Bullverines 2 week trial Journal and PA discussion

[NoDoji]

Quote from 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.

Yes it's been in a downtrend and quite oversold on the daily, so when it gapped up in pre-market I thought maybe MOS said something in their earnings call that was beneficial to POT, because MOS was down and POT was up. It was actually a decent long once it sold off the open, but my trading plan was to wait until after the econ news, and when I saw the quick selloff the open, I was then looking short again.

 

[Bullverine]

Quote from NoDoji:

Yes it's been in a downtrend and quite oversold on the daily, so when it gapped up in pre-market I thought maybe MOS said something in their earnings call that was beneficial to POT, because MOS was down and POT was up. It was actually a decent long once it sold off the open, but my trading plan was to wait until after the econ news, and when I saw the quick selloff the open, I was then looking short again.

Makes sense... I am not yet experienced enough to go at it from the openenig, my strategy so far is to stay out for the first 15-30 min. You mentioned before that you dont trade certain hours of the day. Are those hours 12-3 and are they dangerous due to low volume?

 

[NoDoji]

Quote from Bullverine:

Makes sense... I am not yet experienced enough to go at it from the openenig, my strategy so far is to stay out for the first 15-30 min. You mentioned before that you dont trade certain hours of the day. Are those hours 12-3 and are they dangerous due to low volume?

I did a very thorough evaluation of my trades over a long period of time and found that trades after 11:30 were either losers or minimally profitable. I added to my rules "no trades after 11:30" and interestingly enough, I don't think I've had a losing day since.

I think during that midday time frame day traders are just playing poker with each other. There's no volume. Trends take a breather and pull back, ranges narrow down to a few ticks, you see a lot of tiny false breaks out of ranges, basically running buy and sell stops of breakout traders. I've never seen more setups that work well in the opening 2 hours do just the opposite midday.

The last hour the professional money managers are back to do their buying and selling, volume picks up and price generally has a decent move.

I've been evaluating some end of day trading strategies, because I'm leaving money on the table not trading the close.

 

[Bullverine]

Day 5 (please see the attached chart):


Was trading RIMM today. It was in uneventful down trend for the second half of the day . For the first half it had a violent spike up followed by a retracement. Still I have managed to go long initially thinking the was a HH forming, but it was a mixed single made out of HH and twin top candle

 

[mdl060374]

I like this journal so far. I like the fact you come here for ideas, but bring actual examples of your trades. This will help you, me, and others learn more.

First of all, you seem to be on the right track... here is why:

1) lack of indicators. this alone puts you ahead of many. (indicators can be used in filters however to alert you of potential situations, etc) when scanning for stocks.. but for scanning stocks only..

2) staying away from open (for now. )very wise.. build confidence by doinbg what you are doing.

3) studying price action.. There is another older thread here that discusses this that is excellent. its a long thread by anekdoten.


my .02:

In my opinion, there is no better published book in existence on TA/PA than the one written by suri dudella. most of the books are crap out there, this one isnt.. Also.. Victor Sperandeo is good so look up his patterns.. (hint: Suri uses 2 of victors patterns for reverslas.. ther 1-2-3 and the 2B." I love these..

4) focusing on basics... S/R, channels, triangles, and failures of each will help. (more on this later.

5) examine 2 (or) 3 diff time frames. setups on longer time frames for macro picture, smaller for entry... watch how price behaves in relation to s/r on larget timeframe setups..... this helps give a feel on things..
---------------------------------------------------------------------------------
warnings (at least in my opinion):

1)time frame trap. Whatever you do, dont fall into the trap of trying to switch from 3 to 5 to 10 back to 3 then 7 minute time frame bars... What looks great on a 2 minute looks horrible on a 10 minute, etc for example..
there is no perfect time frame.. use sensible risk reward and strategy to keep losses small and scale out of winners... even with 50% win/loss, that should keep you flat or even after commsiions at worst.

I personally dont like minute bars intraday. Price doesnt trade according to minutes, therefore the formations arent as accurate as volume based charts...

however volumebased charts are more system hogs due to more data being processed, and, if you switch symbol to symbol, it takes along time to load.. but if you are looking at a few stocks each day, and know what they are, you can preload them b/4 mkt opens.....

also, volume based charts "speed up" in creation, and "slow down" depending on how active volume is being traded, so they have more of a feel to them..
(this is just my opinion. you can look into this later, just food for thought.)

2) also, personally I dont put much stock in candlestick formations. Thats just me. If you can make them work for you, go for it. But I have heard using them on short time frames offers no advantage.. Thats what alot of people say, but take it with a grain of salt...

my advice would be to focus more on setups like double bottom/top, h&S, inverted H&S, dragon pattern, flags, and channels.. AND THEIR FAILURES.... alot of teh time, first move is a fakeout, and it reverses direction... this happens alot on double bottoms/tops, and h&s..... draw an accurate neckline, and let price bounce accordingly... OFTEN FAILURES TO CONTINUE offer BIGGER moves the opposite side.


