Bullverines 2 week trial Journal and PA discussion

[NoDoji]

Quote from Bullverine:

1) My interpretation of what is happening might be completely wrong. See point one on the chart screenshot with what I perceived as a possible double bottom and point 3 with what I interpreted as a small pullback that never came.

2) Point 2 on my chart: I read that move correctly, but I was not certain how to set a profit target for that small move given no clear Support or trend line.

You use a longer time frame than I do, but here's my take on it:

1) The double bottom was very inviting, but you have a conflicting signal of the lower high. This means you don't have an "A" setup, where the stars are all aligned. You had a stop, hopefully near that support if breached, which limited your loss. That's what's most important. That big bear bar is almost as decisive as the big bull bar earlier, so price would need to break through previous resistance on decent volume to give you more of an "A" setup. Consider placing a double stop at a breach of double-bottom support, so you're stopped out of the losing trade and at the same time entered into the direction of price momentum.

2) Very nice entry setup, which I give an "A" because of the confluence: a) decisive pullback from a lower high in a downtrend, b) there have been 2 pushes down from the high; the first was the test of support, and the second was the secondary double bottom just before 11:00. Most trends have at least 3 pushes before reversing, so you're about to catch the 3rd push and your trend line is definitely a good way to target the move.

3) This is the setup that used to eat my profits later in the day. It looks so inviting because you have a shooting star at the top of a strong move. It took me a long time to pinpoint what was going wrong when I traded this setup.

It's this: You've already had 3 pushes down and instead of price leaving yet another lower high in the downtrend, price breaks through previous resistance. This is your first sign that a reversal may be coming. At this point you either wait for a higher low to go long, or wait for a failed test of the next resistance level to continue trading to the short side. That little hammer right after the shooting star is a decent long signal for the test of next resistance, because it leaves the higher low confirming the reversal of the previous trend.

Just before noon, price pulls back before testing that next resistance level. This is an alert that the reversal to the long side is not very strong. This is also the time of day that I don't trade, so for me, I'm done unless I get true confirmation of a move one way or the other. If you want, switch to a smaller time frame and scalp moves in the range.

How did it all turn out?

 

[Bullverine]

Quote from NoDoji:

You use a longer time frame than I do, but here's my take on it:

1) The double bottom was very inviting, but you have a conflicting signal of the lower high. This means you don't have an "A" setup, where the stars are all aligned. You had a stop, hopefully near that support if breached, which limited your loss. That's what's most important.

You've already had 3 pushes down and instead of price leaving yet another lower high in the downtrend, price breaks through previous resistance. This is your first sign that a reversal may be coming. At this point you either wait for a higher low to go long, or wait for a failed test of the next resistance level to continue trading to the short side. That little hammer right after the shooting star is a decent long signal for the test of next resistance, because it leaves the higher low confirming the reversal of the previous trend.

Thank you for sharing your opinion NoD. I did not see the lower high that was conflicting with the double bottom in my first set-up, nor did I notice that the little hammer at my set up 3)* was above the earlier resistance at my set up 2)* ..... but I am grateful that you brought this to my attention. I know more today then I knew yesterday and that's the most important thing for me right now

Regarding using the shorter time frame: I currently use the 5-min frame because I have noticed its commonly suggested by many other traders (even Al Brooks!). I don't want to get into a habit of being a scalper and would like to capture bigger inter day moves. I have been playing with the 3-min chart a bit and the issue I am having (I am sure its somewhat common) is the conflicting messages that the 3min chart and the 5min chart produce. I know that very often 3min and 5 min tell the same story, but so far I have encountered a few situation were that was not the case. Do you have any suggestions on this matter?

 

[NoDoji]

Quote from Bullverine:

Thank you for sharing your opinion NoD. I did not see the lower high that was conflicting with the double bottom in my first set-up, nor did I notice that the little hammer at my set up 3)* was above the earlier resistance at my set up 2)* ..... but I am grateful that you brought this to my attention. I know more today then I knew yesterday and that's the most important thing for me right now

Regarding using the shorter time frame: I currently use the 5-min frame because I have noticed its commonly suggested by many other traders (even Al Brooks!). I don't want to get into a habit of being a scalper and would like to capture bigger inter day moves. I have been playing with the 3-min chart a bit and the issue I am having (I am sure its somewhat common) is the conflicting messages that the 3min chart and the 5min chart produce. I know that very often 3min and 5 min tell the same story, but so far I have encountered a few situation were that was not the case. Do you have any suggestions on this matter?

