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The Most Important Lesson in Trading Psychology
15 hours ago
Wednesday, December 14, 2011
Todd's VCI trade
This is the trade I referenced in the previous post. The entry was a break of the trigger bar's low (marked).
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23 comments:
very nice VCI
it seriously looks like a big "U" @.@....
Two nice trades Todd. What is your success rates on this type of trade taken in the first 90 minutes? Above 60%?
um....
will CREE 5th bar meet the criteria?
but its seems to be too far away the RZ @.@....
so maybe a bit more risk involve?
Times, I prefer the trigger/entry to be closer to the 61.8% line, so I would have passed. But, this setup did work out. I agree it presents higher risk.
I didn't have any trades today.
thanks, true too high risk...
good discipline learning from you, Trader X and Tom C.
12-16-11
Todd,
Thanks for taking the time to share your setup. I really appreciate it. Where do you typically have your initial stop?
Today i traded Sina of the 15m with your setup over bar 6 (right on the edge of the 90 min window)with the Fibs set at the high and low of the morning range. It shook me out at the morning range high. Your comments on hte trade are appreciated. Tnx.
Todd,
wouldn't you think the 3 down bars in a row may be a bit risky to short considering it may need another bar or two to digest the move before next leg down?
Anon, regarding the three bars down, you have a valid concern. But I let the 5EMA guide me and since the trigger bar was being "pushed down" by it, and breaking through a key level (61.8%), I thought it was a valid setup. I don't take setups that don't show support/resistance from the 5EMA, and use that as my guide as to whether a move is too far extended.
Anon, on the SINA 15-minute chart, I only trade this setup on 5-minute timeframes. I've found that the longer you go on timeframes, the less likely it is to work. I'm trying to get in and out in as little time as possible, and 15-minute timeframes would only provide a handful of bars to trade and that doesn't work for me.
On the other side, I've traded this setup on 3-minute timeframes with success. But anything faster tends to fall apart. Based on my experience, 5-minute timeframes are the sweet spot.
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.
David, my success rate is pretty high on trades I take in the first 90 minutes - I don't keep an exact measure, but I would say above 75%. Patience is required, though. This past week I didn't find any trades Thu or Fri, but I did have solid trades Mon, Tue, and Wed.
Interesting setup and I like your parameters. I will be looking at it next week. Thanks!
Hey Todd, what about JAKK today? Entered short on a break of the sixth bar, covered at the FE.
Problems I see - it didn't quite break the 61.8%, though it was the second attempt down after a bounce, which I think was a good sign. The 5EMA was still a little away from the actual bar, but it was close.
Things I liked - the first bar had no tails. It was strong up, from the open. Then the second, third, and fourth bars brought it down past the 1/2-way point of the opening range. And, it just looked good.
Thoughts?
Todd,
How do scan/create a watchlist of candidates? How many charts are you watching at the open looking fro trade setups? Thanks.
Brian, I actually took that. I would not have posted it though, because it was not a textbook setup as X would say. I only wanted to talk about the perfect setups, and let everyone decide for themselves how much variation and thus how much extra risk they wanted to take on.
But, since you commented on it, I liked it. You pointed out the problem areas, and I agree with your assessment that it just looked good. If the opening bar had a tail on either side, though, I would have passed. And, if I found a better setup to trade this morning, I would have passed.
I don't have access to make a post right now, but hopefully I will get it later today and I will post your comments, the chart, and my comments.
Ed, check comments of the last few posts - pretty sure Todd addressed it. And, do a search on the blog because X details scans and watchlists.
Todd, you are already banned from posting? What did you do?
Michael
Todd,
Can you look at PTEN? It is not the same as an U Turn because it gapped up and traded lower and then back up to RZ before it broke down.
I short on the 16th bar, but I would sure if I should take it because the 5MA crossing halfway the trigger bar instead of pressing down from the top, can you comment on this case of the 5MA?
The reason I entered was this weak wide bar was after it tested RZ (2 narrow range bars).
Thanks.
Bruce.
You answered Brian "If the opening bar had a tail on either side, though, I would have passed." I would appreciate very much that you can explain.
Cos, I do understand if it was a lower tail, it mean bullish, but if it has an upper tail, would it be bearish and it would be better?
Like VCI, the first bar had that little tail you talked about. Or maybe the tail is not too long to worry and reward was worth it.
David
David, in theory what you are saying makes perfect sense. In practice, I've found that the tails lower the probability drastically, even if they are "in favor" of the trade as you point out. But I found that strong bars with no tails yield setups that have high probabilities. I learned this lesson the hard way.
Anon,
Regarding SINA in 16Dec,Fri. What I see 6th bar 15 min: 1) doji inside bar breaking out, not down
2)premkt/open h/s pattern 3)bounce off 47 long term support. This was a good reversal stock esp options exp.
Bruce, I can't look at charts right now but will tonight!
David, it is subjective on what is a long tail. I compare it to the real body, and VCI had a solid green real body that, in my opinion, made the shorter tails not so worrisome.
Thanks for your quick reply.
I thought about what you said and here is my take:
Upper/lower tail on the first bar or even some opening range bars in between may means either pros or smart money supporting the stock.
So when they show up at the right place, S/R, RZ, etc.., it will strengthening the momentum toward the direction of the trade.
Say, do you ignore the daily chart when trade a stock? Do you trade gappers exclusively?
David
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