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Tuesday, April 26, 2011

KND - 042611

I made this post* back in 2005 (have I really been blogging that long?):

If you follow that advice, it frees up your capital and your brain to take trades like KND. The trigger bar is marked - as you can see, it was a nice offsetting bar pattern, with price bouncing off the 50% retracement and moving up with support from the 5 EMA. I closed half of the position at the Fibonacci extension (FE) and held the other half for the $28 whole number. I usually don't do this (ie, I usually exit my entire position at the FE), but I saw this pattern in a lot of issues today, and it was a bullish sign. You can also make the argument that there was a "beyond the Fibonacci extension" setup in there somewhere.

*link to original post



Flowtastical said...


Loving this post. Passing on bad setups is the job of a trader just as much as taking good setups is. I think your post on that saved me tens of thousands of lost trading dollars.

Ted said...

One of your most prolific posts! And, great trade!

Times of Your Life said...

excellent post and trade

bl said...

Funny you should mention "discard the bad ones". I went thru my %gap up 10 min charts(late cut off 25 min into the open)and discarded all the "red 1st 10 min bars" or 6 out of of 16. KND was one of the 10left: REDF IIVI DAL SIAL. File it under "Tip" and maybe we can start a Tip Section. NFLX a beautiful 5 10 15 30 min chart

TL said...

Trader X,

Your posts have given me so many inspirations. I have one question. It seems like there are way more long trades than short trades on this blog. Statistically, do you trade long more often than short? I would love to see how you trade on the short side. Thank you so much!

Grove Under said...


The basics and the fundamentals of trading are so simple, but it's also so easy to lose focus. This is, was, and will forever be a great post regarding the job of a trader.

And also, +1 to Attitude Trader's comment from the prior post -- I also appreciate Trader-X keeping this "little" party going for over 5 years!

Grove Under said...

No trading for me this week due to other commitments, but saw some interesting trades/potential trades.

To change things up, I sorted low volume at the top to see what I could find. Here's a quick summary/questions with links to charts:

SWK - 5m chart
4th bar buy? (too risky/bottom picking?)
10th bar sell? (red hammer OK?)

Would you have taken them? Why or why not?

SYT - 5m chart
9th bar sell? (volume too low?)

Low volume, and entry is above the opening range low which increased risk, but the overall pattern with the declining 5ma looked good. And those fib levels still work for this low volume stock.

FMBI - 5m chart
4th bar buy

Another low volume stock, and the bars around the setup had some small upper wicks, so it wasn't perfect. But overall, the setup looked bullish.

Here's the crazy part -- the move up to the FE and back down to the RZ took maybe a minute or two. Fast and thin trading. I had to go down to a tick chart (1 min chart was useless) to see whether the FE target or the stop got hit first.

Realistically, everything happened so quickly that unless you had a market if touched order at $12.99 or lower, you wouldn't have gotten out of your trade in time. And even if you had the MIT order in place, you probably got a lot of slippage. On paper, this was yet another setup that worked.


Final thought, Fib levels never cease to amaze me, especially with regards to how they turn at the FE. As I mentioned in a comment last week, I'm thinking there's some sort of possible system here.

Going back to SWK above, if you put a limit order to buy at the FE (yellow circle), with a stop $0.15 away, you would have gotten a good entry.

On SYT, the first buy at the FE (yellow circle) would have been stopped out for a scratch (trailing the stop up to below prior bar low), but the 2nd buy at the lower 1.618 expansion (yellow circle) would have worked with a good entry price.

Again, I have no idea if this is a profitable strategy or not. Very different style vs. Trader-X. Just wanted to share what seems to be an interested observation.

bl said...

Depending on one's temperment, software, etc, one might might want a Premkt gap WL say of nasdaq only, trade long, short or fade after the open from Busystocks.com(GENE). Or eps, news stocks WL(I had a 12 eps WL: WHR DV APKT), or Focus stock(Wed-AMZN). If I'm not set up by 9:35-38 with an at the Open WL(vs Premkt) it's tough: Nasdaq long only WL-Chart up-Chart Watch(8-5min charts-Compare and contrast the 8 for the best set up. Seems 5 min charts are the best, Wed: GENE

Times of Your Life said...

um....don't the low volume stock will get push around by big players?

I didn't trade the following but its good to look hahahaha...
REGN, 15 min chart

Grove Under said...

Couldn't find many clean setups today (4/28), maybe it's just me? But I agree the 5 min charts seem to be working well lately. I also watch the 15 min to make sure I also catch those when they start setting up again.

For GENE on 4/27, what bars on the 5 min chart would have been a good entry and exit?

You make a very valid point -- why mess with low volume stocks, especially when there are good setups on much more liquid stocks!!

