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Thursday, December 04, 2008

Patience...and a little luck...never hurts

The NQ put in a double top at yesterday's high. I entered on a break of the bar's low indicated by the arrow. I was hoping for a better candle - a hanging man or a shooting star; it was somewhat mediocre instead. But it was a narrow-range, inside bar at strong resistance.

I was watching the trade closely to see if it broke through the short-term trendline (yellow). Once it broke that level, my target was the 50% retracement of the previous day's low to high. Price chopped around and drifted lower most of the day, which actually worked in my favor. Had the NQ reached my target earlier, I would have covered my position and moved on. But it did not approach the 50% retracement until the last hour so I decided to see how price reacted to that level.

As luck would have it, price sliced through the 50% and fell sharply for the next half hour. I covered on the first move above the previous bar's high as indicated by the arrow.



Attitude Trader said...

Damn! That's all I can say.

Thanks for posting the chart and the thought process.


Toby said...

Do you think we are going to crash tomorrow with the economic report?

anarco said...

I am glad this one worked so nicely for you!
I wonder if any of the following entries would also be acceptable to you:
1. The shooting start that touches the trend line in yellow (about 6 bars after your entry).
2. Any of the bars that form between 13:40 and 13:55.
Thanks in advance.

Tyler said...

Trader X,

Nice trade in NQ! I am not sure how you hang in there so long with it chopping around so much, I don't think I would have the patience.

Do you just have a profit target in mind and let it go until it either hits or gets stopped out?

I have the 38% Retracement drawn on my charts and that coincides with the ORL. Price hit that point a little later and formed an inverted cup and handle. You got out right at the 100% Extension from the top of the cup to the handle. It is interesting how that works!

Tyler from Am I Bald?

Trader-X said...

Anarco - on #1, yes that was a textbook pullback to the TL. I just wish it wasn't so wide range. #2, I would prefer the spinning top doji after 2:00 as it was a classic double top...new [swing] high, closed back below the old [swing] high.

Trader-X said...

Tyler - amazing how everything works together - I notice the same thing with Fibs plotted over different timeframes too.

One reason I switched to 5-minute bars from 15-minute bars was because I grew impatient...but even the 5-minute bars seem slow at times. I usually hold for my profit target unless I see a clear sign of a reversal.

TL said...

The double top at PDH was the only entry I thought you would have taken when I pulled up the NQ chart before visiting your blog! I find it to be a very good exercise even if I don't trade futures.

What's your thoughts when you saw,

1. offsetting bar against you right at ORL(13:30)?
2. break of previous swing high (1435)?

I find tightening stop to be very tricky and I hope you can shed some lights on this.

Good trading,


Justin said...

Damn that was a nice trade. I hope you caught Friday's action, even better.

Great blog. I am hooked.