KKD gapped up and made a textbook pullback to the retracement zone (RZ). It bounced off that level and I entered on a break of the 14th bar's high. I monitored the trade closely to make sure it didn't reverse at the opening range high (ORH). It broke through that level and rallied to the Fibonacci extension (FE) where I closed my position. For those of you looking for a "later in the day" trade, note how price pulled back to the ORH and bounced (resistance becomes support) - you could have taken an entry there and held for the whole number ($8) for a nice trade (I didn't make that trade, I'm just pointing it out).
_______________
29 comments:
Hi Trader X,
Good to hear that you are coming back to the groove.
For the setup today in KKD, I am wondering what held you from entering at bar 11 on 5 minute chart. Thanks
Tajir, I look for a combination of support from the MAs and a solid candlestick pattern. I see the argument for the 11th bar, but for me I didn't like the MA interaction which had the MA inside the candle's real body. But, your 11th bar was still a solid setup, especially coming off the bounce off the RZ. If I had entered on a break of the 11th bar, I would have adjusted my stop to a break of the 9th bar's low.
Trader-X: Welcome back!
* * *
With the markets gap down so big this morning, I thought it was going to be an action packed day. I was wrong. Much more boring than I expected. Maybe this is the calm before the storm?
Here are a few of the more interesting setups for today (5/23), although they took place mostly later in the day.
SWC - bought above high at 14:30, 5m chart, Fibs over current OR.
http://imgur.com/lEJyK.png
Four factors that made me very comfortable to pull the buy trigger and go contra against the gap down:
1) Nearly solid green bar went up against FE resistance
2) Rising 5 ma
3) Break above VWAP resistance (dark blue line) signals possible tipping point for reversal day
4) Prior bar was a red inverse hammer, and current trigger bar broke below it (might have triggered some shorts and trapped them)
Exited when bearish upper wicks appeared in the retracement zone.
* * *
LPL - 3 contra trades (see below) to buy against gap down. 5m chart, Fibs over current day OR.
http://imgur.com/pW2Qs.png
(Did not take these trades. The range of the bars seemed too narrow for me.)
1) 13:15 - Broke above VWAP (dark blue line) on rising 5 ma.
2) 14:05 - After breaking back above the opening range low, the price came back down and bounced on the opening range low support.
3) 15:00 - Beyond the FE setup, although the bars were VERY narrow.
* * *
ASML - Sold short below 11:50 bar. 5m chart, Fibs over current OR.
http://imgur.com/LueDm.png
(Stepped out for a few minutes and missed this trade, ugh.)
After a messy congested morning session, and a breakout fakeout to the upside that nearly touched the upper FE, prices came down relatively orderly and bounced off the lower FE.
The bounce retraced back up to the lower OR, and created a nice red hammer. A setup doesn't get much cleaner than this.
One possible flag was that the 5ma was sitting on the bottom of the trigger bar, although the 8ma would have looked fine.
Getting out after the 12:20 bar would have netted about $0.30+.
when i woke up late and saw the market down, i thought i missed the boat. then i saw it was nearly a complete inside day. glad i slept late.
grove, I would have been most comfortable with the LPL trade.
the only chart i saw that was of any interest was ORLY. i didn't take it because i didn't think there would be much movement. no retracement but consolidated at day's high and reached 50% retracement very nicely.
http://imgur.com/a/DEfqg
are these non-trader X style trades okay to put up here or is it too confusing to the group?
Nice tip for a later trade. Thanks X.
joshua:
Your ORLY example was nice. I'd say if it's a trade inspired by Trader-X/Tom C. (gaps, Fibs, ma's, candlestick patterns, etc.), then at least I would be very interested in seeing it.
And if you change your ORLY example to a 15 minute chart, draw the Fibs from prior high to current OR low, you'll see that it is a Trader-X setup, circa 2007!
http://traderx.blogspot.com/2007/05/bidu-053007-15-minute-chart.html
5/24 trades
SIFY 6th 5m bar. This bar closed above the 38 fib and was hammer-like, though its upper tail was a bit much. I sold half at the OR high and the rest got stopped at break-even. The stock tried to break out later on an ascending triangle, but it only got halfway to the FE before failing. In hindsight the stock gapped big and still moved well off the open, expending most of its energy. It still tried, though.
