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Thursday, January 11, 2007

TRMA - 011107; 30-minute chart

posted by Tom C:

I am going to do my best Trader-X analysis here:

I entered TRMA short, and was aware of the increased risk due to several red flags - first, a long lower tail on the 1st bar (somewhat bullish), and second, the fact that the entry was above the OR low.

But there was something compelling about TRMA, so I shorted it on a break of the 7th bar low. The 7th bar was the narrowest of the morning (NRM), and came after a narrow-range 6th bar that left an upper tail. There was also a declining 5MA overhead, and the big picture was bearish as the stock gapped down and did not rally to the retracement zone during the pullback from the OR low.

I held until the end of the day, and the trade netted ~$2.00.

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Trader-X said...

Nice trade. I always say as long as you are aware of the increased risk, there is nothing wrong with taking it if you have good reasons and keep it on a tight leash.

lbcando said...

Great trade!

Took CTSH long break of 5th 15min.

Also learned only too well your admonision about entries above/below the OR h/l. Case in point COP.. took short on break of 13th ..15min bar..above the OR low. Watched for 45 min and COP would not break. Did I cover...Noooooo. Got stopped out .02 from retracement high before collapse...Break of 9th 30 min bar would of been perfect.

Good trading,

Nestor said...

Tom, Trader-X, now it is official. I made today my first trade ever and, being your blog my sole learning tool, it is not strange that it was TRMA, only that I saw it when it set up in the 15 min chart below the OR low (18th bar). THANK YOU GUYS, and for all the other good stuff in the blog too. A must read every day.

Anonymous said...

I like the risk on the trade. You are getting about 3:1 if you place your stop at the top of the bar vs OR LOW or 2:1 if the stop is at MA5. Instead you got much more! Congrats.

Anonymous said...

X - thanks.

Good comments all. Nestor, nice trade!

Anonymous - I was not talking about risk in terms of risk/reward and $$$. I was talking about risk in terms of red flags, and the liklihood the set-up would work.

Have a good Friday all.

Tom C.

Jamie said...

Great trade. NRM equals NR7. I was never quite sure of the significance of NRM. Now I get it. The NRM bar had almost no volume. The next bar broke like a coiled spring into a momo move.

Bubs said...

Great trade. I must do some more reading on these narrow range candle trades that everyone seems to be taking. Are these plays only done on stocks with opening gaps?