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Tuesday, December 02, 2008

Not an optimal setup

Despite the volatility, I could not find many good setups today. I had a few good Futures trades, and I took a setup in APOL which - in retrospect - I don't think I would take again. But it turned out to be a winner.

APOL gapped up and printed a very wide-range first bar. What caught my eye was the next three bars were inside bars with narrowing range, and the fourth bar was a doji or spinning top-like candle. And the first four bars stayed above the 50% retracement of the previous day's low to the OR high.

I bought on a break of the fourth bar, and exited at the Fibonacci extension. As I said above, I would think twice before taking this setup again; it was somewhat subpar. I would have preferred to see an orderly pullback to the 50% level with a hammer or offsetting bars.



Anonymous said...

The $$$ still spends the same.


Attitude Trader said...

I wanna see your futures chart for today!

Only if you're in the mood though, of course. ;)


Trader-X said...

AT - here is a chart.

The first arrow was a spinning top at support from the PD low. The second arrow is a Dark Cloud Cover that signaled the move above the 50% may not hold...the third arrow was a nice confirmation and short entry. The fourth arrow another short entry after price fell back through the 50% level and paused after a long red bar. The fifth arrow was a hammer that I missed.

Attitude Trader said...


Thank you so much for the explanations.

YM didn't move exactly like NQ today of course, so what you were thinking at each of those points is invaluable to me. There are however enough similarities between the two that several spots on my YM chart are now, after your explanations, obvious entry points.

Thank you again.


anarco said...

I opened your e-mini chart an hour or so ago and studied it. I look at other charts (new and old), but I keep coming back to this one. With every new look I find new things, little details here and there. And it is really full of invaluable lessons!

Thanks for sharing.

Anonymous said...

Have you ever considered trading just futures?

Trader-X said...

Danny - yes. But I enjoy the "thrill" and variety of stocks too much to abandon them all together.

Anonymous said...

I was just thinking I could be more successful focusing on only one thing, and I was thinking futures might be the way to go.

Love the blog. Thanks for sharing.

Trader-X said...

Danny - I absolutely agree with focusing on one thing and getting better at it. There is nothing wrong with that logic. I would say look at both the NQ and ES if that is what you choose to do.

Best of luck.