DSW 10th 5m bar. This stock moved well; its pullback never dropped under the 38 fib. The setup bar was a nice-looking hammer-like bar with its body over the rising 5ema. I didn't take this though, because the spread was around .10 and I was busy with SIFY. It hit the OR high and pulled back (and would've stopped my other half for break-even if I had taken it). Later, like SIFY, it broke out to about halfway to the FE.
@.@ mine is a more risky approach...
so i don't think other will do it
TNE, 10min, 13th bar's low
Fibonacci from current day high to current day low
i very have to watch this very closely cuz there is lots of support and still above the EMA
I was also on the TNE ride today, although getting off at the FE means I got off very early.
TNE - bought high of 2nd bar on 5 min chart. Initial Fibs were from prior close to current open, then after 9:45, switched to Fibs drawn over current OR.
Maybe this is a sign that the "quick hit" setup is coming back? I haven't seen too many of these lately. It's great when they work well, since your day could be over very quickly.
Got out of half the trade at the FE drawn on the Fibs from prior close to current open FE. Then closed out the trade at the FE drawn from the current OR.
* * *
Like Klaorman, I was watching DSW on a buy above the 10th bar on the 5 min chart.
But once the price printed above $49.72, it hit an air pocket and quickly went to $49.85 within seconds due to the wide spread.
I know the best thing to do is to just pass on these stocks with bigger spreads.
But is there anyone out there that thinks it's worth working these wider spread trades?
My order entry skills are relatively basic, so I find that it takes a considerable amount of finesse and effort to work the spreads. This then diverts attention away from seeking other opportunities. Maybe I just answered my own question...
Grove Under,
Very nice on TNE. You've done at least a couple of trades like this one. Currently I'm only looking for the classic Trader-X strong move, pullback to 38 fib, consolidation, then breakout type trade. However, I did see (too late) that TNE based a bit on the 1st and 2nd 5m bars (easier to see on the 1m chart), and felt that if I had seen that that I would've taken the trade. In fact, I was tracking 8 or 9 strong move stocks where I had thought later, "If only I had just bought them all at the open!" :-) I just watched TNE keep going and going without any pullbacks. Also, you will notice that the 5ema (which I ideally want to use) would've kept you in the trade for almost the entire move. TNE was so slow and steady that even I could've probably held it all the way (I had written earlier that when price gets too far away from the 5ema, I get nervous and look to sell early).
I saw the same air pocket on DSW as you did. I usually don't work the spread, especially in a stock with a tight spread; if it looks like it's going to go, I'd rather just pay up and get in. So that gives me more reason to avoid a wide-spread stock. But DSW had a strong setup, and did hit the OR high, so I probably should've just paid up. One day a few weeks ago I saw intraday ascending triangles on several stocks, and they all moved very strongly when they broke out. I only got into a couple of them because I saw the other ones a bit too late (or so I thought). I thought about chasing them, but I didn't because that's not in my nature. However, after seeing the big moves that resulted, I half-thought that perhaps I can chase stocks (and pay up on wider-spread stocks) that have strong setups if they haven't gone too far; keep the same logical stop, but just take less shares. I haven't done so yet, though. :-)
grove: thanks for pointing out the 15min chart from trader x. for some reason, i forgot he used to trade these. i always thought it was 5 min and then he switched to the 2 min. i am going to have to go back over his old trades to see if i can pick up any ideas.
The spread on DSW isn't worth it to me. about .05 is how far i am willing to stretch. i like small spread, nice volume stocks.
i haven't been really seeing anything i like for the past few days. i forgot who said it on here a few weeks ago, but I am really trying to only take the best setups. they were talking about "failed" trader x setups and then the commenter said, "it wasn't a failed trader x set up because each time it was missing a key piece". i have taken that to heart and i am trying to realize that one good trade a day or every few days is better than 5 or 10 bad ones.
