Tuesday, March 13, 2007

Dummy Trade of the Day - QUALCOMM, Inc. (Public, NASDAQ:QCOM) Long / Continental Airlines, Inc. (Public, NYSE:CAL) Short

QCOM gapped up on the open and carved out a WRB with a long upper shadow. After an orderly pullback to the rising 5 period EMA, the fourth stick printed a NRB with a lower high. I went long as price took out the high of the NRB. I took a partial when price retested the OR high and I was stopped out about an hour later just 5 cents below the OR high.

CAL was a short entry on a break of the OR low. I covered too soon because the afternoon session was somewhat choppy. At the time, I thought we were going to rally on a bullish candlestick reversal pattern. False alarm.

6 comments:

Anonymous said...

Hi Jamie,

How did you select your OR low breakout bar for CAL - it broke through on 2 bars prior to the one you were short on...

Cheers
MD

Jamie said...

Hi MD,

Usually I take the entry 2 cents below the OR low and then I go in the red for a while, sometimes half an hour or more. Today I was more selective because the markets were very choppy. That's not to say I didn't go in the red. I did, but not for very long. It's hard to pick the perfect entry and that's why strategic stops are so important.

Also, the red hammer was a concern at first, but it did not confirm so I felt comfortable taking a short when price took ou the hammer low.

Anonymous said...

What do you usually use for your stop. For example what was your stop loss on CAL and QCOM?

Jamie said...

If you click on the QCOM chart to enlarge it, you will see a small red line segment just under the low of the reversal bar. I use a 2 cent margin, so my stop was set 2 cents below the low of the NRB.

On CAL I forgot to mark my stop. It was $38.52. When a round number is near my stop, I use the round number plus 2 cents.

Babak said...

Jamie,
thanks for the detailed charts. Awsome blog btw. I've enjoyed it for a long time as a lurker. Thought I should come out finally :)

Would love your input on the ideal trading front-end.

cheers

Jamie said...

Thanks for coming out (commenting) Babak. I like your blog and will stop by later on with my thoughts on the ideal trading front-end.