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Friday, August 26, 2011

It's Friday!

As mentioned last weekend, I haven't made a lot of posts in the past few weeks due to other priorities monopolizing my time. Readers are making some great comments - I encourage everyone to read them. Recent topics include pivot points, watchlists, some trade analysis, and some tension. I am behind on all the comments myself, and hope to catch up this weekend.

I saw this cartoon and it was funny and sad at the same time. Luckily for my "buy and hold", 401K friends and family, we gained some back this week. Of course, that could all change today!



Zorro said...

"and some tension" - lol

The major frustration to me is that it seems like people keep doing the same things over and over, and hoping for a different outcome. There is a famous quote about that being the definition of insanity. Also, people always question watchlists, timeframes, number of trades. Those issues have been discussed, analyzed, and beaten to death over the years. A quick search will yield everything you ever wanted to know. Quit trying to re-invent the wheel.

Based on everything I have read in comments, my advice - IF you are losing money (cause if you are making money, keep doing what you are doing) - is as follows:

1.) Focus on no more than 20-30 stocks on your watchlist. 30 is actually probably too many, but you guys would freak out if I said 15-20.
2.) Focus on ONE timeframe - I think the 5-minute offers the most opportunity.
3.) Pick only 2-3 setups to look for, and don't trade anything that is not one of those setups. What setups? Only you can decide. Don't try to trade exactly like X. Analyze some charts, see what you are comfortable with. Use his core tenants - Fibs, EMAs, candlesticks. But, as he says, MAKE IT YOUR OWN. And once you decide on your 2-3 setups, don't trade anything that isn't a grade of A for any one of them.
4.) Never have over 2 open positions at a time. Just don't - you are losing money, and that will accelerate and compound your losses.
5.) If you have 2 losing trades in a day, STOP. You are doing something wrong.
6.) Now that you are focused and simplified, learn to analyze bar by bar and really figure out if setups are good before you trade them. It is the little things that matter. Where did the real body close? Was there a tail? Where is price in relations to the EMA? Those are just a few questions to get you started.

Again, if you are losing money, you need to be doing these things. Take control!

Times of Your Life said...

>.< those word are like gold, i can't agree more, now that is money and mental management....

bl said...

The tension has been pierced by the saber!
Busystock premkt WL: TIF CMI SINA OVTI ARUN MCRS...45min reversal into open rallied them. Open +%WL $2-10: BWS HERO KKD PWER.

Anonymous said...

Nice comments Zorro, if that is your real name. Seriously, though, you are spot on.


Chips and Salsa said...


ERTS, 5m, 5ema, Fibs OR, entry above bar 14, exit at $21.50. There was an earlier entry at the RZ, but I didn't see this until it was a Beyond the FE set-up.

"and some tension":


Chips and Salsa said...

On ERTS, the RZ trigger candle was below R2 (the pivot, not the droid), so the entry was riskier anyway. Forgot to mention that. Roger would be proud of me.

About the number of trades, it all comes down to what makes you consistently profitable, like Zorro said.

Ken said he averages 3 trades per day. That means some days he takes more, other days less.

X posted a while back that he averages 2-5 trades per day.

It all depends on what keeps you profitable and consistent. For me one trade is too few. Three or more is too many to manage at one time. Fewer trades can create greater focus, so I think Zorro's advice makes perfect sense.

When I start making more than 3 trades per day, it almost always results in a losing day, primarily because the more trades that are made, the more it is emotionally driven, not set-up driven. It creates a vicious downward spiral.

Klaorman said...

8/26/11 trades

Couldn’t find much today.

MS 6th 10m bar short
This was a green shooting star at the 5ema, 38 fib, and S1. It formed after the SPY paused at its pivot point after Bernanke’s comments. The SPY kept going, however, pushing MS past its stop.

