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Thursday, September 28, 2006

Deep thoughts

From my last "gap sources" post:
"Keep in mind you will NEVER get all of the gappers - nor would you want to; it would be difficult to manage a watchlist of 100-200 stocks every day. Accept that you will always miss something, and focus on finding the really good set-ups from the list that you have."

And don't worry if you missed a set-up we post on the blog. In fact, you should WANT to see set-ups you missed, so you can learn from them. If we only post the same things you trade, the blog would be useless!

Someone asked in comments if I only trade 30-minute charts now, as I have not posted any 15-minute charts lately. I HAVE been trading more 30-minute charts because I am experimenting with a few things that I will post about later this week (or weekend) - so stay tuned. But, it does not really matter if the charts we post are 15- or 30-minute timeframes. A set-up is a set-up, and it really looks the same on either. So focus on studying the chart and don't worry about what timeframe it is.

Now go forth and don't make any mediocre trades!



EM said...

VRTX looked like a nice bread and butter play with a break of the 4th bar high (:30). It formed a hammer like candle at the retracement and sat on top of the rising moving average. Any obvious problems I failed to see with this setup???? Thanks for your help.

estocastica said...

True, but I'll be the first to admit that it feels awesome when a stock I traded shows up on your blog! Now that I think about it, 99% of the trades posted here are winners; there would be nothing better than to trade your set-ups everyday. Forget the need to learn...if I'm making the same exact trades as posted, I'm an expert (and wealthy)! :)

Seriously, another insightful post and I understand where you are coming from.

Jon said...

I had a lot of trouble finding anything worth while to play today.

I've been missing a lot of the trades posted on here recently and I'm not quite sure why. I need to try to cycle through my entire list every 15 minutes and set alerts.

Do you take stocks off your list throughout the day if they look like they're going nowhere? I think that would help me cut down on the noise.

Anonymous said...

CAO was a nice bread and butter set-up off the 7th bar on the 30.


Anonymous said...

not sure i see the CAO trade. You entered in the middle of the opening long range bar which can sometimes be no mans land as far as direction. I don't see any fib support or MA support on the seventh bar low although one positive was a break of the 7 bar cleared the 5 sma. If you took the trade you did well so congrats.

Ronnie said...

Similar to the trades I posted in comments of the BOBJ post yesterday, LBIX was a great trade today.

Randal said...

anonymous - you should post a name or make one up so it is easier to address you.

CAO was actually at support from the retracement zone...it bounced off the top of it. Retracement zone from yesterdays low to the 1st 30 minute bar high.

I saw it but did not take it. Congrats TJ.

Randal said...

em, not sure about VRTX. There is something I don't like, but cannot put my finger on it. Maybe it is because it was below 33.50, and the .50 and dollar marks tend to be strong support/resistance. It never could get back above. I guess your stop was not triggered and if you held to the end of the day you just had a small loss.

Prospectus said...

Anyone care to comment about identifying and entering setups in real time vs. analyzing a chart after the fact?

I find myself watching a potential setup longer after a promising candle prints and moves on to the next candle--Like I'm waiting to see if an inside bar goes further inside to narrow the risk. I also find myself watching potential setups in real time as the candles are being formed, getting mentally whipsawed as they go up and down. Should I just unplug and ignore candles-in-progress? Any thoughts?

T. Webb said...

I only look at a candle once it is done. What good does it do to look at it while it is in progress - it changes minute to minute. Basing a trade on an unfinished candle is suicide.

Will said...

I'd agree with T.Webb on trading only off of finished candles, plus some: I think the point you're getting at is how easy it is to scroll back at day's end and pick a stock that went up, then switch time frames until we see one that made for a beautiful trade. Problem is, what does that tell us to do tomorrow morning? Not much.

Just speaking for me, I trade longer bars as the day progresses. At 1000 EST, I'm watching 10-min and 15-min bars on all my suspects. By 1100, I'm down to 15's and 30's. Much later in the day and it's straight 30min bars. Look for a smooth series of higher lows or lower highs with absolutely no cheaters, else change time frames (or stocks). Wait for a pristine setup.

As for the "inside bar of an inside bar"... only trade the break of your setup bar (plus a penny, I'd say), which eliminates that problem. And beware if you get many inside bars in a row; your volume may have dried up too much and you often can't trust the latest, littlest ones.

Sorry for the long-windedness. Best of luck!!

EM said...

Randal.... yes, took a small loss as I entered at 33.50. I had a chance to break even but I didn't take it. Not totally disappointed with the money loss as I am trying to find out why the trade didn't work (if there is a clear reason). Sometimes... things just don't work.

KayakHandy said...

EM... VRTX may have been what I call a "Chaser" yesterday...just to wide of a space between the previous days close and the gap open...a $1.67 spread from close to high of gap...in other words it shot it's full load for yesterday.

However VRTX looks like a great swing trade to about a target of $35.38 - $36.00 to me. I would like to see a small pullback to and then buy on strength again.

Not an X style trade but VRTX seems to be in a channel right now.

EM said...

Kayak... the first bar range was not too wide on VRTX yesterday looking at the previous price action. Are you saying that you take into account the size of the gap as well? X... can I get your take on VRTX yesterday as well? Many thanks.

KayakHandy said...


First, let me say that VRTX was traded by me on the 15 min. and 3 min. time frame.

Went long on the break of the 6th, 15min. bar on Wed. and sold half the position on the second bar after the first bar with very large volume on Thursday mornings gap. The rest is a swing trade with adjusted tighter stops.

To me it looked like on Wed. morning that there was a very orderly pullback taking place with strength moving in at the 7th bar...15 min.

On both the 15 min. and 30 min. chart on thursday I really didnt' like what was unfolding. The opening Gap was a failed move on large volume that dropped more than 50% from the previous days closing low to the top of Thursday's opening gap. I think this is what made me negative the most on VRTX for a trade on Thursday with a 30 Min. chart.

I should have been more clear with communication before...sorry about that.

I think the trade could have gone either way for you...I know it was hanging at the Fib and along the five day MA but I just did not trust that large failed move.

Hope that explains it better.

Otto said...

em, my .02...it was a pretty violent (deep) correction from the open high. So, I don't know if I would have been looking to go long. I like bars to be more narrow range as they aproach support, indicating that the down trend in not strong. And, I don't really like that 4th bar in the context of calling it a hammer. The body was too wide.

Another thing to consider is to maybe have your buy point .05 above the trigger bar, as opposed to .01. That gives yo ua little more room to enter, and would have kept you out of vrtx.

Also, remember X said these bread and butters are not as reliable as othr set-ups.

Finally, I think alot comes down to experience and feel. It is hard to articulate. But, looking at the chart it is not a setup i would have traded. Don't get me wrong, I am not critisizing, just trying to give my take. All the best.

em said...

Thanks to all for your input on VRTX... it all makes sense. Bottom line for me is that this was not an ideal trade even if the setup criteria I looked at was in my favor (ma and Fib). Like I said... my entry was not that off as I only lost a small amount of money. I won't make this trade again.