ADTN,ALTR,ASML,BBL,BCS,BEAV,BHP,CIEN,CLF,CSX,DLR, FDG,FMCN,GCI,IP,JASO,MXB,NITE,PFCB,PWR,SAI,SAP,SCHW,
STJ,STX,TEX,WLT
A difficult day today. Just one trade was made, which ended up at breakeven. But before the chart and commentary etc, Just a quick aside.
I have received a few emails from readers who are saying they are using TraderX similiar to me and have lost a lot of money over the past couple of weeks. To be honest I'm not really sure what to say. This has been my worst month so far as well (only 27% of my trades have been profitable, 33% BE and 40% losers). And my lowest number of trades for a long time.
You have to be very careful, only take the best setups. In months gone by, some lower grade setups would have worked , but not now. Moreover, even if they didn't your other trades would have done well and compensated. Look back thru my blog, you will find numerous setups which look identical to charts of this week and last week. Same results ? ...No !!!!
Now, even the good setups are only occasionally winning and mostly just breaking even. It is a point that I mentioned in my "trading for a living article" : what if the strategy stops working. We will wait and see on that, but it is something that is always at the back my mind.
Another point I would say is that, please see from my profile that I am by no means an experienced daytrader. There are traders out there who have years and years of experience trading US Stocks. So I'm being honest when I say in response to emails that I'm not really sure myself what the best course of action is if you are in trouble with your trading. Maybe the answer is to take a break over the summer ?
All I can say is for myself, I am continuing to trade my strategy and I'll see how it goes over the next month or so with the added factor of being more disciplined and just taking the best setups IMO. Remember that refusing a trade is in effect a "trade decision" as well, I see it as a breakeven trade with no commission.
NITE (gap down)
Weak 1st candle is followed by another weak 2nd. We recover on the 3rd but do not make it back into OR. The 4th is red and closes weak. It also confirms OR as resistance.
Entry: 13.85 Stop:14.30
Fib Ext: 13.24
1R= 13.40 2R=12.95 3R=12.50
Initially it looks good as we reach 1R. But there is no follow thru and we close at breakeven as the stock comes back.
I missed entries in SCHW and CSX on the long side. That's just the way it goes sometimes.
10 comments:
TR: I could not agree more. This is a tough trading environment. Perhaps because of the summer blues? It is great advice to take a break this summer and reflect on our trading strategy.
Couple of ques:
(1) What led you to your exit strategy? How and where did you get the original idea from? It is rather unique, since I know most traders, including X, usually exit all positions at Fib. ext. Obviously, back testing does confirm it is an excellent strategy.
(2) When paper trading, what results did you get on exiting all trades at 3R instead of EOD?
(3) What other exit strategy did you backtest? And what were the overall results?
(4) Are their other exit strategies you are currently exploring?
(5) By your own admission, you are not an experienced daytrader, however is the confidence in your system based solely on trader X education? Do you know of other "professional" traders who successful utilize this strategy?
(6) Are prolonging your learning curve by not seeking "professional" mentoring, but going the do-it-yourself route? How confident are you that your system is time tested for all market environments?
Thanks, Ralph
X would take partials at $1.00 gain... maybe that might help?
I think why it's been so difficult is that the market often has strong actions lately. When the market moves decisively in one direction, individual stocks just follow. So the chance of getting any follow-through is just 50/ 50. For example, I also took NITE (8th bar). While I thought, and still think, it's a good setup, it's not gonna work when the market's up 300+ pts from its low. So my thought on this is try not to guess market direction, but to trade both sides, and hopefully the winners will more than offset the losers. Hope this help.
TL
Gap up strategy works well in a bull mkt. IMO, one needs to have other strategies available to him like a Watch List or Beta Groups (+/-) WL with patterns,reversals, etc. Sometimes that pefect gap pattern never comes will the whole market rallies. As one can't fall in love with a stock nor should one fall in love with a strategy.
There was an incredible Financial reversal today: WFC was a gapper play.
Lately I've noticed that breakout trades doesn't work, so I just take "random trades", what do I mean by random trades? I see that the market is going down, so I short AMZN or some other major stock, with a sound stop, and take profit at 1.5R or so..
It's not the best way to trade, but it sure does work :)
BTW I'll add your blog as a link to my blog since I come by your blog everyday, please add mine as well http://www.trader-ghost.blogspot.com/
ralph.
1). Whilst paper trading, when going thru my charts night after night every night, I noticed that the strong/weak stocks although bouncing at around the Fib ext did eventually follow thru and close higher/lower. Having reached the Fib Ext I know that I had already booked a profit and so was happy to leave it alone and let the market decide.
2). I didn't analyse that sort of mix. But I am developing something at the moment which will allow me to see more flexibility of looking at backtest results.
3). Other ones I've tried are: Exit all at Fib Ext, Exit at 1R and rest at Fib Ext. Exit at 1R and Fib Ext and EOD. Results, I will try to put together and work out the stats when i have time.
4). Yes.
a) Taking partial at 1R rather than just moving stop to be.
b) Using price action , candle pattern and ema to exit rather than eod.
c) Moving stop to be or tighter if price does not move as planned.
5). Mostly based on TraderX and knowing myself that I have paper traded it and live traded it for 1 whole year now. I don't know any "professional" traders. But there are a number of blogs out there with traders who trade for a living and utilise TraderX methods. They seem to be doing well, and TraderX has been doing it for a number of years. I know in essence what you are asking, but it is an impossible question to answer. We all want confirmation that a strategy works, but there are no guarantees in the stock market.
6) I haven't got a clue to be honest. All I know is that I have tried various methods of trading over the years and made the usual mistakes. That has been my "learning curve". So now I have a defined trading plan, I use money management and position sizing. I have become more disciplined and trade using a method which I am comfortable with. What would a "professional mentor" do ? Maybe someone who has had mentoring can answer that one.
b) "Tested in all market environments ?". No I haven't. Confident? Yes. But ask me the same question in say 5years by which time we may have encountered all market environments. :-)
qqqball.
Yes indeed so, and I do the same as well when the opportunity presents itself.
tl.
Thanks.
bl.
I see what you are saying.
The only problem is that the watchlist might get too big ?
Take 20 misc beta stocks or one beta group and see what happens: commodities dn/ fin up today(thrs)
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