I took this trade because it is a pullback on the monthly chart and appears to be a reversal of an intermediate term bear trend on the weekly chart. The pullback on the monthly chart looks bullish to me because of the lack of downward momentum, the presence of two bull bars and the tails on several of the bear bars. In addition, the pullback has landed on my 40 EMA, which acts as a dynamic support level for pullbacks in my trading system. On the weekly chart, the stock broke out of a trading range that lasted from August 2015 until January this year. The breakout from the trading range was not strong and formed a downward wedging pattern from the October lows until the lows of last week. In addition, the lows of last week touched the highs of the 10/17/2014 price bar which is where many traders would have gone long (assuming their using that useless squiggly 40 EMA again). This price level was rejected and a strong pinbar was formed last week. I think that a lot of traders went short on the breakout of the trading range especially since they got a second chance with the 2/5/2016 bear bar. Prices should rise as they cover.
The student is ready
- Thread starter 2_bits
- Start date
2_B
I don't second guess another trader - ever - its a respect thing
Just posting up some context
Green line - the PT
Red line - the SL
Rose colored lines - one (the bigger) range
Yellow lines - another (near term) range
Box - yet another (near term) range
And of course the LT Blue DMTL (Down Move Trend Line)
Note - I don't think in terms of trend.., rather moves..., which is why I call it the DMTL.., and not a - down trend line
Other notes
Although not noted - the overall is downward biased at this point
Except for your PT and SL - I removed the prices - so as not to sway you
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This context is not my opinion..., nor is it my interpretation of what price is saying
It is verbatim what price is saying
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Typically I don't do this..., but based on your below remarks - I felt I should give you something to sink your teeth into
This is your trade - manage the damn thing (iow follow your plan to fruition)
From this point on..., I will not comment on it..., win or lose
Because as I said - I respect my colleagues..., and will never second guess any of em
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Finally,
Not looking for you opinion about my post
Opinions do not matter..., only actions and results
Respectfully said of course Sir
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Here's the landscape as of EOD Feb 16th
RN
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Oh I had plenty of thrills over the last 10 years trading. That is definitely what I am not looking for now however.
I started my trading career off in the year 2000 when I got my first bonus check at work. Some of the older guys I respected at work suggested I invest it in mutual funds. Thinking this was a sound idea I spent a good deal of time researching the various funds and then chose two different funds. They had names like Technology Value and Technology Growth. Well I held on to those investments for 5 years during which time they depreciated by a factor of 100!
About 3 years into this I gave up on relying on other people managing my money and started to do some research into how to manage it myself. I found "How To Make Money In Stocks: A Winning System In Good Times Or Bad" by William O'neil on my brother's bookshelf in 2003 and read and reread the book and some associated books. I also subscribed to IBD. That year I thought I found my niche. Based on my research I came to the belief that the core edge to the method was not the fundamentals but rather the technical cup and handle price pattern. You want to by right when that handle breaks out. Plus I found that the cheap stocks under $5 formed the best patterns and had the most powerful breakouts. In addition, those stocks that were less liquid had much more obvious volume signs to indicate whether and when the breakout would be successful.
I ran my small account up over next few years and then my account became too big for the volume in these cheap illiquid stocks and I started affecting the stock price. But by win rate had been so good that I became lax on using the method's recommended stop loss order.
About that time I discovered the futures market. Over the period of about 6 months I was wildly successful. Early in September 2007 I bought the multi-month gold breakout with a lot of leverage. Later I compounded my gold wins with a bunch of other commodity trades like sugar, coffee and palladium. No stops and lots of leverage. Everything I touched went in the direction I wanted. So I just kept adding more and more leverage to a ridiculous degree. I remember putting on a short limit order in the S&P Emini before the open on one Sunday night early on in the 2008 bear market with as much leverage as my broker would let me. The market gapped up hit my limit and turned right back down. In a few hours I had made as much as I made the year before at my full time job. Needless to say I didn't sleep a wink that night. But I was on my way to an early retirement....
However, not long before that S&P Emini trade, the losing streak had already begun. Although I had enough common sense to start adding stop loss orders, I would set them too tightly and continued using massive leverage. As the losing streak accelerated, I began to get more and more timid and instead of adjusting the leverage down and giving the trade more room to breathe I would exit the trade shortly after I entered.
During the losing streak I began to study all manner of technical analysis and and bought a number of systems and programmed several of my own. But it was too late. A year later damage had been done to both my account and my psychology. While I continued trading sporadically over the next five years, my account basically broke even. I also spent countless hours studying different trading methods, but I just couldn't seem to make any of them work.
