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Sunday, November 19, 2006

NTGR - 111706; 30-minute chart

posted by Tom C:

Great post by X below on "Chasing success". I could not agree more.

I took an interesting trade in NTGR on Friday. It had a few "red flags" - the entry was above the OR low, and as X would say that 1st bar was crazy wide. But, the 1st bar also closed weak and below the 50% mark of its range, and it left a long upper-tail (bearish). The 2nd bar was a narrow-range, inside bar, and a "hanging man" type candle. And the 5MA was declining and serving as overhead resistance.

I entered on a break of the 2nd bar low. The target was the Fibonacci extension of the previous day's high to the OR low, and it was hit two bars later.

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estocastica said...

Awesome trade -- I was just in the middle of writing up a "Day Trades That Got Away" post about NTGR! I passed becasue the 5MA wasn't quite close enough for me. Otherwise, I thought it was beautiful.

Sami said...

i have a question or two about exits.
Do you always exit at the Fib target? or would you consider trailing a stop above/below resistance/support? or on the opposite end of key candles much like your initial stop?
If you do not hit a Fib target, but the stock closes weak, would you hold overnight? or always close the trade at the end of the day to avoid next day gaps?
thanks bunches.

Trader-X said...

estocastica - I passed it up for the same reason. It reminds me on ILMN on Monday. I need to re-think "close" as opposed to touching.

Good trade.

Trader-X said...

sami, not speaking for Tom C. but I usually close at the Fibonacci extension. Sometimes I take 1/2, and trail a stop. But I always close something as it usually reverses at that point.

I never, never, never hold overnight. To me that is just gambling (unless of course you are swing trading, but don't confuse the two!).

Will said...

X and esto,

After helping myself to a heaping portion of the X-patented 5EMA on 30min bars, I too quickly ran into the horseshoe / hand grenade quandry (i.e. just what is close enough?)...

My personal solution was to throw a 1% envelope around the EMA, which works great for me. YMMV, of course. I've an annotated chart of NTGR with it, but I don't think it's kosher to post a picture or do "a href" in someone else's comments, so here's the link to the pic to copy/paste if ya'll are interested: www.dummyspots.com/wp-content/

Best wishes and still follow both of your sites daily. Cheers.

Trader-X said...

Will, I don't mind at all...thanks for sharing.

Here is Will's link.

Trader-X said...

will, I also added you to my blogroll...


Sami said...

X, thanks for the reply. My objective is neither to day-trade nor swing trade. I am happily busy running my small software development business during trading hours (and nights, and weekends), and frankly my portfolio is larger than i can manage to day-trade.
I've been managing my portfolio based on fundamentals and macro-economics. I would like to supplement that with sound technical analysis to reduce volatility and possibly enhance performance. For example, i would like to exit positions when medium-term trends move against me, and to add to positions when overcoming resistance levels.

For me, i am finding that the best way to really learn technical analysis is to trade intra day charts. It is very hard to convince people to buy at new highs. But watching a streaming chart where a position gaps up, consolidates on low volume, and then breaks above OR high, finding support at MA, that just drives the point home. It is like a switch flipped in my head after i started following intra-day streaming charts. I trade a small portfolio based on intra-day charts so that i can learn with real money and emotions.

I am applying the knowledge from the intra-day charts to my real portfolio using daily and weekly time-frames. So far the results have been good. It is like i've been blind all my life and just opened my eyes for the first time.

Sorry for the long comment... and thanks much for the blog. I've learned more from your blog and Alphatrends than all the books i've read combined.

estocastica said...

Great stuff Will! Also, thanks again for you comments on my blog regarding the additional Fib series on the OR bar.

Trader-X said...

estocastica - please link to that comment you were talking about...

estocastica said...

I intended to link it with my original post but forgot. Will's comment is the third down of the following post:

Additional Fib

Trader-X said...


em said...

wow... yet another timely post. I, too, had questions about 'close' to the 5ema. Right now I'm waiting for candles to touch... but the 1% envelope sounds like it makes sense. Although... I've seen bars come close to the 5ema and fail. Usually when it's touching and all the other stars are aligned - it'll move. Thanks for reading my mind (you, Will and Esto) and I'll test the envelope technique to see how effective it is.