Quote from macattack:
Do you enter trades after a specific bar acts as a confirmation or do you enter trades in general areas?
For instance a stock in an uptrend pulls back to it's MA and hovers there. Would you buy it in that area, or do you wait for a strong green bar to appear before buying?
In your example, I watch for price action first at the 10-bar MA. If buyers come in, I'd join them with my stop below that entry bar. If stopped out and price moves to the 20-bar MA and buyers come in, I'd join them again, with my stop below that entry bar. If stopped out again, that means the 20 was broken and I would watch for a lower high at that point because the trend isn't strong enough to hold up well.
When watching for price action at the 10- and 20MA on my 3-min chart, I'm also watching the 1-min chart. This is where I see the first buyers come in and the stochastics at that point should be oversold on the 1-min. Once the fast stoch line pivots from oversold as buyers come in, I'm quick to enter. Vice versa for shorting in a down trend.
I was also curious where you put your stops. Are you so precise that you can put them 1 tick below the bar you enter on, or do you put them below important pivots, support, resistance levels?
I'm having a helluva time with stops. I try just below my entry bar and get stopped out, re-enter, stopped out, re-enter...............now even if I was right about the direction I'm well in the hole for nothing.
I try wider stops and they seem to get hit too. I try no stops and that's a really bad thing for me. Very frustrating game sometimes. [/QUOTE]
Stops have been my nemesis, but they are now my best friend. If you try the strategy I just outlined above, you can usually place a stop just below/above the entry bar. If the price action's been whippy, then you may want to place the stop just outside previous support or resistance. Wider stops are needed if you choose to enter a trade early or if you chase a late entry.
I get very frustrated when whippy action keeps stopping me out, but if the setup's still intact I will continue to pound the entry until it sticks or the setup is voided by major opposing price action.
My biggest problem has been moving stops to break even too soon, getting stopped out, then watching the trade move very nicely without me.
I now wait until a significant move into the green has occurred before moving my stop to b/e.
I then use the 1-min chart with the 3-min chart to guide my exit at a target zone. If price is moving with more momentum than I expected I will tighten the stop at my initial target, then trail a limit further on. It's always nicest to get your limit order hit than to be stopped out, but sometimes the tighter stop near my target zone works very well to get me out close to the reversal.
Because of the way I trade, I would not trade without a hard stop. It keeps me honest and protects at least a little bit against insane rogue price moves.
My biggest rule, and I am pleased to have honored it for a long time now, is ONLY move stops in my favor.
stick to your guns! i've heard POT is an amazing daytrading stock
