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Tuesday, December 13, 2011

Todd's setup

First, thank you to Trader-X for letting me make some guest posts in December. I have often thought of starting my own blog but I also see some of the challenges and headaches it can present, so I'm not sure if I want to undertake the task. Time will tell.

Next, X described my setup as a "u-turn" type setup which is a term that I believe Tom C. originally coined. Here are a few more details about what I trade:

1.) 5-minute charts
2.) 5EMA
3.) I like taking setups that form in the first 90 minutes (preferably, the first hour). If it takes longer to form, the odds of success are lower. This is an old X rule that still holds true. I do occasionally take some trades outside of the first 90 minutes, but my mix is probably 85/15 (first 90 minutes vs. the rest of the day).
4.) I like crisp moves - straight up and straight back down (or vice versa). I plot my Fibonacci lines over the opening move, and look for price to move back through the 61.8% retracement with confirmation from the 5EMA (pushing price up for a long, down for a short).

SLB is a good example from today. Price rallied with the first five bars, and the sixth bar broke the fifth bar's low, so I plotted my Fibonacci lines over the first five bars. The 7-10th bars chopped around the "retracement zone", and the eleventh bar closed below the 61.8% retracement with the 5EMA providing overhead resistance. I entered on a break of the eleventh bar's low, and covered at the Fibonacci extension. I watched the opening range low (set with the first bar of the day) closely - often price will reverse at that point and prompt me to take profits. SLB fell through the low, however, and easily hit the Fibonacci extension.

VCI was another good trade today. I'm having trouble with the chart (I'm trying to adapt them to X's format on this blog) and will try to get it posted soon, but please take a look at it and you will see what I mean. The entry was a break of the sixteenth bar's low.

Let me know your thoughts or questions in comments. Thanks!



Anonymous said...

Nice trades. Do you trade only this setup, and do you find trades of this setup every day?


Times of Your Life said...

Thank you so much Todd and Trader X
they are very nice setups...

I have been re reading this blog and they are all wonderful trades

bl said...

Thanks. How would you trade MS MBI...a fade from the open, descending triangle? nice 10 min charts also. Both premkt Tues, along with BBY AMZN CCMP URBN IVN

Times of Your Life said...

will NIHD be the same idea?

entry at 14th bar or too dangerous cuz its too far away the RZ?


Anonymous said...

Very nice trades, can you share your search and screening creterias.



Todd said...

John - this setup is about 90% of my trading. It does not happen every day, but usually 3-4 days a week. It helps keep me from overtrading!

BL and Times - I will look at those charts today and post a follow-up comment.

Elad - I use the gap lists in RealTick, the same way X does. I simply put the NYSE and Nasdaq lists into one watchlist, and focus on the highest volume stocks for the day.

Todd said...

Times, NIHD worked but it was not a setup I would take. Opening range was the first bar, with a long tail. I like to see a few bars make the opening range, or a really strong wide range bar that opens at the low and closes at the high (or vice versa for a weak bar).

niki said...

bat SLB ismt a gap ?!!

Times of Your Life said...


thanks Todd

Anonymous said...

niki, SLB was a gap up.

Anonymous said...

You Wrote:
"and the sixth bar broke the fifth bar's low"

hummm the sixth didnt broke the fifth low...

Also: "and the eleventh bar closed below the 61.8% retracement with the 5EMA providing overhead resistance"

???? wasnt it the 14th bar to close below?

AM i wrong?

Todd said...

Anonymous, yes, you are wrong on both counts. The chart is provided, and what I wrote can be seen on the chart.

David said...

Nice trade. Looking forward to more.

ד"ר שי סולן said...


Great to have you here...
I trade similar setup on indices...
Question: How do you set the initial stop loss, and what are the criteria for exiting a trade before the profit target?


Todd said...

TNX, regarding stops, there are two choices. First is the standard X method of the opposite extreme of the trigger bar. Second is a wider stop loss using a move back through the 38.2% level. This allows the greatest flexibility, but sometimes the distance is prohibitive if you are basing your position size on the stop distance.