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The Psychology of Handling Large Drawdowns
6 days ago
Wednesday, September 07, 2011
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> around 2,200 subscribers by feedburner
> over 200 via email by feedblitz
> 67 by carrier-pigeon
> and 2.4 million people visited the site yesterday alone (give or take 2.397 million)
contact me if you are interested in detailed stats.
11 comments:
bl:
I took a contra setup (gap fade) in TRI yesterday (9/6) that worked well. It didn't follow the pattern of the group of stocks you mentioned, but it did have what I consider a good reversal pattern.
Here's more info:
http://grovetrades.blogspot.com/2011/09/recap-tri-pb2rz-and-contra-trade.html
9/7/11
With all the great discussion we’ve had recently rattling around in my brain, I tried to look for only the best setups today. However, it seems that I overthunk it. Or did I?
CONN 5th 5m bar
This was a red hammer with its tail touching the 38 fib and almost touching the 5ema. Price pulled back to the 38 fib, but the bar’s body was way above it, so was this a “proper” pullback or a shallow pullback? I set an alert for the high of this hammer; when it hit, I noticed that price had touched the bottom of the hammer, so that fact, combined with how close the stock was now to the ORH and its .04 spread made me pass. As expected, it struggled somewhat at the ORH, but then it easily hit the FE, paused there, and then hit the 162 extension.
Would any of you have taken this trade?
CREE 6th 5m bar
This was a red hammer with its tail touching the 5ema and almost touching the 38 fib. As with CONN, price almost pulled back to the 38 fib, but the bar’s body was way above it, so was this a “proper” pullback or a shallow pullback? No matter, I tried to hit the offer, but the second I hit my buy key, the offer lifted and I missed it. I had multiple chances to get in later, but I didn’t want to buy it as it was coming down. The ride would’ve been agonizing if I had gotten in, and I would’ve probably gotten out on the 12:20pm dip under 31.50, but the essential thing to see is that the stock did hit the FE near EOD. So do I watch my trades closely and get out on any shake (real or imagined) or do I close my eyes and let ‘em fly? Stocks mostly do not go up in a straight line, and because I’ve seen so many hit their FEs while doing the shake-and-bake in between, I truly have to set and forget. Of course, I’ve already said this multiple times...
MMR 6th 10m bar
This was a red hammer at the 38 fib with its tail touching the 5ema. However, the red previous bar had engulfed the green bar before that, which made the setup look iffy. I set an alert for the high of the setup bar, but then I noticed that the low was breached, invalidating the setup for me. Price then snapped back off the 62 fib and R2 to form a green hammer, which I half-noticed, but I didn’t get in. As with CREE, the ride would’ve been rocky, as the ORH held firmly on the first retry, but the FE was hit later.
Would any of you have taken this trade? If so, would you have scratched it on the “obvious” ORH resistance?
DISH 9th 10m bar
This was a red hammer at the 5ema and R2 but above the 38 fib. This time the red previous bar almost offset the green bar before that. Shallow pullback, offsetting bar; I hesitated and didn’t get in. The stock hit the ORH nicely and then made a good try for the FE near EOD.
Would any of you have taken this trade? If so, how would you have managed it?
GU,
Nice trade with TRI\ with the VWAP. Also 3-5" red body bars of selling can signal a reversal, double bottom. Some traders use parabolic ZAR.
9Sep BusyStock.com premkt: mcd vrsn tzoo db lulu bhp mt rimm regn ulta soda abm.
QQQ gasp dn fills the gap reversal 11am est.
9/8/11 trades
MU 5th 5m bar
This was a red hammer at the 5ema and R2, but a bit above the 38 fib. I exited at the FE. The stock did go farther, and the 5ema would’ve kept me in, but I’m happy that I held to the FE.
VLO 4th 10m bar
This was a hammer at the 5ema and 38 fib. I partialed at the ORH, but stubbornly held on even after a shooting star formed. I got out after a higher low broke down.
Missed trades
TITN 7th 15m bar short
This was a shooting star at the 5ema and 38 fib. I was wary of the long tails on the 1st and 5th bars, even though the setup felt good to me. The stock followed the 8ema all the way down for the rest of the day.
Would any of you have taken this trade?