You're welcome. I use a 5-min for futures and 3-min for stocks, but it's very close to the 5-min and later in the day I often switch stocks to 5-min, too, so really whatever I said would've likely been nearly the same.

 

[Bullverine]

Day 3: (please see the attached chart)

BBY was not doing a thing today, so I focused on RIMM. Went long on the "1)" set-up on my chart. It worked out for me, but the decision was not properly justified and I should have waited for a better confirm which followed later. Set-up "2)" was kinda easy, I entered thinking it was a small reversal before the next leg down, but actually caught a bigger move up that broke through the resistance of the first big red bar and stalled at the second. On set-up "3)" I joined a nice and easy downtrend and as I noticed later when the day was finished that last downtrend actually formed the second shoulder of a perfect head-and-shoulders pattern that was clearly visible on the 2-day chart.

Could someone please shed some light for me on the bar marked "4)" ??
It looks like it was some last minute buying before the earnings report and judging from the bar it ran through alot of short-stops, but this bar was SO quick and if I look at this chart in a line format instead of candles that bar is not indicated there. I would appreciate if someone could help me understand what that bar meant. Did it actually impact anybody? Did it run the stops? There was no reversal caused by the stops being triggered and no spike on the line chart.

 

[NoDoji]

Quote from Bullverine:

[BCould someone please shed some light for me on the bar marked "4)" ??
[/B]

Nice trading!

That spike was most likely a latent print. I sometimes get those, too. A latent print shows up on the level 2 and causes a spike on the chart, but in actuality, no stops are triggered because it's not an actual real-time price move.

I'm just assuming this, since you were watching the chart in real time didn't see a strong run of buying and then selling to form that spike.

 

[Bullverine]

Quote from NoDoji:

Nice trading!

That spike was most likely a latent print. I sometimes get those, too. A latent print shows up on the level 2 and causes a spike on the chart, but in actuality, no stops are triggered because it's not an actual real-time price move.

I'm just assuming this, since you were watching the chart in real time didn't see a strong run of buying and then selling to form that spike.

.

You are right, the chart looks as if that spike did not happen, no expected impact is visible. Odd ... My L2 lingo sucks, i dont know what a latent print is

 

[NoDoji]

Quote from Bullverine:

.

You are right, the chart looks as if that spike did not happen, no expected impact is visible. Odd ... My L2 lingo sucks, i dont know what a latent print is

It's when a print from an earlier transaction suddenly hits the tape later, causing a spike up or down on the chart. I'm simply repeating what someone told me once. Sounds plausible enough and since I've been in trades where it's happened and no stops are triggered, I know it's not real price action.

 

[Bullverine]

Day 4: (please see chart attached)

Was trading RIMM today. RIMM got unrightfully punished for its earning, but I know better then to trade on what I think is right or wrong. There was a strong reversal signal in the beginning of the day and then the stock trended down for the rest of the day. Trending down was a common pattern with all the stocks that I was watching today, even though the market ended in the green.

 

[NoDoji]

Quote from Bullverine:

Day 4: (please see chart attached)

Was trading RIMM today. RIMM got unrightfully punished for its earning, but I know better then to trade on what I think is right or wrong. There was a strong reversal signal in the beginning of the day and then the stock trended down for the rest of the day. Trending down was a common pattern with all the stocks that I was watching today, even though the market ended in the green.

Nice trade, and wise use of stops!

I shorted POT after the 10am news. I actually had a long bias because it opened gap up despite MOS gap down, but it turned out to be a gap-n-crap off the open, so I quickly switched sides (we traders are such traitors).

I almost took profit on the first little pivot that appeared to be making a higher low, but I remembered Velez' saying "If it makes a lower high, chances are it will make a lower low", and I moved my stop just above the previous bar's high, which kept me in a winner for an additional 80+ ticks.

 

[Bullverine]

Nothing like a timely switch to make you feel in "control" again .... Good Job.

What was your long bias based on? From the one month chart it looks like the stock is in downtrend and if you look at all the days for the past week you can see the same "small gap up in the morning and trend down" scenario.