After last month, I was ready to be really selective and try to improve my win rate. I started off with a 5R trade on the first trade I made in March which is always a nice way to start the month. I was being extremely selective through the first half of the month - only 3 trades through the 14th. I just didn’t see many Read the rest of this entry »
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I had a choice yesterday: short CFC or ANGO. It’s obvious which one worked out better. Why didn’t I just take both? This seems to happen to me quite a bit - I see two setups and try to decide which one is better and then I only take that one. I need to get to the point where I take both of them even though it may mean that I lose 2R on the day.
Sometimes I choose the “right” one, sometimes I don’t. I’m almost certain that I would come out ahead in the long run by taking both positions.
Anyway, this month has been quite good in terms of R, but I’ve been experimenting in breakout trading (which has trounced my dummy/fib trading handily) and my position size isn’t where it needs to be. Here’s the chart of CFC and ANGO. Comments welcome!
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I lost 2R today in a slow market, but again my position size was smaller than normal. I made a couple scalping type trades in AMR. The more interesting trade (if you can call it that!) was PPL. I traded PPL off the break of the 5th bar on the 30 minute chart. It got to within 5 cents of the threshold where I’d move my stop to 1R - instead I got stopped out at breakeven. I know from looking back at my trades in StockTickr that in the long run my stop strategy will pay off.
Sure there will be trades like this where I leave a little on the table, but it’s better to let 1R slip away than to consistently move my stop too soon and lose out on those 5R trades later. Here’s my trade in PPL:
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OK, first off - what a day in the markets. This was a nasty reversal day. Take a look at this chart in the Qs:
That doesn’t bode well for trend traders out there. For me, I took 4 trades today for 2.63R. My position size was smaller than normal on my main winner, so it didn’t end up being as much money as it sounds like.
However, another case of “move-my-stop-too-soon-itis” hurt me today. Here’s a chart of SNCR where I entered off the 4th 15 minute bar. I took a boredom exit at breakeven which ended up costing me 2R on this trade. Time and time again this ends up costing me. Even on a day when the market trended up the entire time I had this position it still would have worked out for 2R.
Here’s a losing trade I had today in BEC. Those big down bars in the QQQQs convinced me to take a less than optimal setup here. I realized that going in - I’m going to try to avoid these types of trades in the future.
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I’ve spent the last few days trading breakouts which are showing a lot of promise. It’s very different from dummy trading and I’m interested to see whether I can do both simultaneously. So far, the breakout trading has more than made up for my mediocre dummy setups that I’ve taken. I feel a little like Tyro did in December.
It’s been a fun few days. As my StockTickr Calendar indicates, I made over 6R today, but my profits aren’t as much as my R levels indicate - my position size was about half what it normally is (which is pretty small anyway, in my opinion).
Here’s the chart of SCHL, my losing dummy/fib setup today.
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For the next interview in the StockTickr Interview Series (RSS feed), I spoke with Tim Knight, who founded Prophet.net way back in 1992. I’ve followed Tim’s blog after seeing it in TraderMike’s blogroll. Tim has also just released a book called Chart your Way to Profits (Wiley 2007).
Tim is an outspoken perma-bear and proud of it. I think anyone would be if the first trade you ever made was on Black Monday! I guess that would skew your thinking to the dark side.
I have to say that I think this interview ranks up there at the top of all the interviews in the series. Read on for more about how Tim trades the markets, some excellent advice on “just sitting there”, and the most interesting “what do you like most about trading” answer that I’ve come across yet.
Tim is eager to answer your questions in the comments of this post, so ask away!
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A few subscribers have already noticed, but I added some “R tables” to each entry in your StockTickr Journal. The reason I added them is because I use R values as a guide for moving my stop. For example, when I reach 1R of profit in a trade, I’ll move my stop to breakeven. As my trade reaches 2R, I’ll usually move my stop again. How far I’ll move it depends on a few factors, but these whole number R thresholds are where I make my decisions.
I used to compute these numbers in my head and write them down on a sticky note when it looked like my trade was approaching 1R. The math is not hard, but I don’t like doing even simple things that could be more easily done by a computer. This is why I added the tables to the StockTickr Journal. Now, I enter my trade into the journal as soon as I make it and this R table is immediately available without my human error factor.
Just hover your mouse over the green dollar icon in the journal next to the ticker symbol to see the R table.
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I traded SLB today. It was a HCPG suggested trade, although it didn’t show up on their main trading list. As it turns out, it would have made a much better gap play - it didn’t even show up on my gap radar, though. I’ve been paying a lot more attention to the 89% Fibonacci retracement level these days thanks to Esto. This would’ve been a nice play off that level.
Instead, I entered on the break of 66 and ended up with 0.5R. Here’s the chart review.
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As I stated when i interviewed the guys over at HighChartPatterns, I’m a subscriber. I’ve been following their picks, but rarely trade them. I’ve been trying to determine whether I would be able to watch their picks and continue to do my gap trading. I’m pretty sure I’ll be able to do both.
I traded BEAV which was on the HCPG forming list today. It was good for 2.83R. It took all of about 15 minutes and by the time 10AM rolled around I had closed the trade and ready to generate my gap list. It felt great to “start the day” with a 2.83R cushion!
Of course, I rushed into a trade in AHS that I wish I hadn’t. I entered on the break (if you could even call it that!) of the 4th bar high on the 15 minute chart. In hindsight, there was barely a gap at all and the first bar was way too wide. As soon as I entered I realized my mistake and contemplated bailing at breakeven. I went ahead and held on to get stopped out. Another day, another lesson learned.
Here’s the chart of AHS and here’s my StockTickr generated chart review for AHS and BEAV:
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No trades yesterday. It makes things very difficult when the market reverses like it did. I also had some cable modem issues (thanks, Time Warner), but I can’t see anything that I would have traded anyway.
Also, I got a note from long time StockTickr friend Dave Johnson who has started a new blog called The Trading Digest. It’s good to see Dave back in the blogosphere!
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