Due to a bad tick, it was impossible to view the 15 minute timeframe for JOYG through Esignal in early trade today so I actually had to use stockcharts.com to see this chart correctly and map out the setup. My favorite shorting setup is an inside NR red bar. This one was perfectly placed at the base of yesterday's pivot low and in close proximity to the downsloping 5 period ema. Pivot point breaks generally result in vertical moves so you want to see the breakout bar close at or near its low. Since I couldn't draw any Fibs due to the bad tick, I used yesterday's Fib. calculation of
$48.00 as my target.
With $77.00 oil, I decided to look at CAL for potential weakness. After gapping lower and attempting a reversal, CAL managed to retrace up to the downsloping 5 period ema. Another red inside bar just below the 5 period ema - it doesn't get much better than that. The middle blue line is the pivot low from the most recent dip and I kept a tight stop as price tested that area. My target was the lower pivot line. As you can see CAL carved out a double bottom, so it may try to rally back up to fill the gap. We'll soon see.
Due to a bad tick, it was impossible to view the 15 minute timeframe for JOYG through Esignal in early trade today so I actually had to use stockcharts.com to see this chart correctly and map out the setup. My favorite shorting setup is an inside NR red bar. This one was perfectly placed at the base of yesterday's pivot low and in close proximity to the downsloping 5 period ema. Pivot point breaks generally result in vertical moves so you want to see the breakout bar close at or near its low. Since I couldn't draw any Fibs due to the bad tick, I used yesterday's Fib. calculation of $48.00 as my target.
With $77.00 oil, I decided to look at CAL for potential weakness. After gapping lower and attempting a reversal, CAL managed to retrace up to the downsloping 5 period ema. Another red inside bar just below the 5 period ema - it doesn't get much better than that. The middle blue line is the pivot low from the most recent dip and I kept a tight stop as price tested that area. My target was the lower pivot line. As you can see CAL carved out a double bottom, so it may try to rally back up to fill the gap. We'll soon see.
13 comments:
Is it me or does everyone (no matter what level) get a heart attack when its almost near your stop price?
Being stop out (short MO) was bad for me cos of my small value account, I can only trade 3 daytrades every 5 business days.
I felt like the more I learned, the less profit trade occured.
To master or not master the skills!
To borrow more just to meet day trade balance or not!
Nice trades Jamie! You are da man.
Jerry,
Getting stopped out is very painful for every level trader. But I understand that it is much harder when you have trade limits that come into play.
Looking at the 15 minute chart of MO, I'm assuming that you shorted on the 11:30 bar on the 15 min. timeframe.
When price hit the PP high dating back to March 12 on the daily, it bounced and tried to recover. When this happens to me, I get out before it turns into a loss, usually with a small profit, or take a partial at the PP.
As I pointed out in the post, I like when the breakout bar closes at or near its low, this signals success for me.
MO did not gap down. Just wondering why you chose this stock?
The more you trade, the more experience and intuition you will develop and the profits will come.
I usually suggest that new traders paper trade until they get a good feel for the setups. For example, after three consecutive wins on the same type setup, you can take a real trade up to 100 shares. If the real trade is a winner, take another up to 3 in a row, and then you can increase your risk to 200 shares, and so on.
This training plan will ensure that you don't blow your account. It also means that you won't make any real money for a long time, but that's okay because while you aren't making money, you will become a master trader. Then the real money will come easier in the end.
Thanks Zoomie and welcome back! Hope you enjoyed your vacation.
@JerryC:
You have many options as a new trader. Do the paper trading as Jamie has said, and then check out Zecco for free stock trades (perfect for small accounts!). I used them for 7 months with a tiny account while I was practicing, and now I trade through a proprietary trading firm so I don't have the daytrader rules anymore, even though my equity is far below 25K. I've written a bunch about it all at http://www.movethemarkets.com if you want to know more.
@Jamie:
I traded CAL today also, and it looks like we took the same exit, which makes me very happy! You also caught the entry I missed. I shorted a break of the 10th bar low for far less R's :)
Jamie: Your suggestion is noted. I know I need to do more paper trades to gain extra experience.
MO was on my watchlist since earning. It didn't gap, but the stock was in the same trend as the market. In addtion, I saw that it may break the mid May, so I short 50 shares. Perhaps I should of wait to tested first before enter, but I can't resist...
Do you think it best to wait to test the PP before enter or depends?
Overall, I could of stay in 5 mins + 4 cents more, I would of gain much more. However, I learned that if you don't follow your trade plan, then one shouldn't trade. There are some exception, but for new trader like me, I must do so.
One thing I know is if you didn't obay your stop, you could of loss your pant and more.
Prospectus: thanks, I will check out your web.
Jerry,
I agree. I took the CAL trade knowing the PP was 50 cents away. When price hits the PP it will either retrace part of the move, consolidate, or reverse. Either way, you must protect your profits up to that point by lowering stop, taking a partial or full profit. Once the PP is taken out, it usually results in a momo move. Assuming you can't take a partial because of number of trade limits, that leaves you two options.
Prospectus, Nice trade with CAL.
10 trades, that's a very busy day!
Is there a time (ie., lunch time) when one shouldn't enter a trade? If yes, why?
Jerry,
Every trading day is different, but often times lunchtime is accompanied by reduced volatility. Many stocks start trading in the dead zone and that means that you start praying that your stops will hold.
Nice trade in JOYG, Jamie. I took it off my screen after that crazy tick. Sounds like I should have stuck with it! Nice setup.
Thanks Dave,
That crazy tick was annoying but I stuck with it and it paid off.
Nice trades Jamie
I think you know it, but if there is someone who don't, you can edit any bad tick on eSignal through right click on the chart>Tools>Bar Editor and correct the bad data.
Thanks José,
No I did not know about that. It will come in handy next time I see a tick that distorts the chart. Great to know!
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