I've got my hooks out at 1.0361 for my first lot, I'm looking for a 40 pip profit on the trade. Not sure if I'll get a bite this Sunday evening but I'll play it if no other pair looks better. My Stoch readings are already overbought on the hourly and 4 hour charts and nearing an overbought reading on the daily chart seen below.
Click on the chart to enlarge
Crazy 4 day week, I was down almost 2 R on Tuesday, up 2 R on Wednesday, up a little over 1 R on Thursday, and a scratch day on Friday. Overall with fees I'm down just 1/2 risk unit. I had increased my risk unit last week which was causing me to use more shares then I needed, and I was getting the same type of profits but with higher fees, so I'm back down to a proper risk unit for my overall account size. More on this topic later! Even thou I'm basically had a scratch week, I'm up overall for January which is the first time in two years. I've been really squeezing the downside with my trading which has been an eye opener and has made me profitable. After 4 years of intense study of my method of trading, you're about as good of a trader as your going to be in the short term (in the next 12-24 months), so if you want faster results, it is much easier to stop the down side by taking quicker stops, managing trades better, etc. For example, now when I enter a trade, I will take a stop if I lose 55% of the prior bar even thou I have not technically stopped. Why should I take a full R loss on a trade that should be going in the right direction form the get go! If the trade continues, I just re-enter or go to the next setup. Another key concept is that I zoom down to the 1 or 2 minute charts looking for the next higher pivot to form, then I can move my stop to the next pivot area which hopefully is above my break even point, if it's not, I still move the stop up to this area, my thinking is that It's better again to take a smaller then a 1 risk unit stop if you can. This is what I call squeezing the downside which works but don't fall in to the trap of taking more trades and not waiting for your proper setups, which I think I did a little bit of this on my losing day on Monday.
Another area for improvement is to always play the strongest stock or weakest stock. I have a bad habit of not waiting for these stocks to setup for entry and moving on to some inferior play. These stronger moving, better trending stocks always will give you an entry, but you must be patient and wait. This will lead to greater profits, and a lot less frustration!
In Forex, just another profitable week and I almost have my account back to the levels before my disasters holiday trade. Learning Forex has been my serendipity with trading. Like all successful traders, I found a trading method that I love in Forex, I've been profitable for the last 6 months after only about a 1 1/2 years of practice and my Forex trading is better than my Equity trading even thou I spend all of my time attempting to master my equity trading... Go figure???
On Friday, the Q's opened by gaping over the last 15 minute wide range red bar to the middle of the sideways base to open at 66.89 area then price tested the lows of the base at 66.74 before moving up higher putting in the top at 9:45 am @ 67.19. Then price moved back down to the middle of the sideways consolidation at the 66.75 area where price found major support and consolidated until 1:30 pm where price broke out to the high side and retested the highs of the day but could not break through. By 3:00 pm the Q's started to fade back down into the middle of the base closing at 67.00.
For Monday I'd be looking to play short if we happen to gap up or trade back up to the 67.25 area. If we happen to gap below 66.88 area or if the current 15 minute buy fails in the market, I'd look to play the next 5 minute sell in the market back down to the 66.50 area with a nice lower target area of 66.25 area. If we happen to gap up above the 67.25 area, I'd look to play the first 5 minute buy setup to a target area of 67.70. We currently are in a sideways pattern in the QQQ which means, short the top and buy the bottom until we break out...
Longs:
AIG - Pivot I "Money Bar"
CTSH - Daily buy watch
MOS - Break out continuation
PCAR - Break out continuation
SNDK - Daily buy triggered
Here is the update on my AUDUSD trade, 40 pip profit taken!
