I got a late start to my trading day due to personal business. SOHU had a very bearish morning and attempted to rally from the blue line but couldn't attract enough buyers as confirmed by the declining volume. After retesting the base, it carved out a NRIB setting up for the next leg down.
AKS made its way slowly to the next support level after printing a series of lower highs. It consolidated for close to an hour before breaking down. Not a perfect inside bar, but right on the half dollar mark. I had two targets - the next two support levels (blue lines). I took a partial at the first support level. After much chopping around, it felt like it would make a final swoon to the next level, but managed to bounce back quickly after taking out $68.00.
ENER is not a good setup. Price had moved too far, too quickly, and needed to consolidate longer before breaking out. I got caught up in the bearish Friday afternoon syndrome and did not analyze the setup properly before jumping in. The inside bar was below all of the MAs including the 50 SMA and I took the bait. However, after losing the 50 SMA, price often consolidates and and attempts to get it back as in the AKS chart above. This consolidation often takes time so it's best to wait till the dance is over before jumping.I realized my error almost immediately as a nice profit quickly reversed into a loss. Luckily, my stop (pennies above the IB), did not get hit and eventually I was able to exit with a profit.
7 comments:
Nice trades as usual.
In your SOHU trade how did you manage your exit? Did you have an initial target (looks like it would be $70.00)?
Do you generally trail your stops or in this case did the 1:45 hammer like doji make you tighten up your stop?
I also noticed in ENER and AKS you choose to not show the formula pivot points. In both of these cases the bases were a little above the pivot points. Wouldn't these pivot points in theory provide support for the stock. In AKS in blew right by but in ENER it looks like P offered support. When and why do choose to ignore these levels sometimes?
Thanks!
Jamie,
Very nice trade in SOHU. The daily had a consolidated look over the previous 3-days leading to great downside action today. I'm sorry I missed it.
Also good management of ENER - just as important.
Thanks PDT,
For SOHU I was looking at most recent lows for support $71.50 or $70.50 from the daily. Hard to tell because there was no volume spike to foreshadow the end of the move, so best to keep it on a short leash.
The formula PPs are not always perfectly aligned with the real S/R levels. In either case I had time to get out if price reversed at the PP.
Various elements to consider on a trade setup. It's not that I am ignoring the PPs, it's just that on days where the market sentiment is strongly aligned in either the bull or bear camp, it is easier to trade the casino factor. In other words take all NRIBs that meet your minimum criteria. So, today NRIBs at the base of support were my main game plan given that I only got to my trading desk at noon and the big moves had passed me by already.
Thanks Jim,
I was anticipating a H&S top on the SOHU daily. I almost missed it too due to a late start.
Jamie,
I looked at SOHU on Thurs night and completely missed the H&S on the daily. Clear as a bell now.
Hi Jamie~
I really like the beaut of the Sohu chart and the clean execution. Congrats on that!
I have a question regarding "trading psychology" and a subject you discussed a few weeks ago: trading to win vs. trading not to loose. In the ENER trade, although the bar following the trigger bar closed above your entry, you left the initial stop in place and stayed in the trade. This was a case of "trading to win." Now, in the "trading to win" state of mind, how closely do you monitor your position? Do you just let it be until a move in your direction happens or you get stopped out?
And maybe a more important Trade Psychology question: are you able to be in the "trading to win" state of mind after a loosing trade?
Thanks in advance!
anarco
Anarco,
In the trading to win strategy you take a position and sit back and relax. This is easy to do when the stock has a perfectly formed, orderly base with NRIB as in the SOHU setup. The ENER setup is not quite so obvious so it requires more monitoring once the order is filled. I normally allow for a retest of the base. In this case it retraces 100% back to the high of the trigger bar and then swoons back down but prints a higher low. That is the first signal that this trade is not working, so it's a good idea to partial out and lower the stop to BE on the balance.
If the first trade of the day is a losing trade, I often fall into the trading not to lose psychology.
But on Friday after being away for 1 and half days, I was in the trading to win mood. Especially, since I had 1.5 trades in my favor.
If you have an average daily profit objective and you are ahead, you can risk the difference or part of the difference on the next trade. If you're behind the objective and there's only an hour left in the trading session, you need a great setup in order to minimize the risk further cutting back your profit on the day. Sometimes it's easier to try and make it up the next day.
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