Spydertrader's Jack Hershey Equities Journal II
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8888broc, RXT, foible, rb922579 and anyone else who profited over the last two days, nicely done. Keep up the great work everyone.
- Spydertrader
- Spydertrader
All in all, a pretty good day damn near all around.
- Spydertrader
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- Spydertrader
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Last night was my first real trade - XING. Did anyone else take it up? LBDU was hit before 10:30am with price/MACD/STO all in acceptable ranges.
XING looked really good to me on the daily and 30 minute charts. My only concern was a 10% gain would put it above the left (upper) trendline. I am only simulating trading and due to my cautious nature would not of taken this trade despite the excellent charts. I've seen enough charts where the upper trendline kills a rally.
I am curious to what SpyderTrader thinks of my analysis.
I am curious to what SpyderTrader thinks of my analysis.
Yup, I was in there with you.
My account size has grown dramatically so that I'm no longer trading with play money. It's playing games with my head. I'm embarassed to admit that I sold my shares just before the end of the day for some piddling %age profit. I think that was a mistake and I'm reviewing my rules again to make sure that I know them, trust them, and can follow them.
Good luck with the trade tomorrow!
JSDA currently sits at the $8.15 USD price point. As such, I haven't yet added JDSA to the Final Universe. Should JDSA make it above $10.00 USD (and maintain all other parameters), I plan to investigate it further at that time.
Please, keep the following in mind. The analysis and recommendation below responds to a very specific situation. I do not intend the recommendation to apply to all scenarios
I understand one's reluctance to enter into a trade when price has already moved so far. However, looking at the particular trade (See Attached XING Daily Chart), it appears that price, not only broke to the upside of a Flat Top Pennant, but also, appears to have broken free of the dominant down channel - possibly forming a Point Two. If we do have the beginnings of a Point Three Formation, then, we will have witnessed today a change in the dominant trend. In addition, $10.63 USD marks the most recent low of the current cycle. As such, price only needs to reach the $12.75 USD price point to complete another 20% run.
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We have all seen rockets blast off only to return back to earth at lightening speed - creating the dreaded False (Failed) Break Out (or FBO). When the system triggers these signals which create some anxiety for the trader, one could tighten up the stop in an effort to alter the risk / reward ratio. Rather than use a Stop Offset or Percentage Stop, find an appropriate location much closer to the entry.
I recommend taking a look at the last time price attempted to break through the upper trendline to see how far down the next bar closed when compared to the previous bar (circled on chart). Following this advice may result in a premature stop out followed by watching price head higher, but until a trader gains confidence in the overall methodology, better to train your mind to correctly anticipate the outcome, rather than, train your mind to fail. In other words, we all need to 'debrief' the trades we take, as well as, the trades we do not in an effort to learn to correctly anticipate what comes next.
As in any rule set, exceptions exist when trading stocks. As long as one chooses to bend (or break) the rules for the right reasons (changing trading environment or context), rather than, for the wrong ones (fear or greed), the trader continues to learn and obtain the experience necessary for success.
I hope you find the above information useful.
- Spydertrader
Thanks for the informative information.
I am following the rules within journal I fairly closely, so by those rules, I should be extending my stop from 2% to 5% from my entry for XING. I know the stop offset method is better, however I do not watch the market the entire day due to time differences.
In the past my trading has been based pretty firmly on a high reward:risk relationship. As long as its high, the % win can be quite small and still everything works out in the long run.
However, looking at the stats when I increase the stop from 2% to 5%, the results doesn't seem particularly sexy:
1. If I were to keep the Stop loss at 2%, selling on open would give me about a 1:1 win, or if the stock moves to $12.75, my reward:risk will then be around 5:1.
Being shaken out too early is a corollary of this tight stop.
2. However if I change the stop to 5%, my ratio declines to 0.5:1 if I sell on open, or 2:1 if I sell at the suggested maximum, $12.75. Not bad, but not terribly great either (although I'll never turn my back on lots of these...
). However, If I get stopped out, I loose an unnecessary 3%.
Now, I try not to look at the dollars, but rather the % win and the Reward:Risk ratio.
I only need a 15% win rate to reach break even at 5:1. If the odds are reduced to 2:1, I need to extract an additional 20% of winners from my trades as break even kicks in at 35%.
It seems I'd be better off leaving the stop at the original 2% - which is now about 4.5% from close or even lift it higher to breakeven. My point being it seems less than optimum to extend the stop to 5% from my original entry. I'd much rather generate $1000 from a $200 risk than a $500 risk. With lots of trades, $1000 returns are not all equal!
I am attempting to meld the Hershey/Spyder methodology in my slow brain, so I apologise if I am laboring this point.....
Do my ramblings make sense to anyone, or does everyone think its moot?
Thoughts?
I am following the rules within journal I fairly closely, so by those rules, I should be extending my stop from 2% to 5% from my entry for XING. I know the stop offset method is better, however I do not watch the market the entire day due to time differences.
In the past my trading has been based pretty firmly on a high reward:risk relationship. As long as its high, the % win can be quite small and still everything works out in the long run.
However, looking at the stats when I increase the stop from 2% to 5%, the results doesn't seem particularly sexy:
1. If I were to keep the Stop loss at 2%, selling on open would give me about a 1:1 win, or if the stock moves to $12.75, my reward:risk will then be around 5:1.
Being shaken out too early is a corollary of this tight stop.2. However if I change the stop to 5%, my ratio declines to 0.5:1 if I sell on open, or 2:1 if I sell at the suggested maximum, $12.75. Not bad, but not terribly great either (although I'll never turn my back on lots of these...
). However, If I get stopped out, I loose an unnecessary 3%. Now, I try not to look at the dollars, but rather the % win and the Reward:Risk ratio.
I only need a 15% win rate to reach break even at 5:1. If the odds are reduced to 2:1, I need to extract an additional 20% of winners from my trades as break even kicks in at 35%.
It seems I'd be better off leaving the stop at the original 2% - which is now about 4.5% from close or even lift it higher to breakeven. My point being it seems less than optimum to extend the stop to 5% from my original entry. I'd much rather generate $1000 from a $200 risk than a $500 risk. With lots of trades, $1000 returns are not all equal!
I am attempting to meld the Hershey/Spyder methodology in my slow brain, so I apologise if I am laboring this point.....
Do my ramblings make sense to anyone, or does everyone think its moot?
Thoughts?
I completely understand your concerns, and following the guidelines described throughout Journal One certainly provide a roadmap to success. However, I feel you may have missed the intent of my previous response. Looking at this specific scenario only: How does one train themselves to take small risks in order to avoid missing the boat? I certainly did not mean to suggest you alter your Risk / Reward Paradigm for all trades you take, nor do I mean to imply you should use the same solution for all future scenarios where it appears the train had already left the station. Rather, I suggest looking at the problem from a different point of view. The last time XING attempted to break out of the channel resulted in an FBO. How does this time differ from the last? How can you insure a wash, yet still maintain a market presence should price continue trending tomorrow? In order to arrive at an appropriate solution you need to train your mind to 'see' things differently.
I hope the above paragraph provided some additional clarity for you.
- Spydertrader
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