I sorted the volume on my scan results backwards, and it's reassuring to see that even on low volume stocks, a good setup is still a good setup.

I like to see all the great trades and perfect setups that I missed. Makes me feel like the lake still has a lot of fish to catch. However, as I mentioned earlier, today didn't seem that great.

Did I miss anything?

t-money said...

Grove Under:

I couldn't find any setups on the 5 minute or 15 minute charts either. But ZMH setup a nice hammer (3rd bar) right at the Fib retracement on the 30 minute chart. I exited at the Fib extension. However, this was a Trader X style trade circa 2006 with the 30 minute chart. I try to stick to the faster timeframes but I do check for Trader X style trades on the 30 minute chart if nothing else sets up.

bl said...

GENE Tues 2/5min bar looked good and premkt.
traded FTNT 7/2 min break scalp.

Grove Under said...

Great idea to move up to 30 min charts if things on the 5 and 15 look sparse, I've never done that before. Nice find and trade on ZMH!

You've given me a couple of good ideas based on studying your Thursday watch list.

1) If a bullish looking setup with an inside bar comes up on the 5 min chart, move to the 2 min chart to take a closer look. I might find better confirmation.

This gives me a good reason to start using the 2 min charts when appropriate, especially during the opening range period.

Your FTNT and SFLY on 4/28 are great examples. On the 5 min charts, the 3rd bars for both are inside bars, just about solid green, and in the top half of the opening range. The 2 min gave pretty good reasons to take the trade.

2) I have to also keep an eye out for gap DOWNS. I usually focus 90% of the time on the gap ups. I'm leaving a lot of potential trades on the table.

Thanks to you both for the very useful feedback.

Grove Under said...

Based on recent conversations here on how to improve ourselves to become a better trader, below are some links to James Altucher's blog that might be of interest.

For those who don't know him, you may have seen him on CNBC or Yahoo's The Daily Ticker. He wrote the book "How to Trade Like a Hedge Fund" (and several others that didn't do as well), was a columnist for TheStreet.com, FT.com, and is still a contributor to a WSJ blog, Forbes blog, and who knows what else.

He is nerdy and quirky with funny looking hair (even he agrees), and can be quite controversial in his opinions, so many either love him or hate him. I think his blog is great.

I started following his blog last year, and find it interesting, quirky, brutally honest yet almost unbelievable at times, and has shifted away from finance towards more of a self help/Psychology Today-ish direction. So if you like that kinda stuff, then please read on.

A recent post was called 10 Reasons You Should NEVER Own Stocks Again. Of interest to this group, his point #9 was, "Well, what about day trading?" He basically says, don't do it.

He has traded with some big hedge funds, said he was a successful trader, but bottom line is he still doesn't think the general public should day trade to earn a living. He even had a post a while back called 8 Reasons Not To Day Trade. Although I think this should have been retitled "8 Reasons Why James Should Not Day Trade."

In another recent article titled The 100 Rules for Being an Entrepreneur, he has a short Q&A towards the end of his post.

Q: I want to build a business day trading.
A: Bad idea

There he goes again!

One of the comments in that post is from a successful trader named "Marc", who said that he has been a profitable trader for the past 4 years. This trader said that James' post titled How to be THE LUCKIEST GUY ON THE PLANET in 4 Easy Steps contains nearly everything he does to stay profitable. James' response was that he agrees the only way to day trade successfully is to follow the steps in that "Luckiest Guy" article.

He might be anti-stock ownership and anti-day trading (as well as anti-college, anti-home ownership, etc.), but that doesn't bother me. Because his posts make you think.

He has a lots of other interesting stories and articles that are very specific, actionable, useful, and entertaining to help you become more successful in whatever field you're in. Just don't let his hyperbole and personal opinions distract you from the useful nuggets.

bl said...

Of course on Friday some nice NASDAQ 10 min long charts, delete red opening bar(probably 5min if you're trading 5 min bars), chart up 6 charts per page(more readable than 8 on 21.5" monitor), >$6, 2 pages, chart watch(compare and contrast) looking for slight pull backs 2nd or 3rd bar or level: 7 of 12 total longs green first bar that had pullbacks: ACOM NTGR ZOLL TSTC QDEL QLIK CELL, shorts (inside bars): ENDP DRIV REGN TRMB CTCT REGN. Premkt Focus stocks: FSLR MSFT CSTR CAT DECK for options or otherwise. Traded MPWR 6/10" for scalp but not a good chart: WR 1st bar, too many spider legs, no pullback, too close to whole number. I came up with these rules during the day after the MPWR trade. One wants to see pause, pullback, hestitation to "invite" other traders in otherwise a straight shot up at the open is energy already spent,imo.