it climbed at the end of the day.

Thanks so much for the input. I'll definitely put the volume back on all my charts.

Best Regards, John

BL said...

FVE: with Scottrade I have a very narrow OR(4-15min or first hour)of 10.29-10.40, then a break to the downside. A good short on my chart. DoI have different charts than you??

John Wheatcroft said...

Friday was a tough day for everyone but the FVE trade probably failed because the market collapsed under its own weight 45 minutes after the open. Even though you are trading individual stocks the market has something to say about it. Remember the next time you see a moon shot on the Dow like that that only two things can happen - a sideways move or a downwards move. Very few stocks can go up under that kind of pressure.

Also watch the VIX on short term (5 min or less) basis. If it starts collapsing (as it did on Thursday around noon) it might be a good idea to close any shorts you might have lying around. PSUN fits that profile to a t. Compare the two on a couple of charts and you'll get the picture clear.

Just my two cents on John's trades.

John said...

BL,

I use Medved Quotetracker with an Ameritrade feed. On my 15m chart, the 9:30 candle shows as a wide range red hammer with a high of $10.35 and a low of $9.70 - so I'm not sure why yours looks so narrow range.

John W,

Thanks very much for your input. I have gotten out of the habit of watching the overall market. I used to do this religiously, but it seemed that it always kept me out of good trades. I'd always be stuck in that "I can't go short because the market's going up" zone, or vice versa, while I'd watch my potential trades return large gains and kick myself because I stayed out. Lately, I try to keep an eye on it without letting it influence me too much.

I also used to watch the VIX when I was swing trading, but I never thought to do it with day trading. I'll have to check on it more often - I see what you mean about PSUN on Thursday. Sometimes I think there is just too much information. I'm always telling my wife that it doesn't matter how many things I check before I take on a trade, I always miss the one piece of critical info that would have prevented a loss.

Thanks again for the input and keep up the good trades.

John

Sam said...

With all due respect to John W., who I am sure is a very good trader, I have to disagree. I used to watch the overall market and VIX, and now that I don't I do alot better. That is why I read X's blog - he focuses on the stock and the price action regardless of what is going on in the overall market. He constantly has great shorts in a flying market, and great longs in a falling market.

If I am trying to guess what the overall market is doing and is going to do before I enter a trade, it just adds a layer of compleixty I don't need.

Good luck this week.