5/25 trades
AVGO 8th 5m bar. Pullback tails touched the 50 fib, but the bodies closed above the 38 and the 5ema was nearby and rising. 5th bar had a big upper tail, but I was OK with that since that just meant that the stock hit its high and started to pull back; if the candlestick boundaries were shifted then there might’ve been a solid green bar with red bars showing after it. The stock took its sweet time and almost stopped out, but it popped later. It then weakened and I almost moved my stop to breakeven, where it would’ve been hit, but I figured that traders would keep pushing it, and they did. I sold half at the OR high, and then when it was about .20 away from the FE I figured that I was happy enough with the strong move that hadn’t pulled back yet, so I took my profits there. It went another .08 and then dawdled around, almost touching the OR high 3 times before finally hitting beyond the FE.
ZLC 2nd 5m bar. I thought about Grove Under’s TNE setup yesterday, but I got cute and sat on the bid when the spread was .02. Never again! :-) The instant I did that the stock ran away from me, hitting past the 62% extension.
HAL 5th 5m bar. This stock gapped up, moved strongly, and then based at the highs, right under the whole number. I thought about TNE again and paid up for the breakout. Unfortunately, I bought the exact high and got stopped out in 5m! Later on the 10:50 and 10:55 bars were nice hammer-likes above the 5ema, and the stock had barely broken under the 38 fib, but I didn’t see the bars. I probably wouldn’t have taken the trade anyway since I had already lost on the first trade, but a pro would’ve taken the good setup, loss be damned! It was choppy throughout most of lunchtime, but it finally hit the FE and eventually hit the 100% extension.
PXP, though not a gapper, had a strong move at the open and then based nicely right at R2. When it was about to hit the 5ema, it dropped under it, but then it immediately came back up. During the 10:35 5m bar, I struggled with whether I should buy over the previous small bars or wait until the current bar completed and then watch for new basing. I waited, then somehow lost focus and didn’t see the new base at the OR high. It then broke out to hit the FE and hang around there for the rest of the day.
Klaorman,
Nice trade on AVGO. Way to hang in there through the chop in the morning. I also traded AVGO, but I traded it after the 7th bar on the 15 minute chart.
nice trades, thanks for pointing out PXP.
i traded WPRT, it was a dud. i saw volume at 900k but didn't realize its average volume is around 100k. oops!
Thanks t-money and joshua!
t-money,
I told myself to believe in the setup, so I stuck it out. I see the nice hammer on the 15m. Where did you take profits? Do you usually try to hold all your shares for your target? For now I’ll have to partial at the OR high and then hold the rest for the FE.
joshua,
I actually pay attention when a sleepy stock gets more volume because that means traders have found it and will probably push it around for some nice trades. Was the 8th 5m bar of WPRT your setup? It was choppy after that but it did eventually hit the 100% extension.
X,
Following up on what the first commentator has asked and your reply, would you consider break of 12th bar high as a good entry (on hindsight) since the MA is not inside the candle's real body and we've got support MAs below? Thanks
Jordan
Klaorman,
I ended up getting out of the trade below the 21st bar on the 15 minute chart at 34.28. I set my stop below that 15 minute bar because it closed below the 5ema.
Usually, I have a target in mind. In this case it was the 38.2% FE. Once the target is hit, I will put my stop below/above the 1st bar to break the 5ema. In this case it was the 21st bar.
I know Trader X doesn't trade this way, but the reason I do this is because I think the lost profit that may occur if the stock fails at the 38.2% FE, is worth the risk if the stock runs to the 100% FE. If it hits the 38.2% FE and closes below the 5ema, I look at the trade closer and adjust my stop accordingly.
klaorman, i traded the 15min. as soon as the stock closed green I went for it. I should have waited for it to break the high of the green bar but I like the nice tight stop. i just checked now and the 5 min does seem pretty decent. on my chart it's showing a hammer on the 9th 5 min bar. you make an excellent point about abnormal volume on a low volume stock. i can see your reasoning there. i think my problem was getting in the move too late.
5/26 trades
Today was a miss-all-the-good-setups and buy-the-one-setup-that-failed day:
TIF had an ascending triangle setup on the 2nd 5m bar, like TNE the other day, but I didn’t see it. It went very well.
CSC 4th 5m bar. This stock had a bad earnings report and gapped down and kept going down off the open. It had an unreadable bounce but then within the 4th 5m bar it mini-based at 39.20 lows after a weak bounce. I really wanted to short it when it broke down, but I didn’t want to give it its logical .50 or so stop. It gave almost $3 profit at the bottom.
