I use a discretionary exit for the 2nd half of the trade. My goal for the 2nd half is to "ride the wave" and try to catch 60-70% of any trend that may occur. Break of a trend line and/or an EMA are nice areas to place catastrophic stops; Change in momentum (ie trend indicator rising above zero or bars turning blue); confluence of all the above should prompt an immediate exit. Price action around pivot areas can provide a good "heads-up" of a trend reversal sometimes. ie Double bounce off of a pivot and can indicate price exhaustion.
You have 4 weeks when you didn't trade. Unless you didn't trade because there was no signal (I think you were on vacation), they should not be included in the stats, because it skews the results. Without those 4 weeks you are app. on your way to the 3% per week... Good job!
Good question. IMO, there are two types of traders--scalpers and trend followers. Scalpers make small gains using a system that produces high winning pct and small profits. Trend traders make gains using systems that produce small losses/large gains and typically have a low winning pct. My background is swing/position trading--ie trend following. So, my confidence to hold on to the 2nd half of a trade probably comes from that experience. What gives me confidence? Triple screening technical analysis helps identify short-term, intermediate term, and long-term trends. Confluence between the three can indicate strong momentum/trend. I also use a few indicators to help read market conditions: * A simple method is to track the four major indexes; the Dow Industrial 30 stocks; and a few key sectors (ie Utilities, transportation, semis, banking/brokerages). if these items are making significant moves in the same direction (ie > .5-1%) then it usually indicates a trend is in place. * the ratio of Advance/Declining stocks and volume are also good tools. Again, confluence between these two can indicate a trend is in place. Both scalping and trend following have their pros and cons. Both present different challenges psychologically. I'm new to intra-day trading so I'm trying to use a "hybrid" system that locks in some profits via scalping the first 1/2 and then use the 2nd half to catch trends. It's not the best strategy, but, it's helping me get through the learning curve. Sorry for the lengthy reply. I hope this was useful. Good baseball game tonight BTW--I'm from the midwest so I'm rooting for the Indians. Go Tribe!
Hey folks, No trades today. I felt like a deer caught in headlights. I saw mixed signals today thus chose to stand on the sidelines. In hindsight, this looked like a good day to trade trendline breaks. But then again everything looks good in hindsight Oh well... For those of you who swing trade stocks, you gotta be happy with AAPL! My wife picked it up when it was consolidating in mid-Sept and has been trailing her stop ever since. It looked like it was up $9 or so after the close. Hope you were all profitable today!
Price opened above the pivot and bounced off of R1. Also, a nice head and shoulders pattern developed. Although A/D and volume started high, notice the steep declines (Yikes!). Probably should have been expected after the booming news on AAPL earnings. Don't really know for sure. Anyways... I did a counter-trend/Gap fill trade today. Waited to see how price reacted around R1. The plan was to go long (on a retracement with the trend) if price broke above R1 or go short if price went into a tail-spin towards the gap. Even though it was counter-trend type trade, yesterday's high was > 10pts from the 30 minute low thus I felt pretty confident scalping the first 1/2 at my target +10. I had absolutely no clue what would happen to the 2nd half of the trade. In summary, I pretty much played the gap today On the higher timeframe charts (60m 240m and daily) it looks like YM and ES are in a retracement heading towards the 60m trendline with the NQ in a trading/Consolidation range. The rest of the week should be interesting.
Ok, I hope everyone grabbed pts today. It was a nice setup for a short. Merrill Grinch's earnings bomb set the tone early and for those of you are in the states, did you really think the housing numbers were going to be good? he he he... Sorry, there are houses in my neighbourhood that have been up for sale over 18mo now. With all that said, price hovered around the pivot until the housing news was released and then down she went. There was an impressive turn-around in the afternoon! I was ready to pull the trigger short after the long consolidation during the lunch hour but it didn't make it to the low of the day. Instead, it closed up for the day! That's one determined bull! I missed the pm opportunity, but, I was content with the am gains. I do hope everyone grabbed some pts today--am or pm.
Two trades today. One after the new housing report and another in the afternoon as I attempted to ride the afternoon wave. Simliar pattern to yesterdays action--down in the am and up in the afternoon. What was interesting today is that there were three 100pt trends that occured today. 1 up; 1 down; and another up; I've heard about how much fun it was trading during the dot-com boom. I'm wondering if today's action was similiar to what happened back then. Feel free to comment if you traded during the dot-com boom. +10, +33 in the am +10, +13 in the pm
Painful post today. I got greedy and arrogant thus promptly chopped up today. Once again, down in the am and up in the pm. Had the right idea in the afternoon but just lacked patience today. Three trades: +10, +6 -19, -19 +10, -13 -25 for the day. Good thing this happened on a friday (ie I have the weekend to forgive and forget what happened today).
Week 19 was very good overall. Friday's debacle cut into profits, but, I still earned 3.8% for the week. I was going to bump up my contracts from 2 to 3 next week, but, I may delay that after Friday's mess. ie Not sure I'm mentally prepared to increase my position size yet. Have a great weekend!
If and when you jump to 3 contracts, how will you adjust your scale-out strategy? Would you still take 1 off at +10, then ride the remaining 2?...or vice-versa...or something different? Keep up the good trading...you're putting up good returns here.