It’s Tuesday after MLK day and a bit rougher trading today but not like any other Monday. I should have ended the day up or about even, but I let down my guard down and strayed a bit from my trading plan. I started taking lessor plays again with fewer shares looking to add but all I did was to get into trouble losing just under an R today. I need to continue to trade in full share lots, immediately look for a pivot area on the 1 or 2 minute chart that I can move my stop to in order to continue to squeeze my losses down to under a full R stop. Every play needs to be like this, etc, etc, etc… This could have been a scratch day but instead I lost an R and there was no reason for it, I just made the mistake of attempting to make something happen which is a big mistake when trading. Remember You must be rigid in your rules and flexible in your expectations…
Mark Douglas
PS I’ve also been rating my gaps every morning via my Gap rating system, gappers that are a Tier 2 & 3 I’ve been waiting for the 15 minute buy or sell in the stock with much greater success. My 9:45 wide range bar strategy is one of my favorite methods for finding reliable plays.
After USDCAD rolled over last night without triggering my short, I switched to AUDUSD which looked like it just may set up and it did overnight. I’m in short at 1.0576 looking for 40 pips of profit below at 1.05760. The trade is working out so far and is profitable. Here is the chart from this morning before the equity market opened on Wall Street. Click on chart to enlarge…
audusd
Just throw my hooks out on this trade, limit orders set at .9950 and .9970 areas with a 40 pip take profit areas set as well. I feel I should hook one overnight and both would be better… Here is the chart for my potential trade in USDCAD.
usdcad
I was too tired Thursday to finish my post and Friday my brain was fried so I did not post at all. Friday I ended the day up almost 2 risk units and if my trade in LVS long would have broke to the upside at the end of the day as the market did it I would have had another touch down, but LVS just continued sideways and got wippy! I had one of those text book trades on Thursday that I hesitated taking until I removed the moving averages. Once you see the chart without the moving averages it becomes so clear that you just have to enter the trade this is the key here to mastery, I not wanting to enter the trade was forced into the trade by the perfect pattern. It would have been a crime if I had not taken the trade, I found the trade off my gap up list in the morning and noted it that I wanted to take the 15 minute buy. The trade triggered at 12:30 lunch time and many traders refuse to play lunch, I’m just the opposite in my thinking, if a play sets up like this one, I must enter, the fact is that many 15 minute buys or sells setup during lunch and these can be some of the most reliable trades during the day. I show two charts here of the same play, one with the moving averages and one without, I use a tab chart so I can remove the moving averages with a click of the mouse which allows me another view of this text book 15 minute buy in JNPR.
My next trade was a 15 minute sell setup in CREE that I actually zoomed down to the 5 minute chart and entered just after a wipe out bar. I found CREE on my gap down list this morning triggering the Daily sell in CREE. I was hesitating on the play until the GBI appeared (green bar ignored) on the 5 minute chart. Price moved lower nicely and the play had high hopes of hitting the low of the day, but price could not make it through the 200 ma and I was forced to sell 1/2 of my shares and finally having to exit the entire lot once a 5 minute red bar was taken out by a green bar. Ok trade about 1/2 R gain…
The QQQ gaped over yesterday’s high continuing the uptrend and rallied for the first 5 minutes then, price pulled in for the first 5 minute buy at 9:45 and set the low of the day @ 67.06. The Q’s put in two more buy setups setting the day’s high of 67.48 by 2:15 pm. The Q’s sold off into the close and made a lower low ending the 5 minute uptrend that we have been in all day. Currently the QQQ is at major support and closed at 67.21. My first play was in EBAY which had a nice bullish gap at the open clearing 11 days of resistance overhead. My entry was on a 1 minute pivot, price shot up immediately and I was up an R in a matter of seconds, then I realized that I had purchase too many shares and by the time I attempt to offer some of the shares for sell, price completely collapsed on me. I went from + 1R to -2R in just a matter of seconds. A complete disaster, I hung in their for a while and price did correct itself but it looked like it was never going back to my entry price. Once price caught itself under the 20 ma and formed a small doji style bar on the 1 minute chart, I thought it would be a good time to exit, so I did with just a 1 R loss. It’s been a long time since this has happened to me, experience has taught me that when disaster strikes, be a bit patient before exiting your trade, price just might recover and allow for a safe exit. Here is the chart on my disaster play in EBAY this morning…
