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Wednesday, March 07, 2007

FAF - 030707; 15-minute chart



1.) What did I see?
A gap up and wide-range first bar that leaves a long upper-tail. The second bar consolidates, and the third bar rallies above the OR high. The next four bars consolidate around the OR high, and the eighth bar tests support from a rising 5MA (and the OR high), and closes strong near its high.
2.) What is the entry?
A break of the eighth bar high. If you missed that entry, there was another opportunity on a break of the twelfth bar (hammer) high.
3.) What is the exit?
The target was the Fibonacci extension of the previous day's low to the OR high; it was hit after 1:00EST.

Set-up grade = "A-"; the only issue I had with the set-up was the upper tails on the first and third bars.

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18 comments:

QQQBall said...

ADM was good set-up... BO above the 1.382 extension level too.

John said...

Hello Everyone,

I was stopped out again today, this time in CVTX, and I'm hoping to get some input.

Here's a link to the chart and the details of the trade:

http://www.metrocast.net/~jm3/cvtx.gif

The only thing I see (in hindsight) is just how big the initial gap was. Not much else is sending up a red flag for me, but maybe some of you guys will see something I missed...hopefully anyway!

I really want to turn the corner in my trading. I've been at this too long and worked too hard to give up now, but I just can't seem to quite make it work. It's frustrating to say the least.

Thanks for any insight.
John

Mike said...

John, this isn't something that caught my eye for several reasons. It appears that CVTX put in a double bottom at the previous low, and rallied from there. You entered right above the previous low (4th and 5th bars which left tails), so there seemed to be alot of risk in the trade. That is the main problem I see, and the next bar confirmed by leaving a lower tail at that previous low and rallying.

Also, you entered on a break of the 10th bar low, but the 10th bar was not any real candle pattern to me. It was just a wide-range red bar.

You mention you are frustrated, and that is understandable. How long have you been at it? I recommend reviewing all the charts here, as it takes a while to spot the signals, learn to read a chart, and become consistent. But it will happen!

John said...

Mike,

Thanks for the insight. I did not see the double bottom, but of course you are right.

If you can believe it, I've been at trading for about 10 years, never successfully, but I refuse to give up.

I finally have enough capital to day trade and have only been trying X's methods for a few months. I like the simplicity of it. You can get so bogged down with indicators and such that it's just rediculous!

Thanks again,
John

PS. Sorry about the link not working - I thought I had it.

Gary said...

JOHN

If you should know I ve been trading for almost 10 years too-- last 1 1/2 years day trading ( same reason as you finally got enuff capital to day trade.

As you probably know by now its not easy but at same time dont be compelled to take trades. IF you are having a bad patch slow down. Swtich to 30 min charts if 15' isnt working for you. One of the biggest problems people complain about and I have experienced personally is by the time you find a trader X trade, its already 5-10 out so do you chase it or leave it--cause it changes your risk reward ratio. I would say this that there are many facets to a day trader. Look at as many charts as you can see and see why price reverses at certain points. Why do i say this?? Some days you wont find many trader x type set ups. Kinda like having a pistol and a cannon--cant use the cannon in a close combat.

For today Thursday, I took 5 trades PLCE 3 rd bar break ICE at 133.65 11:15 bar break AKAM 11 o clock bar break target was 161% fib from today morning low to 11 o clock bar break TECD 11 o clock bar break--target was a previous close of third candle bar at 36.16 I am not bragging but all these were 3- 5R winners

I took ICE on a roundtrip sold at 136.25 then shorted it second time it hit 136.31 ( previous bar high)--I have a pivot line at 136.48 on ICE from a few days ago and I saw ICE exhausting from a vertical run hence this trade ( need to have other weapons in your arsenal)

Up until a few months ago I had very little patience in finding stuff and hence took bad trades. Go back and look at archives.http://www.maoxian.com/archivecat.html#QA


Review these over and over (I still look at archives and past charts even though i ve seen them over a 1000 times)--only thing I can add to this is that if your trade is in first three hours of morning make sure its close to 5 ema when your bar sets up--more chance of success, you can only increase your probability but its hard to get 100% right. Dont be impatient and be forced to take trades. What platform do you use?? If you use cybertrader I can give you my query I run every morning

Good luck--this is the best job in the world bar none if you are successful.