Over the past year I've spent considerable time just studying price charts themselves and doing a lot of paper trading. I am now more confident in my technical ability. I've also come to see that a large part of my failure as a trader is due to poor psychology. This is why I developed a structured trading plan and I'm hoping that this journal will help me stick to it.
Thank you for your insights RN. I value and will carefully consider them.
I started in stocks in 1978, and did very well, some of listening to older gentleman at brokerage I hung out and charting I was doing, Listened to what fundamentals had to have as in increasing Revenue, decreasing debt, stable net, increasing dividends and higher lows for uptrend, guys said the highs were of little value and based on happiness or emotions of over paying. Then had thought futures should be the same and lost, lost lost, lost, not the same at all, and day trading is like a year and half of charting in one day, and I have often thought one huge reason many do poorly, your speed has to increase to one and half years quicker to responding as to doing monthly bars.
2_bits, you mentioned you using 40EMA on monthly or weekly? I try to use what most usually use like 200sma on dailies which is 40 sma on weeklies, I don't use ma on monthly other than close beyond pivots for trend. I think William O'Neil was/is very good way to trade, and still is. One of my favorite stock trade is waiting for closure of gap on dailies and on ten minutes before close that is above the gap's low, to sell short risking 1 to 1.5% value of stock but not less than .25 cents. It is like staying in two days and trying to get a half to a buck or 2 week credit spreads on options. Usually so many are happy the gap was filled, so to me happiness runs out for couple days of going other way.
RN, what is PT mean? Yea trend is sort of arbitrary in longer term trading. I look at moving averages more in ideas of how far or how much distance between price and something else, could be price again of recent of 2 hours ago, so more of comparisons of right now as compared to so much time ago and what an indicator is doing. You watch price so many hours and how moving ave should respond and when it doesn't respond as it should, that becomes interesting. Trendlines are so much fun, or more like trend line failures, price breaks out and all the newbs jumping in and of course late, then market pulled back to nab newbs tight stops of they went to breakeven stops already, and I am just waiting for price to come back to trendline again and get in.
2_bits, you mentioned you using 40EMA on monthly or weekly? I try to use what most usually use like 200sma on dailies which is 40 sma on weeklies, I don't use ma on monthly other than close beyond pivots for trend. I think William O'Neil was/is very good way to trade, and still is. One of my favorite stock trade is waiting for closure of gap on dailies and on ten minutes before close that is above the gap's low, to sell short risking 1 to 1.5% value of stock but not less than .25 cents. It is like staying in two days and trying to get a half to a buck or 2 week credit spreads on options. Usually so many are happy the gap was filled, so to me happiness runs out for couple days of going other way.
RN, what is PT mean? Yea trend is sort of arbitrary in longer term trading. I look at moving averages more in ideas of how far or how much distance between price and something else, could be price again of recent of 2 hours ago, so more of comparisons of right now as compared to so much time ago and what an indicator is doing. You watch price so many hours and how moving ave should respond and when it doesn't respond as it should, that becomes interesting. Trendlines are so much fun, or more like trend line failures, price breaks out and all the newbs jumping in and of course late, then market pulled back to nab newbs tight stops of they went to breakeven stops already, and I am just waiting for price to come back to trendline again and get in.
Attachments
Hopefully the readers of your journal will give you tips on how to specifically manage/resolve the poor psychology instead of trying to change your trade method.
The reason/reasons for your poor psychology...was it trading related or related to issues outside of trading such as something in your personal life ?
What have you done to resolve the poor psychology considering trade journals rarely help traders resolve psychological problems mainly do to the fact that psychological problems are not trading related and readers usually have no knowledge of issues in your personal life that sabotages your trading ?
I say the above because you've been at this without success for too long and the odds that your problems are trading related are very low.
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Trading is one of those endeavors where one can say they have psych issues.., and no one bats an eye
We've either had them (and resolved)..., are having them (working to resolve)..., or will have them (still way early in our journey)
Or...
Didn't resolve them and failed
Not acknowledging them and struggling
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Need a tool to help work through the crap - say so
RN
Yea that cattle prod still works, just make sure the girlfriend didn't put catnip in it as the cat usually comes in for naps, otherwise you have the dumbass face all day like you waiting for Redneck new model Saturn all morning.
Often times subconscious knows you don't have a well tested and profitable system and the brain says let's mess with him/her bad till they have a better and well stat system, so many don't take the extra step and keep good stats.
I'll use your advice too if you don't mind...