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Thursday, August 24, 2006

A good day for trading

Welcome to Thursday. Go make some good trades and the money will follow.

Charts later today.

1:40 update - two really good shorts today:
1.) XRTX on a break of the eighth bar low. It hit the target three bars later.
2.) POOL - which is no doubt the trade of the week. I was holding for the Fibonacci extension but the fifth bar not only collapsed and took out the OR low, but closed below the Fibonacci extension indicating a good chance that the decline would continue. It did, and I covered on the 1:15 bar. Sometimes (with good trades and proper planning) you get lucky!

I think I will grab my dog and one of the neighborhood kids and go surfing. Charts later tonight.




Gaptrader88 said...

Shorted BBBY of the break of 2nd nr below OR low, good for .5

Shorted Ebay of 2nd bar break good for .35 very fast can't hold on.

Dave said...

If anyone caught the break of the 2nd 15 minute bar in GES today, I vote that they pay for the first round of drinks tonight. ;-)

chud said...

Hey X, what do you see wrong with taking the break of the second 15 min. bar in VPHM? I took it and was stopped out.


Jose V. said...

Hi everyone,
As Dave said I hope someone caught GES ;)
Chud, I take the same trade on VPHM knowing that the 2nd bar was not an ideal one as it was red. So as you, I got sttoped, but I reenter on the break of the 7th bar high...let's see where it goes :)
Let's do some money!!!

KayakHandy said...

Trader X, Also would like you to look at VPHM please.

Also in VPHM...I rated it a B on the 30 min. chart because the second bullish hammer has a slight upper tail. As the morning is moving onward the third engulfing bearish bar looked like it might hit the stop but the fourth Green hammer saved the day...right now there are a series of NR bars that are staying above the 50% range of the first gap bar.

On the 15 minute chart I saw the gap up, the second red bar hammer, the NR3 and a buy in the fourth green hammer. I gave this a B grade also.

After looking at this trade, I still rate it a solid B but with a lower R2.2 I now would not have made the trade. I have raised my stop on VHPM as the day progresses so now the R is a little higher.

X can you either verify what Chud and I saw in VPHM...thanks a alot for your help.

Anonymous said...

In VPHM, I don't see an entry on the 15 - the first bar was way too wide, and the second bar was just a red hammer-like candle.

On the 30, I could see a probable entry on a break of the 4th bar high, but nothing before that.



KayakHandy said...

I know GES would have been a great short! But was not the overly wide range of the first bar a signal of retracement? Especially when compared to VPHM...which is just stalled out and I think it's time to move on because it just looks like dead money...but with me being the stubborn type A personality I will wait until it reaches my higher stop.

Trader-X said...

I often get asked questions about the "too" wide range first bar. Just because it is very wide range does not mean the trade will not work - it just reduces the odds. If you like to take on more risk, then pursue those trades. As you can see with GES, sometimes they work. But for the most part I can find better trades elsewhere (not to say I have never taken a trade like that - I have).

The bottom-line is that I try to take the highest probability trades...if I can not find better trades that day, I may go to some a little riskier...

nickm said...

Hi X,
Do you mind explaining how did you pick your candidates today, especially POOL. What kind of scan did it pop up? I am assuming that XRTX is a candidate bcos of the gap down.

Trader-X said...

See this post for how I prepare my list for the day:

Javier said...

Hi X,
I looked at "See this post" and I did not understand how POOL was in the GAP DOWN LIST since it only had a 1.2% difference from the close of yesterday to the opening of the 2nd Bar.
I misundertood your rules since I read that you look at GAPS above/below 5%. Is this correct or am I wrong ? Could you please be more specific on this issue since I am sort of confuse....
ThanX X,

Anonymous said...

The 5% applies to what he said he looked out on the INET site. I think X lists at least 3-4 probably more sources to get gaps from. RealTick, Breifing, INET, CNBC morning ticker...

POOL appeared on my RealTick gap list...I am not sure which of the other lists it was or was not on.


Bill K. said...

POOL may not have been a big gap % wise, but it gapped below the previous day's low and had "white space" which X refers to from time to time. I actually took the trade but only got 1/2 the shares I wanted and sold at the Fib ext. Still good, but I was kicking myself most of the day.

Javier said...

Thanks TJ and BILL K.
- Perhaps I am not asking the correct questions but I will try to be more specific.
1. Do we need to look at a minimun % for a GAPs ?
2. Do we need to look for some liquidity in the first 15" BAR ?
3. Do we need to trade stocks above/below a specific price ?
- I am asking these 3 question since it helps to filter some stocks before looking at good set-ups.
Thanks for all your help !!!!!

Trader-X said...

posted by Tom C:

Javier - let me see if I can clarify. First, you need to come up with your own answers to those questions based on your study and not rely on what anyone else does.

Having said that, here are my thoughts:

1. Not necessarily. I like the "white space" theory - meaning there is decent white space between the close and open. If you need to filter, try a %. Once X has his list he sorts by volume which continuously updates, so he focuses on the top volume 30-40 or so. But he also says if he cannot find good trades he will go deeper in the list.
2. That is kind of answered in #1 - obvioulsy if there is a stock with a really wide bid/ask that is bouncing all over the place, I usually pass.
3. That is really up to you...

Again, I recommend coming up with your own filters to make your list managable based on your tolerance levels.

Javier said...

Thanks Tom C for your answers.

I guess that with "time", I hope to be able to manage a GAP list.

As a new day trader, yestarday and today, I was overwhelmed by so many stocks in my watching list.

That was the main reason why I needed to ask (based on your experience) how you filter so many stocks.

Thanks again for your recommendation and explanation.

Javier :)

Trader-X said...

In the beginning if you want to filter it I suggest doing so by volume, and focusing on the top 10, 20, 30 or however many you feel comfortable with. That will keep you in the most liquid. But if you are papertrading, I would review all the gaps you can every day just to see how they act and what happens. Even if you are not papertrading, you should still do that...

Barry said...

Welcome back Tom C. Your longer term pick of ETP triggered this week and is already up $2!

I also noticed SIRI was bouncing off the 200, with a hammer on last week's chart.

Javier said...

Thanks again X,

I will paper trade then until I can see how many liquid stocks I can watch at once while trying to recognize good set up.

Javier :)