Gary said...

Forgot to add John--any interesting charts you see make sure to draw a line at morning high or low (for shorts) this way it becomes easier to see when you are flipping thru charts later on. Very few successful entries are below OR high for longs and same for OR low for shorts--sure there are but again its a game of probability

Anonymous said...

"One of the biggest problems people complain about and I have experienced personally is by the time you find a trader X trade, its already 5-10 out so do you chase it or leave it--cause it changes your risk reward ratio."

Why would you say that? The ability to get in at the right spot on an X set-up isn't any different than any other. At least in my trading experience. You just have to watch the charts and manage your watchlist.

TJ

Anonymous said...

I would like to once again extend an invitation to any traders interested in joining the TRADER X style chat open monday-friday focused on finding setups durring the trading day and sharing them in the chat room forum... drop me an email: jaw2321@yahoo.com or show up on aol and add jwz024 to your buddy list. I Hope to see some more traders in the chat soon!

John said...

Thursday 03/08

Okay guys...the tale of woe continues. Sorry for the length of this post.

Stopped out today on ESRX. The chart and the details are at the link below.


http://www.metrocast.net/~jm3/esrx.gif


Any thoughts would be appreciated. As it turns out, I went long on ESRX 7 cents below the high of the day!

I took this trade after what I would consider a very cautious morning. This seemed to be the best set up on my list, so by lunchtime I was focused pretty much on this stock.

Here's a brief history of my last three weeks:

I went live three weeks ago after another long bout of paper trading. I've traded live several times before in the last 10 years, always with the same disappointing results.

Week 1) Net Profit: $2.50

Week 2) Net Profit: $50.00

Week 3) Net Loss So Far $500.00

So basically it's cost me $447.50 to trade for the last 3 weeks. This is with an average of one trade per day.

I'm sure many of you can relate. But if you have any input as to where I went wrong today, I'd appreciate it. Many of you will probably recommend returning to paper trading yet again, and after today, I may do that. But it's beginning to seem to me like the market is playing a joke at my expense. I review chart after chart looking for patterns that lead to profits. (ie: look at the 11:15 and 11:30 candles on ESRX today. The pattern there is nearly identical to my entry and the price managed to continue rallying after these candles...on mine, however, it did not). I understand the unpredictable nature of the market and what a difficult process daytrading is. I question my reasoning on every trade. However it seems no matter how good a set up I find, I continue to be stopped out. No matter how much I widen my stop, it's always hit. Maybe I have the power to negatively effect any stock I enter! :) I should just always do the opposite of what I think I should do and my profits will skyrocket!

I can honestly say, if I ever achieve even the slightest success daytrading it will be the biggest accomplishment of my life. I have never had anything come so difficult! 10 years and counting.

Thanks for any help.
John

PS: Gary,thanks for all the input in the previous comments. I use TD Ameritrade and Quotetracker charts. I use Quote.com Unfilled Gap List and CNN Gappers to find potential trades. I find this to be a sufficient platform for me. I sit many days out if I don't see anything compelling, although I do feel like I should be able to find something every day. I would consider myself an overly cautious trader. For example I would have taken none of your trades today. I mean no offense by this as you are obviously a much better trader than me.

PLCE: would have passed because entry candle is not NR and is below O.R. high. Also closed red.
TECD: On my charts looks like a tiny gap up and then a big plunge. I would not have traded against the gap and then steered clear after seeing so many wide range candles print.
AKAM: I would have had my fib range drawn across the O.R. high to yesterday's low. Your entry, although narrow range, is just below the 161% extension of this range and so I would never have gone long here.
ICE: What would have scared me about ICE is the amount of weakness in the morning, the fact that the gap couldn't break yesterday's high and, of course the 34EMA is above the 5EMA.

