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Wednesday, May 06, 2009

Tuesday charts

VRX presented a "perfect pullback" setup Tuesday. It gapped up and pulled back to the 50% retracement of the morning's range. It found support at that level as bars 6, 7, 8, 9, and 10 all failed to close below it.

The tenth bar was a "hammer-type" candle, and for those of you who enjoyed Tom C.'s charts with his MAs, I included the 8EMA (note how it pushes price up). I entered on a break of the tenth bar high and sold at the FE. It was a nice 5% move!



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6 comments:

Tyler said...

X,

Nice trade today! I had a very tough time finding any good setups. I am happy to see you can always find something worth trading.

Tyler

Trader-X said...

Hey Tyler. I actually had more on the short side Tuesday, what would fall under my "deep pullback" setup. But VRX was nice...I wish I could have one of those a day!

Walker said...

X,

I traded DRYS today (Wednesday)as a "U" pattern. I entered on the break of the high of the 4th 10 min bar. Unfortunately I was stopped out two bars later as it broke the low of the 4th bar by one cent. It then recovered and went to the FE and beyond.

In reviewing the trade, I saw it did not have a good risk to reward ratio. I was risking 20 cents while the FE target was only 17 cents away. That contrasts very unfavorably with the risk/reward that you had on VRX (18 cents to make a dollar).

Would you have taken the trade and do you have a minimum risk to reward ratio?

Thanks for your input. I have been a long time reader and have learned a lot from you over the years.

Walker

Trader-X said...

Walker-

When I trade a "u"-turn pattern, I generally like my entry to have room to move before it hits the previous high...reason being that area is potential resistance, so if it reverses I can exit with a small profit (or at least break-even).

The entry on DRYS was right below the previous high, which is where it stalled for a few bars and triggered your stop. Looking at the setup in hindsight, I would not have taken it.

One other note - if it is a valid "u"-turn setup, you might consider setting your stop to the prior low (as opposed to the low of the trigger bar)...that would have kept you in the trade.

Jim said...

Hey X,

Great to see you back! I have been trying to post regularly on WSW blog while Jamie is on vacation. I now have a new respect for full-time bloggers. It takes dedication.

Luis Miguel said...

X I have started to read your blog while you were on vacation (by the way, Tom has done a great job posting and answering some questions while you were out...if he manages to keep on posting that will be a good news for all of us your readers...)
One question regarding your trade on VRTX: I have reviewed some of your set ups called "top out" and I would say that given the fact that VRTX had a 2ond bar setting the high of the OR and a third bar closing below the 75% of the OR, one should be looking to short VRTX below the low of the third bar...not going long....I'm sure I miss something that should be evident but I don't know what...Thank you in advance for your help and understanding