After yesterday's sell off, my strategy for today was "don't be a hero". Tight entries with tight stops and take profits early - manage the trades on the 5 minute timeframe as opposed to a 15 minute chart.BIIB set up a nice B&B long. As you can see from the chart above, I moved my stop below the previous bar low and was taken out before the extension was reached. But on the pullback, BIIB held support of the narrow B&B pattern and proceeded to move back up. It tested the morning swing high and setup a second B&B. The second move was momo indeed, extending beyond the 62% Fibonacci extension of the previous day low to the ORH. Again, I took my stop as planned. In early afternoon, BIIB set up another longer B&B, but this one failed so I took a scratch. No harm done, but the late day rounded top at the base of the 62% ext. level signified that there was too much supply.
The chart above is the daily timeframe of JOYG before today's gap down. The blue line is pivot point support from May. When I calculated the Fib. ext. for JOYG, I had a target of $48.00 (38%) and I said no way.The next chart is my JOYG trade, again using the 5 minute chart and the PP target of $50.45.
6 comments:
I know what you mean. Today the stock market is like U goes up/down. So 5 min or lower timeframe should fit the style.
I was scare of by it, so I stay on the sideline.
Jerry,
That's a good strategy if you are a fairly new trader.
I prefer to trade gaps when the market opens into PP resistance. Many of the high volume gappers are trading on their own volition and will be less inclined to wild swings once the initial base is taken out. It doesn't hurt to take a profit!
Don't trade a choppy base. Look for a clean, flat base.
You just remind me.
I read and study a lot of your charts which consist mostly of bb entries. All are very successful indeed. However, I don't see you get stop out of alot.
Now, from what I understand, your stop is normal at the 2-3 cents below the trigger bar, correct?
If so, what percent would you say you got stop out?
Since gaps is the main stocks to trade, do we follow the trend to buy long/short when gap up/down?
Or study with price, volume and ma to determine of a gap fill trade instead?
Had the same strategy to book profits quickly today. Had a hard time finding trades in afternoon but had some success in the morning.
Bubs
Jerry,
Those are good observations. A few ticks below the trigger bar or the base. Generally I like to see a pattern of slightly higher lows moving into the breakout, but sometimes there is a small head fake before the real break. Look at the lower timeframe for the BIIB setup - second entry to see what I mean.
Also I prefer orderly candlesticks with very little shadows - real bodies do not overlap much except during consolidation and pullbacks. This is key the to success!!!
A wider spread requires a wider margin of error in case of a head fake. Or stick to stocks with a narrow spread.
Approx. 25% stop out, scratch, or tiny profit, due to lack of volume after the entry.
Yes, it is easier to trade the gap in the direction of the gap.
Try fading the gap with small risk with QQQQ. Set up a chart with intraday pivot points like I have for the NASDAQ 15 min. timeframe.
Way to go Bubs!
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