My trading has sucked today, but I still have it much better than anyone had it 100 years ago. Life is good.
TraderAM has an excellent site where he details every trade he makes and records the "R" value gains and losses. Today I made a successful TraderAM trade on RIG.
TraderAM looks for stocks that have gapped up above or down below yesterday's trading range. RIG gapped down today below yesterday's lows (white line). I bought on the fourth narrow candle after price pulled back to near yesterdays low and bounced off the 5 period moving average.
I trailed the stock down using the 5 period moving average stopping out on the 11th candle as it peeked out above.
DNDN was a stock I was following looking for a breakout trade today. Fortunately, I didn't take a long position when it was up 16%. In a matter of a couple of minutes it went from being up 16% to down over 70%! Trading was halted on the stock after that insane drop. I can't imagine what people are feeling who didn't have a chance to get out.
There's an inherent danger trading individual stocks--even those with large volume. DNDN traded over 28 million shares up until the drop. Yikes.
I'm pretty new to Elliot Wave Theory, heck, I've been using technical analysis for less than a year. I'm pretty fascinated by the psychology behind it, and I've noticed that watching for Elliot Waves helps me avoid overtrading and seeing setups that don't exist.
Here's an actual trade that I took today using Elliot Wave. I have erased the number of shares (100,000--OK not really), but you can see my entry and exit on the fifth wave of the move on SPY. I got out before a move higher, but I was a bit skittish with this being my first try at using Elliot Wave.
I owe Corey Rosenbloom at Afraid to Trade credit for teaching me about Elliot Wave through his blog and personal mentoring. If you're interested in learning more about it, check out Corey's interview with The Disciplined Investor.
I know it wasn't her fault--she was probably just picking up a check, but there is really no excuse for this monstrosity. Fortunately, I didn't see the Star Wars Christmas Special when I was a kid. It would have ruined the series for me for sure. Of course, one could argue that the Christmas Special was better than the Prequels.
I'm a geek.
I've been burned a bit during April because I've had a bearish bias all month. That hasn't served me well as price continues upward. Looking at the weekly chart gives us an idea why the March and April push upward occurred.
As price continued making weekly lows, momentum (as demonstrated using the MACD) was making new swing highs. This should have given me a clue that the downward move was losing steam and it was time to change my bias.
It looks like now that the rally is losing steam as it meets resistance at the 20 week EMA. I'm trying to ignore my biases (which are still bearish), but I can't imagine this rally lasting too much longer.
Campbell's Soup set up a nice bear flag on the 5 minute chart that met its target . It then set up another bear flag after that. Normally I would take that second bear flag (even though they don't occur very often). But the second bear flag occurred on the third swing up of the MACD as the price made its third swing down. Time will tell, but usually when we see a pattern like this it means that the run down has run out of steam and it is less likely that the trade will succeed.
I'm sorry to the three of you that read my blog (not counting the 3,000 Anonymous haters). I haven't been posting much lately because my trading has sucked and I've been trying to figure out how to stop the bleeding.
I had a pretty good month of March, but I've given everything back and more during the month of April. So, out of that frustration, I kind of put writing on the blog on the back burner.
I've noticed that when I write about some of the frustrating trades that I've made that it encourages folks to scold me and tell me that I suck so I figured that it was best not to post while I sucked so that I didn't have to receive several comments confirming that indeed I do suck.
On to the lesson of the day. These charts aren't complete because the day isn't over, but I wanted to show a trade I made and how using the MACD I was able to determine a good exit point. I traded US Steel (X) using 15 minute candles. I was looking for a breakout of the opening range low because I thought that we were going to see a big down day all around. As soon as that first candle was broken, I got in. I placed my stop just beyond the 200 SMA which was nearly triggered before the stock headed in my favor.
I took partial profits at 1 R, and planned to hold until the end of the day. But I noticed a divergence on the MACD on the 5 minute chart. As price continued making new swing lows, momentum made new swing highs indicating that with each swing, sellers were less aggressive. At the third swing, I decided that the move was probably pretty much over and it was time to get out. At least I got one decent trade this month.
SPY has been giving me fits lately, so I've been looking at other alternatives. A "narrow candle" trade setup on SYNA this morning so I took it. I risked 15 cents per share and gained about a buck per share for a 6.66R trade. It's been a while since I've had that much of an "R" gain on a trade. It's much harder to find those kind of risk to reward ratios trading indexes.
I've always struggled finding decent exits with these narrow candle trades. Using the 15 minute chart in conjunction with the 30 minute provided a great exit--the doji at 2:30 (red arrow). Unfortunately, I was away from my computer when it happened, so I exited at a less-than-perfect spot.
I've been concentrating on trading SPY lately (with limited success) and I've kind of stepped away from trading individual stocks like I used to. I watched APA as I traded SPY today and saw some great setups that I should have taken.
There are two trades that are really close. The first is the bull flag (click on chart to make it bigger). The flag dropped to a moving average with a doji in a very nice pennant pattern. Very near that point the moving averages crossed over creating a great place for a very tight stop and a specific target.
Soon after the stock took off again, price broke through the previous high and created a trend reversal trade that had a bigger target than the flag. You could have held on past the flag target for additional gains providing that big red down bar didn't scare you out of the trade.
I might have to start trading individual stocks again, because I seem to make many more boneheaded decisions trading the indexes.
The market has been hard for me to figure out lately, and I haven't been real motivated to post because I've had a hard time pulling money out of it. Today was no exception.
I actually would have made good money today, but when I attempted to short SPY at 10:30, TradeStation said they had no shares available. I tried to substitute DIA instead, and got the same message.
Instead of finding alternatives, I just gave up and sat back and watched. The anticipated plunge at 1:00 ticked me off. I took the first pull back at 2:00 and of course, it went against me. I held on for dear life. I just couldn't believe that the bulls were making a push late in the day. After I couldn't justify holding on for any longer, I bought the stock back, and (of course) just a few minutes later, the stock plummeted.
Frustrating.
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