February 26, 2008
Two easy trades.
First, classic OPG set-up.
Second, the reaction spike down from resistance.
That’s me finished for the day. While there may well be set-ups through the rest of the day, the Open is where my better trades are. Continued trading through the chop of lunch, as so many traders have noted, tends to diminish early returns.
February 25, 2008
I’m looking for a stronger pre-market, with a fast spike higher, that I would be looking to get Short on. If I miss the spike, or it doesn’t happen, I’m looking short mid-morning.
I expect the close to be bearish, closing near the low’s for the day.
The bullish momentum might carry through the mid-morning, but I would expect this to weaken and re-test the lows of Friday by the close.
February 25, 2008
The analysis from the weekend was wrong. GS opened weak and traded down. As this nullified the initial analysis, I was a spectator till mid-morning.
With the morning low in the range traded Friday, I was looking long for a bounce back to resistance, missed the initial bounce, but caught the pullback, and sold at resistance [the Open high's]
This was in essence the reverse set-up from the weekend analysis.
Watched the chop, looking long, thought about it, thought about it…missed it. Almost a carbon copy of Friday…which I also missed.
February 24, 2008
Read the quote first.
It is this basic psychological pitfall that I try to avoid by defining as precisely as possible trades [set-ups] that I will trade, and those that I will avoid.
In essence we have an Entry and two potential exits. The first exit will be for a pre-defined loss at a Stoploss exit. The second exit will be for a profit at a profit target that exits our position.
The MINIMUM entry that I will consider is a 3:1 ratio. I would prefer a ratio in excess of 6:1 [or greater] Thus as an example; The low of the day is $177.33 and current trades are at $178.00 on an analysis basis I feel that price will reach $182.30
My stoploss will be $177.23. Therefore for each 100 shares I risk $77.00 for a potential reward of $430…this trade will be placed with the maximum number of shares that defines my trading capital defined maximum loss. On a daytrading basis, that stands at 0.5%-1.0% which is pretty tight.
This brings us to the important point. Stops are easily defined and are historical fact. Profit targets lie in the future, and are speculative, based on probabilities of your analysis or set-up.
I subscribe to randomness in daytrading, thus all entries are 50/50 at best. How then to define a probability of a profit target being reached?
This is quite a complex question, and all traders will have their own methodology of deciding upon profit targets; previous price levels defined as resistance/support that are measured via trendlines, pivot points, P&F, EMA’s, MA’s, Oscillators, etc.
From William Eckhard;
“One common adage on this subject that is completely wrongheaded is: you can’t go broke taking profits. That’s precisely how many traders do go broke. While amateurs go broke by taking large losses, professionals go broke by taking small profits. The problem in a nutshell is that human nature does not operate to maximize gain but rather to maximize the chance of gain. The desire to maximize the number of winning trades (or minimize the number of losing trades) works against the trader. The success rate of trades is the least important performance statistic and may even be inversely related to performance.”
February 23, 2008
Friday’s rally into the close really pre-empted Monday’s trade and turned a potential easy analysis into a rather difficult one.
Monday will open at an inflection point.
This basically means…anything could happen. Pretty useless information.
Scenario #1…What I expect to happen at the inflection point is this. Momentum from Friday will carry GS and probably the general market higher into late morning, 10.30am-11.00am, where we will then retest the Opening prices.
If the Open holds, prices will then be bullish into the close.
Scenario #2…GS opens very strong, and sells off hard into Friday’s close. Here, one of two things will happen, price will bounce, and trade back to the high’s, or, they will trade down, probably for the rest of the day, possibly to the lows of Friday.
Trade #1…Wait for the pullback, try to enter long.
Trade #2…Sell Short @ or just after Open, cover at *support* and wait to see what happens.
February 22, 2008
Well my analysis [so far] was spot on.
I caught the open, and got short almost at the very top, and covered pretty close to the bottom.
Currently there is chop. Although as I type, there is another attempt at moving higher. I still expect a move up, with a close near the highs, which will probably be the open. But [if] it goes there, it will be without me…I’m finished for the week.
February 22, 2008
For some odd reason, this post is loading below the prior post??
The analysis was accurate from the *Open* into the 10.30am low. This placed me in a strong position for the day and allowed me to basically finish for the day and avoid the chop, which rather than drifting higher, drifted lower.
This had I traded it, would have succeeded in providing me with numerous small losses/profits, more shares traded and most importantly, possibly changing my analysis mid-stream, which as fate had it, possibly could have caught me on the wrong side of an explosive move to the upside.
Had that move not occurred, I would have been possibly quite bullish for a leg-up on Monday, the news pre-empted this analysis, thus a recalibration of the analysis will take place and be posted in due course.
February 22, 2008
Here is my analysis, or expectation for Friday 22
I am looking for a weak opening [with possibly an opening spike that collapses], trading down till circa 10.00am/10.30am and then a choppy trade higher to close near the highs for the day.
The lows for the day should come in the morning, with weakness through the lunch period, this volatility may shake out marginal longs.
While this is what my analysis suggests, I am not married to the plan and will try to adapt accordingly should it go pete tong from the start.
If it plays out, I’ll use slightly larger positions, and if not, smaller positions.
February 22, 2008
I have settled on 1 single stock to trade…GS.
Basically I find it too difficult to follow with any insight any more stocks. I had an abbreviated shortlist, but even that caused problems [XOM, BNI, GLD, WMT]
Entries; combination of a quant algorithm + MACD
Exits; exactly the same, in reverse.
Stoploss; at a significant turning point, high, or low for the day [at that point-in-time] Thus, entries that have run away, tend to be ignored. I will only take an entry pretty close to my stop.
February 21, 2008
Well I had at one point joined the “Virtual Office” on dinosaurtraders blog, but was ignominiously ejected after leaving iBankcoin blog, and becoming blog-less. I have re-applied for inclusion, we shall see the outcome later today.
Therefore I shall simply post results and analysis here.
In a previous post, I had outlined some rules for myself. They have in the space of 1 week already evolved…so the new rules;
*1 stock to be traded exclusively, which is Goldman Sachs [GS] This is due to finding even the abbreviated watchlist just too many stocks. The previous, but now discarded list consisted of; XOM, WMT, BNI, GLD. I am using GS as I swing-trade GS a great deal, and have come to an understanding with the chap’s.
*Modified the “no trades after 12.00pm” rule to allow a little more flexibility. However, it must be said the best opportunities tend [for me] to be in the first half of the trading day.
*Strategy is a modified “OPG” set-up. Modified in the sense that I try to catch the bigger move, not just scalp a few pennies with large size.
*Moderate size 100-500 share positions. If successful, I will increase the size up to 5000 shares if necessary, but incrementally.
Area’s that tend to be problematical. All these areas will receive a grade, either a 1 = pass or 2 = fail
*Patience; the bane of daytraders everywhere, waiting for the correct set-up.
*Flexibility; adjusting to being long or short, not getting stuck in a single direction mindset.
*Trade the pre-defined set-up; self-explanatory really, do not trade on whims, hunches, boredom, etc.
*Discipline; adhering to the above rules.
