Sunday, 17 February 2008

Trades 14/Feb/2008

My watchlist today:
AAP,ACH,ALXN,CMCSA,CMCSK,DEO,DVA,ECLP,EQIX,EXM,FARO,FIS,
GPRO,GT,HPY, IVZ,LIZ,NTGR,SBNY,SPWR,TECD,UBS,VCLK

TECD Chart (gap down).


The first bar was bearish (long wick). We then had sideways consolidation in lower portion of OR which is promising. The 4th bar is NR7 and red. The 6th bar crosses the OR low, but is not a specific candle pattern, so I am still waiting. The next two candles are Narrow Range, the 8th being red, gravestone doji like (longish upper wick) and with ema close above. This 8th bar is our trigger bar for a short. Note how the next bar (9th) was bearish and closed near its lows, adding to confidence of our trade.

Entry: 32.09 Stop: 32.25
Fib Ext: 31.60
1R= 31.93, 2R= 31.77, 3R= 31.61

Took partial at Fib Ext. And moved stop to 1R after the dragonfly doji (candle 12), which is where I was stopped out on rest of my trade.

There wasn't far to go to the Fib Ext on this trade, but still a 69c gain is ok. And there was always the potential that we may have got a further run beyond the Fib Extension level.

UBS Chart (Gap Down).


First bar was red and closed at its lows indicating bearishness. We then have a trend down then a slight sideways consolidation as the price finds support at the $34.00 level. The 6th bar is bearish, it opens above the $34.00 level and closes below it. Also it closes near its low. This is our trigger candle.

Entry: 33.82 Stop:34.15
Fib Ext: 33.41
1R=33.49, 2R=33.16, 3R=32.83

The 8th candle is bullish and closes up near the $34.00 level. At this point I am thinking the trade may well not work out. The 9th candle is also green and came close to stopping me out at 34.15. However it closed at $34.05, i.e. above the $34.00 level, so I closed my position for a loss.

NTGR Chart (Gap Down)


First candle is red then after a quick "look" past the OR we bounce back into the OR range. The 5th bar is NR, but is green and still within the OR. The 6th bar is red inverted hammer with long wick bouncing off the ema above it. Also it crosses the OR low. This was my trigger for short entry.

Entry: 23.01 Stop: 23.68
Fib Ext: 21.85
1R= 22.34 2R=21.67 3R=21.00

Reached 1R at 14th candle at which point I moved stop to BreakEven. The Fib extension was reached at an hour before the close. At which point I closed the whole of my postion for gain of $1.16 per share.

An interesting obvservation about NTGR is the 12th candle which is inverted gravestone doji. In the past I may well have been stopped out if I trailed my stop once I was in profit. But note how it doesn't get thru the OR low. So my reasons for entry are still valid. It is a bit disconcerting though if you are watching this and see the surge upwards. It is tough to keep your stop in place.
Often, if you keep the faith then you will be rewarded with a move like this which keeps you in the trend thru most of the day.

Hope you found this first "Trade Day" post useful.

4 comments:

Jim said...

TraderAm,

It is very informative and useful that you post your watchlist for the day and then the trades that you took from that WL.

Under "My Strategy", you mentioned that you start with a list of gappers and cut it down to your WL. Is this cut based on the OR bar (WR, weak, strong, etc.) and the volume in the OR? ... so you down select to your WL as the 2nd 15min bar is forming?

TraderIAm said...

Jim..

Yes..sort of. I'll try to explain in a bit more detail:

During the first two 15 min candles I am compiling a list of gappers and checking the chart for each one. If the stock has not gapped outside prev days range or its volume is not > 150,000 in first bar then it is gone from my watchlist. If the stock proceeds to enter the prev day's range during the first candle or 2nd candle then I also remove it from my watchlist.

I don't necessarily remove it if its weak/strong against the gap. So for a gap down, if stock has a strong green 1st bar, then I still keep it in my watchlist in case it starts trending down subsequently.

As you say, while the 2nd 15min bar is forming I am cutting down the watchlist. At this moment I find that I can handle 20 stocks. So that is my limit on the WL. There are a number of days when my initial WL will contain a lot more than that. On those days I just choose the ones with higher volume.

I think TraderX said that you "cannot catch every gap stock"..he is spot on. From a list of 20, I just need to find 3 or 4 to set up and I'm ok. If none of the 20 move to my pattern requirements..then that is ok as well.

Hope this helps.

TraderIAm said...

P.S.

You may ask why is your watchlist limit set to 20 ?

It's a bit subjective, but don't forget that as each 15min candle is ending, you need to go thru all your stocks and see which ones are setting up. This takes time. Maybe with more experience I can glance at the chart for a few secs and make a judgement. But I'm not there yet :-)

Also: If I was trading full time from home then maybe I could use a multi monitor setup and watch more than 20. But with the constraints of work etc, 20 is my limit.

Jim said...

Great explanation. Thanks.