Trading Dummies

[KevinK]

Some of the charts I mentioned...Midday.

PDLI

http://img50.imageshack.us/img50/6564/pdli4pz.jpg

BRL

http://img277.imageshack.us/img277/4589/brl8st.jpg

Hope these help.

 

[Babak]

I was watching AVID because it was mentioned in Barron's (could go to $60!!). Very predictably it got a nice pop.

See attached 15 min. chart below. The stock wasn't able to put in any sort of follow through. A 'dummies' entry - as shown by green line - would have resulted in either a small loss or a scratch (grey box). IOW a -1R

TraderMike has a rule where he stands pat until 10:15 am. TM's method would have taken the blue line as entry - when the high of the previous candle was taken out (green circles). Note that TM (as well as CM) use and recommend 30 min. charts whereas I'm showing 15 min. charts. That would probably be another way to sidestep a lot of whipsaws.

In the end, whipsaws are part of the game. You can only do so much to protect yourself against them until it becomes counter productive.

 

[Babak]

In case imageshack zonks out:

 

[Babak]

.

 

[mseneadza]

Quote from Babak:

TraderMike has a rule where he stands pat until 10:15 am. TM's method would have taken the blue line as entry - when the high of the previous candle was taken out (green circles). Note that TM (as well as CM) use and recommend 30 min. charts whereas I'm showing 15 min. charts. That would probably be another way to sidestep a lot of whipsaws.

[/B]

CM mainly uses 30 min candles. I'm a renegade -- I use 15 min candles exclusively. The 30 minute candles are too slow for me.

Mike

 

[Babak]

Here's the PDLI chart:

1) The signal was the formation of the fourth bar as an inside bar with the entry being a buy stop above this candle's high.

That resulted in a scratch (if nimble) or more likely a -1R loss as the stop loss was triggered. Look at the red box in the chart.

2) You could have continued to monitor it once whipsawed and biding your time been rewarded with the 8th candle (an NR7). This second entry would have given a sweet return as the stock pretty much just ran up from there. As well it allowed for a very small R (in terms of $).

The thin red line below most of the candles is the 5 EMA. This was suggested by Kevin as a method of trailing stops (at least initially).

You can use it or another method to trail a stop loss behind when you enter. Just remember that if you're going to reset your stop loss to the 5 EMA it may mean - as in this case - that your R is a bit wider than it would otherwise be (where it to be based on the length of the signal candle).

But hey, if it works for you, that's all that counts.

 

[KevinK]

Quote from Babak:

Here's the PDLI chart:

1) The signal was the formation of the fourth bar as an inside bar with the entry being a buy stop above this candle's high.

That resulted in a scratch (if nimble) or more likely a -1R loss as the stop loss was triggered. Look at the red box in the chart.

2) You could have stuck with it once it whipsawed and biding your time been rewarded with the 8th candle (an NR7). This second entry would have given a sweet return as the stock pretty much just ran up from there. As well it allowed for a very small R (in terms of $).

The thin red line below most of the candles is the 5 EMA. This was suggested by Kevin as a method of trailing stops (at least initially).

You can use it or another method to trail a stop loss behind when you enter. Just remember that if you're going to reset your stop loss to the 5 EMA it may mean - as in this case - that your R is a bit wider than it would otherwise be (where it to be based on the length of the signal candle).

But hey, if it works for you, that's all that counts.

My entrance on PDLI was wrong, and I know that, hindsight sucks.
in terms of the 5 ema stop...I have switched to a more discretionary stop with deep consideration of the 5 ema.

 

[Babak]

Why do you think your entry was wrong? It was textbook 'dummies' (except for being on a 15 min. interval).

 

[F. d'Anconia]

awesome thread guys...

kevin, your entry was correct on PDLI... I had the exact same stop out occur to me today .


Got back in 3x after that and did well with it, in and out.

PS: I can't believe you guys are giving away my bread and butter strategy to the unwashed masses......

 

[KevinK]

Quote from F. d'Anconia:

awesome thread guys...

kevin, your entry was correct on PDLI... I had the exact same stop out occur to me today .


Got back in 3x after that and did well with it, in and out.

PS: I can't believe you guys are giving away my bread and butter strategy to the unwashed masses......

Yeah.

I feel you on your bread and butter strategy but it will still work, I hope .