Spydertrader's Jack Hershey Equities Journal II
- Thread starter Spydertrader
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While its nice to enter on a pullback, waiting for one to occur often results in a trader missing a substantial initial move. I have found dropping down to a lower timeframe (fractal as Jack would say) often provides the answers you need to make an informed decision. Better to try to anticipate the price break-out from a lateral formation (FTEK). I often take smaller positions when I have less confidence in a move. Although Jack advises using Market Orders, I have often used Limit Orders in fast moving markets in an effort to make sure I don't receive fills with huge slippage involved. However, doing so sometimes results in never receiving a fill at all.
- Spydertrader
Quote from foible:
Been watching FTEK bust up for 10 minutes now. It has run up .25 from when I first thought "I should buy some, but it has gone up *so much*"
You should really have your focus right here. In your own words, you viewed your input parameters, and made a timely decision. Unfortunately, you failed to take appropriate action. No need to investigate additional input parameters or to evaluate additional decision-making algorithms. You passed those hurdles. Work on 'taking timely action' now. IF you don't have a comfort level which allows for appropriate action taking steps, scale back on your size until you arrive at a comfort level.
- Spydertrader
Very insightful, thank you. I hadn't looked at it this way.
I will say that, based on my understanding of the method, I am looking for circumstances where we get a rush of volume into a stock which indicates the beginning of a new trend and a lot of follow-on volume. With FTEK, the biggest scare factor was not the price or %age increase (I've taken many trades with a larger change), but the enormous spike in volume.
It didn't grow smoothly and looked totally out of proportion to what proceeded it. Something similar happened with SMSI yesterday (though it wasn't so abrupt, and had a lot more follow-through).
Looking at the chart, you can see what I mean. It looks like some hotshot just gobbled up a few tens of thousands of shares and then walked away. Jack warned us about this when he talked about looking for large block prints, but this looked like a very similar situation.
What do you think?
(Here's the 15 minute chart to show you what I mean.)
<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=1215868"/>
Of course, I had no way of knowing that volume would die off as dramatically as this. But when volume shoots up to 35% of average daily volume in 20 minutes, especially as it was just in dryup.
I didn't know what was going on, so I stayed away.
Based on your experience over the last few years, is such a runup something that we can expect to see, or is this an aberation?
I didn't know what was going on, so I stayed away.
Based on your experience over the last few years, is such a runup something that we can expect to see, or is this an aberation?
When volume moves very quickly in a very short period of time, followed by next to no continuing volume to support the initial price move, experience tells me to expect a nice sized pullback.
- Spydertrader
Edit: Draw a line midway through the opening bar (30 min chart), and monitor what happens to price as it approaches (if it does) this area.
Is there a tool in Qcharts that will calulate the 50% retrace? I recall icarus618 always having the 50% marked out in his Esigal charts.
Thanks, just what I was looking for.
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