Like I said, don't take any offense. I greatly respect your trading abilities and have often been very envious of the trades you post. The comments above are merely to illustrate how I would have approached the same trades.

As you can imagine in the last 10 years, I've tried just about every method under the sun and have never had any success with any of them. That's why I'm really trying to narrow down my arsenal to one method. I've looked at the chart you posted on your own blog from March 1st and am wondering about your "missed" trades. These would have been "against the gap" trades. What do you use as an entry trigger in these trades? I see bollinger bands on your charts. Do these play a factor? Thanks, John

Glenn said...

John, I also run a free live trading room that looks for X style and dummy setups. You could pop in anytime and ask any one of the very experienced traders privately or to the room if the setup looks good. Plus many setups are called out all day.

dehtrader.com if you are interested. I am not promoting here, just want to help others.

ADD Trader said...

Hi John,

I feel your pain. I will take a shot at why this trade may not have been successful.

1. Late day breakouts tend to be less decisive (read:strong) and thus often fail. Usually the only late day breakouts that work are ones that come out of very flat bases.

2. You always want to get your entry as close to a the break of resistance (or support in the case of a short) as you can. This gives you more upside, a lower stop, and more "wiggle room" to exit if a stock just meanders around. Your first entry point (although a late day break) was the best choice. When you missed it, you should have let it go.

3. Perhaps though the biggest reason the trade failed was it was up againt huge resistance on a daily chart. Your entry was only .18 below the high of the 2/27 candle. I know Trader X and others don't look at daily support/resistance, however, because of the strong moves we have had in the market in the last two weeks, I feel you have to take it into consideration. You were literally entering on the re-test of the high of the "breakdown" bar.

Hope this helps.

ADD Trader

Jamie said...

Hey John,

Just looked at your ESRX trade. My two cents:

The OR is extremely wide (approx. $1.50) and red so that by the time, price regains the OR high, it is near exhaustion because it has travelled so far to get there. If a break of the OR high is one of your trigger points, you might want to focus on narrower OR bars. Another more technical point is that $78.00 is a pivot point for ESRX - you will see it on the daily timeframe.

Hope this is helpful.

Gary said...

This is going to be a long post so if it's not for you skip it. I will try to answer these point wise with least important first so you can concentrate on imporatant stuff

The FMCN trade you talk about on march1 ( I assume thats the one)Q s were pointing up very strong and FMCN made narrow bullish inside hammer and I missed that--it was almost a given it would eventually catch up with Q s( I dont risk as much on such trades)

TO more important stuff

You chased ESRX (missed first entry took second one--now your reward becomes smaller and risk greater --needless to say odds become slimmer--dont know if you play poker but very neat analogy there)-- Be especially aware of spinning tops and bearish( or bullish long tails) if you are long--I trail my stops with 15 minutes lots of time as you have probably seen from previous posts. Set your targets. I have said many times before I like setups relative to price that's why I prefer higher priced stocks to lower price ones--If I get a 20 cent risk on a $80 stock and a 10 cent risk on $20 stock I'll take both but my expectation would be more for the $80 to make a 2 point move than the $20 stock.

AS for my trades you'll be there pretty soon if you work hard and be patient. Sometimes, I know from expereince, in a bad spell you are quick to take profits and slow to honor stops. Do not move your stops if trade is working against you--put em at whatever logical position you would put it. Make your trading as automatic as you can. See next point.

I used to be with Ameritrade, download the cybertrader platform simulator this weekend. See the tools they have. You will never regret the switch. I would like to know the reason why you missed entry on ESRX (was it cause of the platform or you) since you were watching only this stock I presume.