9/9/11 trades
NYX 7th 10m bar short
This was a green shooting star at the 5ema and under the 38 fib. It was invalidated by a few cents at the 9th bar, but it still looked good to me, so I took the trade. The FE was 24.98; I bid 25.02. There were some ups and downs along the way, but I held on and my bid got hit. The FE did get hit by a few cents, but that was the bottom. I’m happy that I held out for my target!
PBR 7th 10m bar short
This was a shooting star at the 5ema and 50 fib. The previous bar was also a shooting star. The FE was at 26.38, so my target was 26.41. However, I was wary of the support at the .50 level. Sure enough, PBR hitched there, and after a bit I covered at 26.52, thinking “Good enough!” However, the stock did hit my target exactly (missing the FE by 3 pennies), but I’m fine with that.
GFI 9th 15m bar
This was a red hammer at the 8ema and above the 38 fib. Unfortunately, I didn’t see the dark red line marking R2 until after I had gotten in. More unfortunately, I did notice the stock getting rejected there on its first try. I then put so much weight on that rejection that I got out .03 above my stop, thinking how stupid I am to not have noticed R2. Most unfortunately, that was the exact bottom, and GFI hit the FE at EOD. The ride wasn’t smooth at all, but the stock still produced higher highs and lows along the way.
Missed trades
FCX 4th 10m bar short
This was a green shooting star at the 38 fib but not quite near the 5ema. S2 was right at the bottom of the bar. These 2 factors made me pass, though I really wanted to take the trade. The ride wouldn’t have been smooth, but the stock did crash through the FE and ended up hitting S3 and almost hitting the 300 extension. Afterwards I reasoned that since S2 was right at the bottom of the setup bar, if the bar triggered, then S2 would’ve been broken, so perhaps that would’ve been OK. Also, the 5ema wasn’t THAT far away, so maybe that was OK too. Or perhaps I was rationalizing an iffy setup.
Would any of you have taken this trade?
Klaorman,
Nice trades esp against the mkt with GFI. I usually don't like 3red bodied bars in a row of selling at the open, NYX PBR. Could be exhaustion move. 11 reversal sent all the stocks down... "bonified" gaps downs, like from premt list, and all. Funny the big techs like AAPL AMZN NFLS filled the gap and reversed which PBR FCX NYX didn't.
bl,
I like your analysis. I don't know if it counts as a reversal play on 9/6, but I went long IP above bar 6 on the 15m and exited $1 higher at $27. Little did I know that the stock would continue another 80 cents higher after that. It gapped down that morning, but had reversed itself in the first 15 minutes, so it caught my attention as something to watch. This was my only winning trade on Tuesday.
Klaorman,
Nice trades, my friend.
If my analysis helps, I took FCX on the 15m, shorting under bar 3. I saw that my entry was going to be just above the whole number of $43, but there were other things that made me confident.
The pullback was orderly and rebounded almost perfectly off the 50% Fib Line. The trigger candle was closing near its lows and it's entire real body was cleanly below the retracement zone. The low of the trigger candle was just below S2. All the candles that formed the initial pullback were bearish.
I bailed at $42.50 for 2R profit, but it continued to fall. Wish I'd kept half in play. The recent chop and whipsaws have me taking profits earlier.
@bl
How do you gather your premkt WL (busystock.com) -- i checked the site but can not seem to find it.
Could you explain?
Thanks
12Sep:
Another reversal day QQQ- 4-10" bars up and reverse or 3rd 15 min bar gravestone doji. Catch the move up at the open expect a 15 30 45 min reversal and catch it down. No need for an open WL...good to have a Beta WL on hand on gap days, like the tech(QQQ indicator to get the feel) and non precious metals(XME).
C&S IP was a news reversal=bot TIN good trade.
Anon try BusyStock.com and look at the top tool bar
9/12/11
SSRI, 5m, 5ema, short below bar 8, exited just beyond FE, net 3R profit. A Beyond The Fib Extension set-up also occurred at 11:30 on the 15m. I didn't pull the trigger, and it ran off without me...
like this...
http://youtu.be/YhRk45Sdg2o
Thanks bl, though I did bail on GFI at its exact swing low.
Thanks Chips and Salsa for the FCX analysis.
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