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Thursday, November 16, 2006

Trade of the week

posted by Tom C:

Trade of the week - at least for me. RMBS gapped up and rallied with the first 3 bars. It then pulled back and formed a "U" with bars 4-12, with the 12th bar closing above the Fibonacci extension of the previous day's low to the OR high (and of course, there was solid support from a rising 5MA).

I entered on a break of the 12th bar high, and held the position until the end of the day. I would have closed the position had price broken below the 5MA (and closed below it), but price stayed above that level and RMBS rallied into the close. The entire move netted over 10%.




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11 comments:

estocastica said...

Really nice trade Tom.

Anonymous said...

Thanks. Sometimes you are in the right place at the right time. I am really liking the breaks above the Fibonacci extension...another thing X taught me!

Tom C.

Prospectus said...

Great trade, Tom! Do you get most of your profit from a few big hitters like this, or from consistent day-in, day-out trades with days like this as a bonus?


I also have a few questions about how you executed this trade in real time. I still am unsure about the real time mechanics of trading X-style...

On your entry: Did you choose a break of the 12th bar high because it was the first bar to close above the Fib extension? Is it correct that you would wait until a close above a resistance line in general, whether it is a fib extension or the opening range high?

On your exit: Were watching for a candle to close below the 5-ma before you would exit the trade? Also, do you use EMA's or simple MA's?

Thanks for sharing your trades!

Michael said...

simply beautiful!

Charles (in San Fran) said...

Beautiful. It was on my watchlist, but I didn't take it.

Anonymous said...

exengineer - most of my profit is from consistent day to day, as opposed to a few big hitters.

Yes on the 12th bar closing above the Fib extension and the close above a resistance line (aided by the 5MA). And yes on the close below the 5MA, rather than just penetrating it.

The 5MA is a EMA, but I don't think it really matters if you use SMA or EMA as long as you are consistent.

Tom C.

Prospectus said...

Tom,

Thanks! One last question: where was your initial stop after you entered?

Anonymous said...

exengineer - the stop is always the opposite extreme of the trigger bar. So, the low of the 12th bar in this case.

Tom C.

QQQBall said...

Tom,

nice trade.

WSM reversal for a scalp... and cannot explain why, but these trades work for me & i have alot of confidence in 'em... 50 cents is about 1.5%.

BL said...

Great trade Tom. I put togethor a NYSE commodity steel oil broker exchanges and NAZ tech list all on 2 watchlists to observe the rally/sell off of these high beta groups. What a blow down in energy today. Including X gap plays. Finding my way. Thanks for the share.

Lee said...

Great trade Tom, I too traded this exactly the same but closed out early as it retraced from its highs at about 20.80.

Quick question. Did you have a target before entering as I cannot see the Fib extension lines above your entry.

Cheers dude