CDTI 4th 5m bar. This stock had a huge gap and had woken up with huge volume (joshua alert!). The setup bar was hammer-like and above the 38 fib, but a bit red and the 5ema was kind of far away. It was also .35 wide and had spreads of .06 or so (on a $6 stock), so I had to pass. It blew past the FE, bounced off the OR high, and then destroyed the 100% extension; it was clearly the star of the day.
ASNA 6th 5m bar. This bar wasn’t a hammer, but it was green, narrow, and over the 38 fib and 5ema. However, I thought I had missed the entry because the bar’s high was 32.96 and I saw the stock at 33.06. In hindsight, I would’ve probably waited to see how it handled the whole number, so I probably would’ve bought it at 33.03 to 33.05 anyway, so I should’ve just gotten in. It hit beyond the OR high a bit before falling.
CBST 6th 5m bar. This bar was a hammer over the 38 fib and 5ema, but I saw it trigger at the same time that ASNA triggered, which I think overwhelmed me and caused me to not buy either one. I saw it a bit late, like I did with ASNA, but the price did retrace a bit to about .03 over the setup bar’s high. I couldn’t pull the trigger though; it hit the OR high before falling.
MPEL 7th 5m bar. This stock wasn’t a gapper, but it had a strong opening drive. The setup bar was a hammer on the 38 fib and 5ema, but it was red and its tail touched under the 50 fib. I had a bit of doubt, but missing the other chances above caused me to get in (revenge trading!). It tried, but it never got near the OR high. There was a big fight at the bar’s low, but it finally gave way and stopped out.
EBS wasn’t a gapper, but it had a big run off news. The 11:10 5m bar was hammer-like and above the 5ema, but I didn’t see it. It touched above the OR high before falling.
I still have to take to heart the fact that a small chase is OK if a setup is strong (ASNA, CBST). I also have to eventually learn to accept larger stops (CSC and maybe CBST, and again, if a setup is strong).
Klaorman, thanks for the alert, lol. That stock was beast. I think you made the right call though passing it up. The stocks need to fit into your parameters. If not, it becomes a slippery slope where you start taking chances because you are flexing your rules.
How are you finding those stocks that run big in the morning? I have a filter that picks up some stuff, just interested in how you find 'em.
Also, I do not like to trade because of the wide stops. I think they are an excellent signal but I can't stomach the distance. CDTI around noon = beastie.
my entry is a bit of risk cuz its above the support...but i noticed and watch it very carefully for reverse...
LULU, 5 min, fib current day high and low
entered: break of 37 bar
exited: around 93.50
this is safer entry...
SD, 5 min, fib current day high to low
entered: break of 37 bar too
exited: around 12.00
joshua,
The thing is, I’ve mentioned several stocks here that had good setups that I had passed up solely because their stops were too large for me, and they’ve all gone on to at least hit their OR highs. So that tells me that I should at least consider trading them (most likely with smaller shares) to get the experience. When (if) I see them working, then I will get more relaxed about trading them.
CDTI was a big gapper, so it appeared on Lightspeed’s Risers/Fallers list that I look through for candidates during the premarket. I also have a Madscan scan that looks for price spikes with large volume. That’s how I found MPEL.
Klaorman,
Have you ever read about position sizing through van k tharp's methods. trader mike used to have a great write up about but now that some other guy took over the blog, i think he changed the post around to make it link all over the net. here is a decent description
http://ripetrade.blogspot.com/2011/03/position-sizing.html
basically, your risk would stay the same across every trade, say $100 per trade. if the stop is .10 away, you would trade 1000 shares, if the stop was .50 away you would trade 200 shares. apparently, van tharp did the calculations and this is the second best method (i believe) to percent volatility but percent volatility is hard to calculate quickly whereas percent risk is very easy.
Hey Everyone,
I was interested in finding out what people's thoughts were in brcm today. I entered on a break of the 8th 5min bar fibs placed over the morning range. I thought the setup looked pretty solid but got stopped out 3 bars later.
MS
joshua,
Oh yes, I use position sizing principles on every trade, but I still hesitate on wider stop entries.
