CHKP was the trade of the day for day traders today. Please explain your thought process in buying way up at 59.90 rather than the clean setup at 58. CHKP ran 2 points from 58 to 60. The pullback will be greater than 10 cents 95% of the time. Watch for bounces to occur at quarter levels. After a 2 point move, you could expect CHKP to pull back at least / up to 50 cents, which is exactly what it did. It traded up to 60, pulled back to 59.50, and not a cent lower. I was not there, but I'm confident the level 2 probably showed clear support down there. It was only able to touch once I believe. Buy the 59.60s, stop at 49 or 48 cents. Trades in. Target A = 60, Target B = 60.25 You gotta ditch this order flow momentum crap. It doesn't work. You never chase. When you do this, you have no defined risk, no plan. Prices to not move in clean lines, they often move up / down in 10 - 15 cent spreads. Sure there are bids and offers only a penny away from each other, but the REAL spread is always larger. You will get stopped out over 70% of the time if you randomly buy momentum. You need levels to work off. You want to wait for levels where you have defined risk. You want to detect points for selling is ending, and buying will begin. Where do other traders see relative value? Where will other traders bail from their positions? Scalping order flow is for computer algorithms imo, not humans. You make a living by getting 50 cent - 2 point moves, not 8 cents. Use support and resistance. Ditch the SPY BS unless you are able to read the market's tape for that day. I only jump in SPY or SDS when I KNOW the market has real upside or downside. ---------------------------- In CHKP, if you waited, you would have seen it pulled back, found support, began making higher lows. If you wanted that trade, it was there. The better buy was down as it broke 58. You had a tight midday range, when it broke up on volume, you're in, and you have a defined stop. You always hold past initial congestion unless something ridiculous happens. The pullback was miniscule = bullish as all hell.
I think the reason you are having a hard time making these momentum plays that people in your office are nailing is because you don't have a clearly defined approach yet. Increasing size before profitability is a bad idea. Trust me. Been there done that. Your goal should be to define your approach, get experience, and increase size after you are consistantly making money and sticking to your trading plan. You are getting some mixed advice on this thread which isn't suprising because there are many approaches that work. You need to pick one and focus. Either focus on one product (like IWM) or focus on one type of entry and scan stocks for that entry. Don't try and do both, at least not yet. If you do pick one there are people that have posted in this thread that can help you with either approach.
Thanks everyone...as you can see by the varying and conflicting advice that I am getting from many on this board, trading is not an easy endeavor. Everyone trades differently, in the end it is about finding value and executing. I will follow my instinct and what the market is telling me and trade the IWM on its own, using PA and volume as I have been doing with the SPY etc. Proper reading of market action and execution, simple just takes alot of work.
Hey, Been looking at Al brooks forum as of late as well. What do you think about some of the trades I put on in the IWM and SPY? The third trade didn't look the best in hindsight. I should have been thinking long, looking back as we had broken above the prior R and TL on good vol and were pulling back. Any opinion
I agree you should have been looking long on that 3rd trade. In my attached chart I drew trendlines on today and yesterday in the SPY. Yesterday two down trendlines were broken which is a cue to look long. Notice that we were then able to draw a bullish trendline. If this trendline holds, we have a reversal to the upside. If it is broken, then that is a confirmed trend continuation pattern to the downside. Once those first two trendlines are broken, I wouldn't take any more shorts until the downtrend is broken. Today, the same thing happened, but with a different outcome. We opened to the upside, and the uptrendline was broken. We were then able to create a downtrendline. When this was broken, this was our cue that we had a chance of seeing the bull trend resume. The bull trendline we were able to draw held, and eventually led to a breakout and rally to the close. This sequence helps me monitor trends on the hard right edge: 1. a trend 2. trend is in play until a trendline is broken (trade pullbacks) 3. when trend is broken, look for a trendline break to resume trend (flags, triangles etc) 4. If support or resistance is taken out, then we just might have a reversal. All trends end, and most of the time there are clues. They are trendline breaks, and excessively deep pullbacks.
