Tuesday, March 06, 2007

Dummy Trade of the Day - NVIDIA Corporation (Public, NASDAQ:NVDA)

The market gapped up this morning and so did most of my usual suspects. NVDA printed a wide OR bar with a long upper shadow. The next bar tagged the rising 5 period EMA closing strong and in so doing carved out a bullish reversal hammer. The next two NR doji sticks flirted with the downsloping 50 period MA. The fifth bar finally took out the OR high on an uptick in volume and this was my signal to get long. NVDA made a steady ascent on strong volume and came 5 cents shy of tagging the 100% Fibonacci extension. I was stopped out in late day weakness. I did not take any partials as price tagged the various Fibonacci extension levels because the pace was steady and price never closed below the rising 5 period MA.

11 comments:

The Addict said...

Hi, great trade on NVDA. Can you explain your rules on getting out of a winner? Thanks

Joao Henrique said...

You catched a nice move Jamie! Almost hit the 100% extension.

Today I didn´t have much time to trade, but I could see similar setups here in the brazilian stock market.

Joao Henrique said...

...caught... Sorry for poor my english :)

Jamie said...

Thanks guys,

@ Addict - I will write a post outlining some of my entry and exit rules. Not sure of the timing, hopefully I will be able to post it this week.

Anonymous said...

hi Jamie,
Was your stopped out here due to NVDA going below 5EMA? And your initial stop just below 4th bar low? How did you move your stop loss along the way? Thanks

Pat

Jamie said...

Hi Pat,

I noticed volume declining as price approached the 100% Fib. Extension. Also the candles resembled spinning tops so I moved my stop to the low of the previous bar. As it turns out the 5 EMA and low of the previous bar were aligned at $30.69.

Yes, the intial stop was the fourth bar low. I moved my stop from time to time but I did not micro manage the trade. I like to move my stop about 5-10 cents below the MA. As long as price does not breach the MA on a closing basis or rally too far above the MA, there is no need to take profits. I was expecting the end of day dip and that's why I tightened the stop.

Yaser Anwar said...

Hi Jamie-

Good trade. Quick q: do you have fib grids as a preset on your charts or draw them in real-time when trading? thanks

Jamie said...

Hi Yaser,

The fib grids are not preset. They are part of the esignal drawing tools.

Anonymous said...

Thanks Jamie. 2 more questions to clarify:

-5th bar took out OR high on uptick in volume. As you entered before the full formation of 5th bar, how did you tell the uptick in volume? 5 min chart?

- As you are trading based on 15 min chart, you will wait for the full bar to form before deciding whether the price has breached the MA on a closing basis?

Jamie said...

I can feel the volume. It's a combination of feel and several indicators such as level II screens - bids piling in, and yes volume bottomed around 10:15-10:25 on the 5 minute and then picked up nicely just before 10:30.

If the market starts to tank, I will not wait until the 15 minute bar has completed to sell. If its just a matter of NVDA breaching the 5 ma in normal consolidation, I monitor it closely on the 5 and 15 minute charts. On the 5 minute I use the 10 period ema as my guide vs. the 5 ema on the 15 min. Trailing a stop 10 cents below the 5 ma on the 15 minute in like priced stocks would likely stop you out if the market suddenly reversed.

It's not an exact science, trading is also very intuitive and that develops with experience. In addition to Fib. Extensions you should take note of obvious support/resistance levels to guide you in your profit taking.

Anonymous said...

Thanks very much for explaining.