Thursday, March 01, 2007

Dummy Trade of the Day - Joy Global Inc. (Public, NASDAQ:JOYG)

JOYG gapped down on the open as did the entire universe of stocks. The first bar was WR with a long lower shadow. The second bar was a red hammer in the center of the first bar's range and confirmed the base and break pattern developing on the 5 minute timeframe. I took a long entry on a break of the second high, using the low of the 6th bar on my 5 minute timeframe as my intial stop. My target was yesterday's late day high (blue line). I tightened my stop midway. If a stock carves out a long lower shadow on the first consolidation bar, I like to use the low as a stop. If it carves out a NRB, I like to move my stop midway up the previous WRB.

The target was almost reached. As price started to pull back, I took a partial. The proximity of the target price and the long upper shadow of the 9th bar implied that the move was coming to an end so I tightened my stop and was taken out shortly after.

2 comments:

Rudedog said...

Very nice trade. Keep up the good work.

I trade stocks that gap by placing a buy/sell stop below or above the OR bar. Sometimes, however,I find that I get filled at the bottom or top prior to a reversal. I've been trading 2 minute bars which has resulted in too many times being stopped out. Therefore, I've been studying your charts along with Trader-X's and Mercado de Estocastica's and how you use the 15 / 30 minute bars. The trick, as it always is, will be to find the proper set ups. Which leads me to my question...How many charts do you have up at any one time? I've had 9 - 12 up and I think its too many. Any comments would be most helpful. Thanks

Jamie said...

Thanks Rudedog,

In the first half hour, I usually scroll through 30-60 charts. Then I decide to focus on 5-6 charts and hopefully something tradable develops. Often all of the setups trigger around the same time and it becomes difficult to manage. Other days, like yesterday nothing much happens and its hard to find one good setup. I use multiple timeframes with the 15 as my main view. If it doesn't make sense on the 15, then I don't take the trade.

Sometimes I trade the open and those are usually planned trades from the daily timeframe, either from the High Chart Patterns newsletter or my ownn picks.

Hope this answers your question.