Here is a better breakdown of the sequence, with a closer view of yesterdays reversal. 1st trendline is steep, but there isn't much to draw it off of. On a 1 minute chart that trendline would probably look fine. Trendline is broken, and we are able to draw a flag. Flag is broken, and price makes new low. Trend is still in play. We can draw a 2nd bear trendline now. It is broken, and the subsequent flag again leads to new lows. We now can draw the 3rd bear trendline. When it is broken we get another flag. I see two ways to draw it. One of them was broken but didn't lead to new lows. The 2nd one ended up happening to function as support, although that isn't something I really look for. Notice that this also creates a larger triangle which could be a larger continuation pattern. It ends up breaking to the upside and leading to a small rally to close the day. I personally find the sequence of trends, flags, triangles etc to be very logical and useful in real time. It helps me to give some structure to the markets.
This is good advice. Don't trade for small moves... you're churning your account. Stop trading the IWM or any other index ETF. Trading the Russells or any leading indicator is usually a losing strategy. You have little edge trading the market, especially without much experience. Lastly, trade the stock that is in play as the above poster mentioned. Use volume filters. Scan the market in the pre-market to search for any unusual activity. It's earnings season and you can try trading sister stocks of major companies that report. Although there is a lot of randomness on earnings plays at least you will follow the stocks are moving. Baggerlord I'm sorry but that stuff with all those lines doesn't work... always easier to post something in hindsight lol
Al Brooks and his technical analysis nonsense is ridiculous. I don't know how his book has decent Amazon.com reviews. Seriously his techniques are so confusing so that their isn't any real strategy... just churning your account for penny moves.
I will be taking a break from this log for a little bit...probably the next week or so. Seems like it is bringing more clutter than necessary to my brain LOL. Will continue working and come back to this thread. Thank you for all your suggestions, especially the above poster. Also IMO PA is PA and Vol is vol... there's the edge? Look at people such as NoDoji on this board. She makes consistent money in the CL/ES etc with PA and vol...different strokes different folks! _______ Al brooks may over complicate his stuff, but it is pretty simple if you break it down. Buy/sell shallow pullbacks in strong trends/momentum/breakouts. Buy/sell longer pullbacks with confirming pa in trends etc. _______ I did trade some stocks in play today and did well. Incidentally didn't focus on the level 2 much and traded based off of Price action and volume...IN THE SAME MANNER THAT I AM TRADING THE IWM/SPY ETC. Missed two of the biggest movers which would've all but wiped my losses for the last 1.5 weeks, because I didn't swipe in and instead waited to offer. Won't do that when I know my setup has momentum in its favor. These setups were both a L1 and L2 as defined by Al brooks. Otherwise was even on the day with 1 losers and 3 scratches/small winners. Attached is the screen shot of JNJ and STT which I attempted to offer at a better price(pennies less...dumb i know) and went away from me.
I said I would stick to IWM, but after hearing what everyone had to say...couldn't stop thinking about things. Thought about it and PA and VOL is PA and Vol...I can try to disguise it in many shades with order flow and momentum and all that, but it is simple. I've been trading the SPY since I started and that is the only thing that I have been doing decent with. The R:R and targets are not very large with it on an intraday basis as far as I have been playing it. So I thought, use this same stuff on stocks in play... Blindfolded myself(figurative) and went bar-by-bar on all of the stocks in play for the past 3-4 days...traded in TOS with the playback feature. Did pretty damn good. Went in today and didn't do amazing, but the potential looks to be there. Still traded some in the IWM as I said I would, will keep working on that...but have opened my eyes to some other possibilities. Thanks to the posters who gave me suggestions, confused me but brought at least a little tiny bit more clarity and direction going forward. We'll see how things go. ..........some other things that I played today. Was in the money 20 cents in both of these, but wanted to swing them out so took BE'S and small winners.