Missed trades

ARUN 4th 10m bar
I saw this red hammer at the 5ema in time to get in, but I didn’t like that the 2nd bar’s tail had almost touched the opening bar’s low. The stock hit over the 162 extension, however, so I decided to take a second look to see if I could’ve interpreted the bars differently. The 1st bar was indecisive, but the 2nd through 4th bars were all hammers, and the 4th bar’s tail touched the 5ema. The 5th bar, however, would’ve invalidated the setup for me since it dropped past the low of the 4th bar and hit a new LOD. But then it closed as a doji above the 5ema. Would that have been OK with any of you? The next bar was wide and green and almost hit the ORH. Would you have entered over the 4th bar in here or perhaps waited until the ORH was broken? The stock almost hit the FE exactly (fibs from PDL/ORH), then formed another hammer later at R3 (2nd arrow), which would’ve been another entry. The 3rd arrow indicates a beyond the FE setup, either that bar or the hammer after it. Notice that the 5ema would’ve kept me in all the way to the 162 extension.

That was a fun analysis! Now I just have to apply this analysis in real-time, perhaps by...focusing on fewer timeframes and a smaller watchlist? ;-) Nah, it can’t be that easy... :-D

ATSG 8th 30m bar
This was a red hammer at the 5ema and R2. It was fairly close to the ORH, so I thought the trade wouldn’t be worth it. However, the stock did push for a few pennies over the ORH.

BWS 8th 30m bar
This was a big-bodied hammer at the 5ema. I didn’t see it until after it had already hit the ORH. That was all it could do, however.

PRD trader said...

Why not doing the same thing that works once.People who change their strategy all the time they always complain why they lose money in trading.I am following trader x for five years now ,he is trading the same style with little modification.

bl said...

Wow! 24>10% $2-7 stocks. 19/24 on nasdaq 10 and 15min charts: CEDC VICL MILL RAS

Klaorman said...

8/29/11 trades

I spotted and traded many nice setups today and was determined to let them play out fully, but with just over an hour left I lost my conviction as my P&L dropped about 40% from its high and I emotionally sold everything. My P&L would’ve dropped a bit more, but then it would’ve roared back and ended the day at about 200%. I was so close! I’ll have to try harder tomorrow. Trade the trade, not the P&L.

KOG 4th 10m bar
This was a hammer at the 5ema and straddling the 38 fib. The stock almost reached the FE, but then a shooting star formed and I exited at breakeven. My stop wouldn’t have been hit, though; it took the rest of the day to hit the FE.

MS 4th 30m bar
This was a red hammer at the 5ema and 38 fib. The stock hit the ORH nicely, and I sold after it dropped back under it. It did hit highs near EOD.

CIEN 8th 15m bar
This was an inverted hammer at the 5ema and 38 fib. My target was R3, .10 under the FE. However, after the stock got rejected at whole number 12, I sold. It bounced at the ORH (I should’ve at least watched it’s reaction there) and hit the FE, R3 or no R3.

SCHW 6th 30m bar
I had noted the previous bar, which was an inverted hammer at the 5ema and 50 fib. This bar was smaller and green, so I used it. The stock didn’t do much, so I sold it breakeven. It did push well at EOD on great volume.

MILL 6th 30m bar
This was a small red hammer at the 5ema and 38 fib after 3 other red hammers. I partialed at the ORH, but then sold the rest after the stock struggled at ORH. It almost hit the FE near EOD.

MLM 7th 30m bar
This was an inverted doji hammer at R2. I liked how it based there and at whole number 69. The 5ema wasn’t quite nearby, though. The stock struggled between there and the ORH; now I notice that the 5ema kicked the red hammer 4 bars later up, up, and away, to the FE and beyond. But that’s where I had sold, right before the kick (and then I kicked myself thoroughly after that).

AVNR 10th 30m bar
This was a hammer at the 8ema and 38 fib. The stock hit over the ORH at first, but then I sold near there after letting go of MLM. It hit the FE.

Missed trades

WINN 8th 5m bar
This was a red hammer at the 8ema and 50 fib. It hit the 162 extension near EOD.

TRV 8th 10m bar
This was a small green hammer at the 5ema and 38 fib. I immediately hit my buy key but missed the offer, which rattled me, causing me to stare at the stock as it went up penny by penny. It didn’t come back down immediately, so I let it go. It hit halfway between the ORH and the FE.

CEDC 18th 15m bar
This stock kept going and going for half the day until it pulled back and printed a juicy small red hammer at the 8ema. However, a distraction caused me to miss it. The stock immediately continued on its journey, almost hitting the FE.