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Thursday, October 21, 2010

Questions and Answers

Here are some questions from the comments in the past few posts, along with my answers.

Q.) Where did you exit?

A.) I exited my initial position at $28.20. I would have been happy exiting at $28, but I didn't have a sell order in and it rallied strongly through that level. I closed the position shortly thereafter as price was overextended and due for a pullback.

note - if you were looking for a probable second entry, you would want to watch how price reacted to the $28 level on the pullback (GMCR presented a few opportunities).

Q.) What was your initial profit target?

A.) I entered the trade with $28 as the target, and I kept a close eye on the $27.50 level for resistance. Price was very bullish around that level, and launched off of it (if you were inclined to add to a position, you could have done so here).

Q.) Why the 8 and 100EMA? How does that compare to other MAs?

A.) For any MA question the answer is simple - I use those because, for the charts and timeframes I look at, they work the best. But don't get caught up in which MA is better, because any MA will yield setups some of the time. If you could plot a 42.385EMA, you would find valid setups.

I look at hundreds of charts every week, and I have become focused on this timeframe. For how I trade, these MAs offer the most - and highest probability - setups. But don't use them because I do - use what works best for you, your timeframe, and your setups.

Q.) How do you prepare your watchlist?

A.) In the past I have had many posts on compiling watchlists - most are still valid, and I suggest doing a search (or looking through the "links to key posts" at the top of the site). Currently I use the gap lists that are in my trading software (Realtick). I spend the first minute combining four gap lists into one, and I am scanning through my "master" watchlist sixty seconds after the market opens (the master watchlist is sorted by volume so those stocks always float to the top).

Q.) How can you do detailed analysis on all the stocks on such a short timeframe?

A.) Practice and experience - I have been doing this for many years, and with a quick glance I can picture where the Fibonacci lines are without having to draw them. I understand my candle patterns and since I only trade a handful of setups I am extremely focused on just those; I don't have to stare at a chart for minutes on end asking "is there some kind of setup there?"

I probably average around 5 seconds on each chart, and I usually limit my focus to the first 20 charts by volume (remember, I sort my master watchlist by volume). So within the first five minutes of trading I have already seen each chart a handful of times.

More to come in the next week.



Anonymous said...

Why was your initial target $28 other than it being a round number?


Times of Your Life said...

Thanks Trader X
excellent good Q and A

DittoTradeBlog said...

Hi X,

Glad to have you back. Please stick around for a while, you have been sorely missed.


uri licht said...

Hey trader X

allso want to greeting you. I learned from You so much in the past, and its nice to read your analizes again.