Wednesday, 12 November 2008

Trades 12/Nov/2008


LDK (gap down)

First candle weak followed by weak 2nd which stays in botton 1/3rd of OR. This price action coupled with downturn in market is our trigger for short entry on the 3rd candle.

Entry: 14.88 Stop: 15.25
Fib Ext: 13.62
1R=14.51 2R=14.14 3R=13.77

The price moves down nicely after entry as the market weakens. We take partial at 2R and leave the rest to run. This is closed at end of the day for around 4.5R.

PBR (gap down)

After gap down the first two candles are weak and also weak relative to the market. This price action coupled with market turning down is our entry trigger for a short on the 3rd candle.

Entry: 23.40 Stop: 23.80
Fib Ext: 21.94
1R=23.00 2R=22.60 3R=22.20

The price moves down nicely after entry as the market weakens and it trends down with the ema. We take partial at 2R and leave the rest to run. This is closed at end of the day for 4R.

Overall two trades with good profits. Shorting on market weakness would have paid dividends today, pretty much on any stock chosen.


OONR7 said...

You are really in stride. Excellent work. I was chopped up a bit today but got back to breakeven. I would like to know more on how you read the indices to time your entries.

TraderAm said...

Thanks 00nr7.

It's not an exact science unfortunately...actually you probably know that already :-)

Basically, I look at the DOW chart and plot the CCI (any oscillator will do) to show me when the Index is overbought and oversold. If you look at multiple timeframes (e.g. 5min, 10min, 30min) it shows you how the market is behaving. I use the longer tf for direction and shorter ones for entry > So for example I wouldn't short if the market is heading up and/or it is oversold.

The problem with indicators is that they lag. So I try to combine this with looking at price action of the stock compared to price action of the index. So LDK for example didn't retrace as strong as the market on the 2nd candle.

It's not easy, so I'm trying to simplify it by just looking at price action. Hence still tinkering a bit with it.

But the main essence of it is that if you can short as the market is coming down then it has a higher probability of success. And the opposite is true for longs. The odds increase more in your favour if you short the weaker stocks and longer the stronger stocks relative to the market.

Having said all of the above > any sort of short on pullback to ema, would have worked just as well today as we trended down the whole session. So I could well be making things too

Not really easy to explain, as it is a bit discretionary on some days. Hope the above helps some though.

P.S > I also did an update on my strategy outlining my current views.

Anonymous said...

nice day at the casino Trader AM! you do really well with the LDK-type set-ups...