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Thursday, August 11, 2011

NWS - 081111

I would give this setup a "B-" because of a few factors:

1.) The long upper tail on the second bar.
2.) The pullback broke below the 50% retracement.

Having said that, I liked the fact that the move up and pullback were orderly, I liked the offsetting bars (bars five and six) that immediately brought price back above the 50% retracement, and I liked the support from the rising 5EMA. I entered on a break of the seventh bar's high (fully acknowledging the increased risk of a "B-" setup) - I chose this entry as opposed to a break of the sixth bar's high because it was more bullish for price to close back above the retracement zone (RZ).

The force was with me, and I exited the position less than an hour later at the Fibonacci extension (FE).

It has been a wild and volatile week, and I am anxious to see how it ends up tomorrow.



Ken said...

Nice rationale X. I took a similar sub-par setup with ERTS. It didn't quite make it to the extension, but I closed it at a profit. Would you rate this the same as NWS, or worse/better?

Grove Under said...

Trader-X, nice trade, you got a much better entry than I did. Although I traded NWSA and the patterns and Fibs were slightly different.

I entered NWSA on a break above the 14th bar, a beyond the opening range high type setup. Scaled out around the 1.618 FE level.

This particular setup wasn't necessarily that great on its own and hasn't done that well from what I've tracked in the recent past. But this one was unique -- it also had what I call the "3 bar reversal" setup.

More details here on my blog for those interested.

bl said...

FWIW Dept: one of the traders on a live blogg I read has a trigger fin
ger...traded #1200 IBM or $250k for .20 or $300. He trades for pennies gain or loosses all day long. Thanks X for your blogg and
education, and insight.

Chips and Salsa said...

X, Ken,

I took NWS and ERTS on the 5m as well. I held out for $17 on NWS and never got there, exiting end of day near the FE. It didn't pan out for me this time to hold for the rest of the session. Meh.

On ERTS, I stopped out at breakeven. Meh x 2.

I also took CSCO and AOL on the 2m and made some nice profits there. Don't know what got into me today. 2m is like the market on crack. But I felt confident in the charts.

The trade I wish I had caught on the 5m was YHOO, but just like Chinpokomon, it's impossible to buy them all.

Every trader must fight the compelling internal Chinpokomon dialogue of "I've got to buy! I've got to buy it!"

You'll see what I mean:

Klaorman said...

8/11/11 trades

I took the same trade with NWSA, but once again I couldn’t set and forget. I feel closer to doing it, though; I just have to trust, believe, and stop the tickitis.

NWSA 7th 5m bar
This was a hammer at the 5ema and 50 fib (1st arrow). Price had dipped under the 62 fib however, but I thought the previous bar had offset the bar before that nicely, so I took the trade. The stock went nicely past the ORH. R3 was at 15.96, while FE was at 16.09, so I was targeting somewhere around there. However, when it stalled at 15.92 and dropped below the ORH, I sold. Yes, I should’ve just partialed, but I was afraid that the run was over. It turns out that the bar where I had sold was a hammer at the ORH (2nd arrow), so that should’ve been a signal to add more, not sell. The FE was hit soon after, whereby the stock based, then formed a red hammer right at the FE (3rd arrow). I saw this a few bars late, when price was on its way down, so I didn’t take it. The stock then almost hit the 200 extension.

Lessons to take away: Set and forget(!); watch for ORH and FE setups.

DNDN 8th 5m bar short
This was a hanging man at the 5ema and 38 fib. The stock got within .02 of the ORL, but I didn’t take a partial cover, aiming for the FE. I got stopped out later. A hammer formed on the 15m at the lows, which might’ve been a signal to get out early, but I reviewed my old charts and saw some opposing hammers that didn’t affect stocks’ journeys to the FE, so perhaps they’re just additional noise. But it would’ve worked here! I actually did get out a bit early when I saw DNDN base and then break out upwards.

Lesson to take away: Take the partial a bit before the ORH/ORL and FE.