3) dont initiate a trade from 11:30-1:00. Stay away from "chop suey" as some say. alot of stocks just aimlessly moving without any real conviction.

(And for stocks you trade that had a strong open, and pulledback
somewhat, look for a possibly continuation... vice versa for shorts)

also, one thing I was and still am guilty of is trying to watch/trade too many things at once... start with a few setups on a few well liked stocks, and go from there....

I will go back and break down your trades in a bit...

looking forward to this thread.. dont be distracted by any morons that shit it up..

 

[Bullverine]

mdl060374, thank you for your response. I am glad to hear that you agree with my decision to stay away from indicators, I have noticed that its a common suggestion and decided to follow it. Also I see immense value in studying PA, it seems that with the understanding of PA I will be able to trade anything. Unfortunately, I was not able to find the thread that you are referring to by anekdoeten. There are so many out there.

As far as your .02 cents:

5) I try to use multiple time frames. I am most comfortable with the 5-min charts, I switch to 3 min-chart to micro-manage entrance/exit and I use 2 day, 1 week, 3 month, 6 month chart to get an idea of what the macro picture looks like and where major S&R is. Interestingly enough I got burned by trying to trade major resistance today on ETR stock. I will post a chart later today.

As far as volume goes, I don't find volume useful for anything else other then predicting if the stock will be slowly trending or spiking and if there is enough liquidity (but thats an afterthought since I trade tinny share amount). I have read some interesting volume discussions (here's one I like:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=134773&perpage=6&pagenumber=1), but did not find anything that can help me at my level.

Candlesticks I find very useful. Individually they may not say alot, but in relation to each other they tell a story.

2) I am not sure what H&S is, I am assuming its the same thing as HH, LH, HL, LL. I use them alot with double top/bottom. I have to admit I get caught by fakes from time to time. You are right when you say that I should use accurate necklines to see fakes. For example in case of a double-top, would and accurate neckline be right under the letter U or V formed by the two tops?

I try to use channels, but they tend to look much better once the chart is complete and not during the first 2-3 hours of the day )

So far I have two major issues. First is not waiting for sufficient confirmation (aka not showing enough patience). Second is going against the trend by thinking that the stock had a good enough run instead of joining the trend until a proven reversal is established (this is one is just silly, I cant even justify to myself why I counter trend for no good reason)
:eek:

 

[deaddog]

Quote from Bullverine:

So far I have two major issues. First is not waiting for sufficient confirmation (aka not showing enough patience). Second is going against the trend by thinking that the stock had a good enough run instead of joining the trend until a proven reversal is established (this is one is just silly, I cant even justify to myself why I counter trend for no good reason)
:eek:

Issue #1

Is this because you don't have rules for entry or because you are not folowing your rules?

Issue #2

Better figure this out before you go live: Get a voice recorder and think out loud while you are trading. Listen to yourself while reviewing your trades.

 

[Bullverine]

Quote from deaddog:

Issue #1

Is this because you don't have rules for entry or because you are not folowing your rules?

Issue #2

Better figure this out before you go live: Get a voice recorder and think out loud while you are trading. Listen to yourself while reviewing your trades.

#1

This happens when I am not following my rules. To be exact, sometimes I find myself leaving the sideline when I think something gone up too far or has dropped too much. The key problem here being the " I think" part

#2
I can not believe that this is even an issues, but it is. It seems to me that this issues has roots in the same place as the reason for issue# 1.

 

[NoDoji]

Quote from Bullverine:

#1

This happens when I am not following my rules. To be exact, sometimes I find myself leaving the sideline when I think something gone up too far or has dropped too much. The key problem here being the " I think" part

#2
I can not believe that this is even an issues, but it is. It seems to me that this issues has roots in the same place as the reason for issue# 1.

Something I did in sim that helped me was to trade breakouts, place a buy stop 1 tick above the high of the day (or 1 tick below the low if you're trading a breakout to the downside). Or go long when price is a few ticks from testing the high.

Once you get that "liftoff" feeling a few times, it will resolve your other problem of counter-trend trading without confirmation.

Today I missed the liftoff on NFLX because NFLX wasn't even on my radar at all until I saw it hitting the hi ticker with a huge count. I thought the price was way "too high", but it was obvious that a lot of people thought the price was going higher, or they wouldn't be buying at that level. So I patiently waited for confirmation and only had to wait a few minutes for the test of the high to fail (double top), where I caught a decent 1.19 counter-trend move.

 

[deaddog]

Quote from Bullverine:

#1

The key problem here being the " I think" part

#2
I can not believe that this is even an issues, but it is. It seems to me that this issues has roots in the same place as the reason for issue# 1.

You're afraid of something. Could be missing a move, could be that you feel if you're not doing anything you are not earning your keep.

You are the only one that knows; so it's a fear you have to figure out and face on your own. It's not always obvious. Once you figure out what it is then it's easy to remedy.