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Tuesday, June 23, 2009

A few short trades

Posted by Tom C.

I rarely go into the trading day with a bias - and I don't recommend it - but I admit I was looking for shorts from the open and was more aggressive on the short side today. So both of these setups were riskier than my usual trades.

I took BA after it formed multiple narrow-range bars, culminating with a NR5 and an inside bar. I entered on a break of the 5th bar low, and closed the position at the halfway point between the low and the FE (Fibonacci lines plotted in the traditional X style - the previous day's high to the ORL).



RMBS gapped down and printed two weak bars. It made a textbook pullback before resuming the downtrend. I entered on a break of the 6th bar low (the 6th bar was weak and left a long upper tail). I was holding for the halfway point between the low and the FE...price never reached that level and I closed the position at the end of the day.



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5 comments:

Anonymous said...

Hi Tom,

Thanks for the post. How do you decide what your target is? Sometimes you target the FE and this time midway to the FE? Thanks Hector

Ron said...

Argh. I was watching BA but didn't pull the trigger. Good trades.

Tom C. said...

Hector, it depends. I would always like to hold out for the FE, but that is not always feasible. If I entered the trade well above the ORL (or below the ORH for a long), and I have several positions, and the move down is quick, I may cover at the halfway point as I did with BA yesterday.

I also watch the price action at the halfway point...BA left long lower tails over multiple bars signaling that the area was strong support.

Luis Miguel said...

Tom, I also shorted BA more or less where you did (but with the 5 min timeframe), for a nice gain. I have seen your chart (10 min timeframe) and I have compared it with mine: I'm really surprised because
"my 5th 10 min bar" it's NOT an inside bar like yours; it's NR but not so narrow like yours and definitively it's not an inside bar. I'm charting with Ninjatrader with data from IB: I guess this might be a problem with the data, but I am wondering the impact that issues like this could have in real trading. What do you think about?...have you experienced something like this before?...Thank you very much in advance!

Tom C. said...

Luis, I am not sure why your bars are different. I have never had an issue, and have used my charting program (Real Tick) for the past ten years.