GG 10th 5m bar short
This was a shooting star-ish at the 38 fib, but with the real body straddling the 8ema, which seemed iffy, but I took it anyway, with predictable results. Afterwards, I also noticed that the retrace was also faster than the initial drop.

Lessons to take away: Be wary of setup bars that straddle an ema and retraces that are faster than the initial move.

SVM 6th 10m bar short
This was a shooting star at the 8ema and 50 fib. The stock dropped nicely but didn’t get close enough to the ORL before bouncing hard to stop me out. As with DNDN, a 15m hammer formed where I might’ve gotten out earlier, but I didn’t notice it until it was too late.

Lesson to take away: Do more research on how to validly get out of a trade before its stop. If I use candles to get into a trade, shouldn’t I use candles to get out?

AONE 9th 15m bar
This was a red hammer at the 8ema and 50 fib. I sold as the stock faltered at the 4.50 resistance, but then I saw a green bar at the 8ema and 4.50 and got back in. I sold at the ORH.

Lesson to take away: Set and forget.

BCS 18th 15m bar
This was a green bar at the 5ema, ORH, and R2. I gave in again, this time at whole number 12, and sold there, even though the stock never broke below that level. I watched in frustration as the FE was hit.

Same lesson to take away: Set and forget.

Klaorman said...

8/11/11 Missed trades

CEF 5th 5m bar short
This was a shooting star at the 5ema and 50 fib. I didn’t see this at all until the play was over. The stock bounced exactly at the FE.

CSCO 12th 15m bar
This was a hammer at the 8ema and 50 fib. I saw it in time but I just didn’t take the trade, perhaps thinking it might be fairly slow. It -was- slow, fighting with whole number 16 for 2 hours before finally hitting the ORH and then taking a steep drop.

Lesson to take away: If the setup is good, take the trade. Oh, and after I take the trade, set and forget!

Trader-X said...

Ken, ERTS was very similar to NWS. The biggest difference I see was the size of the gap - NWS was a bigger gap, and outside the previous day's range. ERTS was a little smaller and inside the previous day's range. So, I might give it a C+ whereas I gave NWS a B-.

On the bright side, you made money and price never stopped you out (I am assuming your stop was the low of the hammer bar (fifth bar)). It reached the initial target of the opening range high (ORH), so the setup in a sense still worked.

Chips and Salsa said...

Too many stop-outs this morning:


FFIV was my saving grace.

loanme5 said...

I like that you explained why you chose the seventh bar over the break of the sixth bar. I have a question about a similar subject.

I notice sometimes that the ema is a bit distant from the trigger bar at the moment of "triggering", but the ema catches up and will often be touching the trigger bar several bars later. Is that something you've recognized and just learned to anticipate when making your trade decisions? I frequently have passed on trades because I thought there was too much space between the 5 or 8 ema and the trigger, but at the end of the day I see that the ema "caught up." I guess this is where the "art" comes in?

Thanks for everything X. All your help, and not just in trading, has been an amazing influence in my life.

Anonymous said...

loanme5, I may not understand your question correctly, but the placement of the moving average should not move later in the day. Once the bar completes the moving average should be set in that spot permanently. If it moved, you could not use it as an indicator. Am I missing something?


Anonymous said...

loanme5 I know exactly what you are talking about. Noticed the same thing. Ever hunt flying ducks? Aim not where they are but where they will be. When price gaps it takes time for 5EMA to catch up. Take the challenge.. plot both a 5ema AND a 4ema on you charts and see if the 4ema 'sometimes' appears a little 'less' distant from the trigger bar at the moment of 'triggering'.


Pete said...

You guys sound like you have issure with your charting package when it comes to moving averages, because Mike is right...they don't move "after the fact". Are you entering before the bar completes? That is a recipe for disaster, as the bar may look like something 3/4 of the way through only to change drastically by the bar's close. It is the same with moving averages. The moving average will move around but once the bar for your timeframe completes, it is locked.

Pete said...

issure should be issues on the previous comment.