Friday, 7 March 2008

Trades 07/Mar/2008


A more difficult day today, only to be expected though after yesterday's excitement.

AAUK (gap down)

After the gap down, the price trends up but swings round before it gets to the previous day's low. Candles 6 thru 8 are bearish and follow the ema down. The 7th and 8th bars are also hammer like and NR7 bars and also close at their lows. These combination of factors lead us to think about shorting. The 9th bar breaks out of the OR low and also closes weak. This is our trigger.

Entry: 33.03 Stop:33.45
Fib Ext: 32.59
1R= 32.61 2R=32.19 3R=31.77

The price falls in our favour and we close half our position at the Fib Ext. The rest we are stopped out at breakeven as the price recovers in the last session.

A couple of other points about this trade. The candle after our entry would have given us a better risk-reward since it is a much narrower candle.
The other point is about the price action in first few bars, where we close above the OR high (candle 5). I know that some traders would have then disregarded this stock as a potential short. That is a fair point of view, however I tend to keep them on my watchlist and if there is strong bearish price action, then I do trade them.

CIG (gap down)

First candle is bearish. We then have some sideways choppy action along the OR low. Candles 7, 8 and 9 make the fall thru the OR low. You can make a case of any of these as being a trigger. I was watching at the time of the 9th candle which is NR7 and closes at its lows. The price action looked promising initially but then the stock recovered and came back to stop us out for a loss.

AA (gap down)

First candle although green has a long wick indicating some bearishness. We trend up to around halfway of the oR before reversing. Note how even in the trend up there is some bearishness (the longish wicks on candles 3 and 4). The 7th candle is weak, it is below the ema, and breaks the OR low. In addition it also closes weak. This is our trigger.
N.B> The next candle seems like it would stop us out, but it must have been a misprint, since the position remained open.

Entry: 36.92 Stop: 37.43
Fib Ext: 36.14
1R= 36.41 2R=35.90 3R=35.39

The price falls nicely in the afternoon session and we take half profits at the Fib Ext. The rest was stopped out at breakeven.


LiggerPig said...

Excellent! Simple, Effective & your charts are uncluttered too.
Keep it up,

TraderAm said...

thanks ligger