5/27 trades
CVS 3rd 5m bar. This bar was green, narrow, and closed above the 38 fib. However, the 5ema was not nearby, and the 2nd bar, choppy and indecisive, foretold what happened. The stock started well, but then stopped me out. In the process, it created a hammer-like bar, which I didn’t trade. The stock started well again, but again stopped out. Then nothing much happened to it for the rest of the day.
BRCM 8th 5m bar. This hammer-like bar closed at the 38 fib and its tail touched the rising 5ema. It did OK at first, but then stopped out.
ARRS 8th 5m bar. This .02 wide bar was above the 38 fib and the rising 5ema. I usually give .05 or more under a bar to account for normal wiggles, but this time I chose .04. The stock bounced exactly from my stop and came within a penny of the OR high before falling.
NUVA 7th 10m bar. After 3 consecutive losses I was wary, but this narrow hammer-like bar closed at the 38 fib and above the 5ema and the stock had a smooth run and an orderly pullback. Unfortunately, even though I had decided to push on in the face of defeat, the losses still weighed on me. The stock moved up .16, but then started falling. When it got near my breakeven, I couldn’t take it anymore and bailed. Of course, that was the low, and it later made it to the OR high before falling back and hanging around at the top. AVGO had done the same thing the other day and I had held on, but this time my P&L caused me to bail. I remember SMB saying to trade the trade, not your P&L, but that’s hard for me to do in the heat of battle.
After that, I saw an ascending triangle in CY. I had noticed that this setup worked rather well recently, so I felt that I had to take it. There wasn’t too much volume on the breakout, but I was OK with that. However, it stopped out.
I had tracked CIT’s strong move off the open, but I didn’t see its nice base at R2 between 11:00 and noon. It later hit beyond the FE.
I noticed KV/A after it based and broke its OR high slowly, but I was done for the day. It rocketed way beyond its FE.
I only had one trade today (5/27), and I really didn't see a whole lot of good candidates throughout the day.
My trade was in MTL on the 5 minute chart. The stock moved up nicely off the open for the 1st two bars and had an orderly pullback to double support of the Fib RZ and the 5ema. I jumped in after the 5th 5-minute bar, which was a nice hammer at the retracement zone.
My target was the 100% Fib Extension and I got lucky today because I always place my exit a few pennies before the actual target, which was 26.72. The stock moved up nicely to 26.71 and reversed. I was lucky that my exit was targeted at 26.70 so I got filled.
Hope everyone else was able to find something good out there today.
Time has been in somewhat short supply for me this week, but I was able to get in a relatively full week of trading.
For the most part, I was controlled and selective, but there were several trades I entered on a questionable setup, or in error. On a related note, my trade selection could have been much better (many "better" setups not taken for one reason or another). And once in a trade, there were many times when I made less than ideal trade management decisions which left decent profits on the table.
However, I still had 24 trades this week, and 71% of my trades were profitable. And if I had not had my moment of weakness of taking crappy setups that ended up losing, I would have had an 85% success rate.
Risking about .4% per trade, my entire portfolio for the week increased by 3.5%. Again, this figure could have been higher due to better trade selection and trade management. And in theory, if my risk was 1% per trade, my return might have been closer to 9% for the week.
I'm not posting these figures to boast (I'm sure some of you are getting much better returns!), but to be living proof that what Trader-X and Tom C. have taught (for FREE!) for all these years really is actionable to achieve the level of success they have mentioned. Yeah, I admit, in the beginning, I had my doubts whether it could be done.
It has taken endless hours of homework, and a high level of focus, discipline and self control during the trading day, so it's not easy. But it sure is possible to be profitable. I know I am far from consistently performing at my "A" game, but at least the results I have been seeing are very encouraging.
Looking forward, one of the most difficult challenges will be to consistently maintain a very high level of mental discipline over the long term. That will then lead to better trade selection, trade management, etc.
I don't always have time to post comments on a regular basis, but I do read the comments and really appreciate all that this community puts in. Thanks everyone, keep up the great comments!
Those are good numbers Grove. But, you consider 24 trades selective? I was thinking selective would probably yield 10-15 trades at the most. Just curious what everyone's idea of selective means regarding # of trades. Thanks.
Some of you voted in my recent survey - thanks! The survey is over and I've posted the results.
Have a great weekend!
-AT
Post a Comment