I have a whole list of rules "written" in front on top of the wall in front of the screen--I see them all the time. Eventually it will engrain in your psyche. Thats the whole point behind that exercise. Have some motivational quotes too--trading is emotionally draining in best of times. Dont trade if you are sleepy or not paying attention or distracted.

I hope you are respecting your "R" value--re analyse your R value if you need more time to learn. Like I said any intersting charts draw the line at OR high or Low whatever case maybe. In bad times try to trade stocks setting up close to OR high/lo. DO not chase if you miss something.

Bollinger bands dont play any part in my trading--Until you pointed it out now I didnt even realise they were there :) A gap up or down would definitely be at extreme of Bollinger bands.

Stick with one method -master that be profitable and then find other things. Did I ever tell you I am probably the worst swing trader you'll ever know :) I used to be profitable in day trading then give em back in swing on "nice" set ups that never worked for crap. Took a long time to realize what I was doing--I was better off leaving swing trading to better guys. One day I ll learn that too :) I hope.

P.S> In bad stretches see set up relative to stock price --I try finding .3-.6% risk for 15' bars and about upto .8% for 30 min bars--just for today --symbol, stock price and risk as follows--TECD 37-.08, AKAM 50 .15 ICE 130 $1.10 (extreme)PLCE 57 .36 cents

I ll try to include trades that didnt work with my exit too from tommorow since you can always watch the profitable ones from archives and such. Take a look at ISRG entered on break of 6th bar hammer--exited when 9th bar low broke on 15' --.15 profit on a 109$ stock yyaaayyyyy I was saying then it rallied back up and I was watching for reentry with alert set at break of 1.15 bar but that never happened. And the rest is history--lucky or not I guess but I followed my rules so....

Gary said...

Misses today were FMCN NVDA and WYNN

Trader-X said...

John - a lot of good points from everyone above. Many talk about things I don't watch, so take the time to see if it is something that would work for you.

As far as what I think - I do see what you are looking at in the original entry, but not the entry you made. I cannot see entering on a break of fifteenth bar high - no real signal there and I agree you were chasing. On the thirteenth bar, you saw it as a "hammer-type" candle (it was not a textbook hammer as the real body was wide, and it left a short upper tail)...if I want to get picky I could say it was also doji-like, and doji's represent indecision...so I am kind of neutral on it.

But the main red flags I see is that price gapped up almost $3, and after it gapped the morning's range was almost another $2 and the first bar was a really wide-range, weak (red) bar. So, I would be worried ESRX didn't have steam to really break out and keep moving because it had already moved so much. And I would have been worried that the first bar was so weak and wide-range. Also, as someone mentioned above - late day trades are not as consistent - I have talked about that numerous times in the past, and that is the reason that I take the vast majority of my trades in the morning...

All of that aside, I will say that if you entered on the original thirteenth bar signal, the sixteenth bar should have been a signal that the move was in trouble - it was narrow range and left an upper tail. So, if you were watching it closely you should have been cautious and looked to exit on a break of that bar's low. Also note the long upper tail two bars prior, which was a red flag.

TwoPack said...

John, there are alot of different ways to make $$$ in the market, and X has alot of setups here. But he stresses not trying to find them all and to concentrate on a few. IMO, this chart today is terrible to try and trade for the reasons that everyone lists above. Why not try to focus on gaps up or down, a pullback after a run in the gap direction, a candle signal and resumption of the trend? So basically a stairstep up (or down if short). Try that for a few weeks and see if you can get into the zone.

Best of luck.

John said...

Hey Everyone,

I just wanted to say thanks for all the fantastic insight and comments. I really appreciate it.

I didn't trade anything today. I looked...and looked! But I think my brain is on overload. I'm trying to see way to many things in the charts. So I figured it's best for me to stay out right now.

Everyone have a great weekend!

Thanks again,
John

Daniel S. said...

John - twopack is right. And especiall if your mind is overloaded. Pick one thing next week and trade it only. Read the letter from Charles that X posted today.

Try hammers at a rising MA, after a gap up and pull back. Best wishes.