You know what Im reading back through your post and you are giving some good techincal adivce(from what I see). These are things that I may have noticed in the back of my mind, but I wasn't the most "conscious" of them. If I am trying to ride the trend in some of these stocks...then it would be privy of me to know which ones behave more conducive to that pattern. I'll take some of this into consideration going forward.
Kurt, Thanks for the in-depth analysis and insight. How would you recommend someone attempt to trade the open in some of these in play names? I have been keeping up a watch-list of different earning related names near key areas. Watching them off of the open and looking for things to setup in a nice way. Looking for a breakout one way or the other and enter into the pullbacks in the trend. I look for the first shallow pullback and then look for more deeper pullbacks. I look at climax patterns in the PA and volume. Also watching the level 2 to see if something reaches a level and cant continue to hit the bids or lift offers. Keeping in mind key levels on the daily and longer-term charts for R:R and targets. What do you think of this approach?
Hey everyone...I am still keeping away from this journal for a bit. Just thought I'd post a little update and this should help to clear some issues for me as I write them out. So did trade today and did decent. Was up a little bit. Today I opened up a little and traded based off of PA, vol, S/R...all that good stuff! I tried to balance using my gut feel with the above variables...with entries with good setups and near good levels. I did well...the trades that I put on worked for the most part. One thing that was missing to a certain extent was trade management. There were a few instances where I moved my stop to BE, because I was in the money 10-12 cents. This would make sense if I was playing a shallow pullback where there was significant momentum etc. where if momentum did not continue I would be wrong and the trade would return to my entry! I did this a couple times where I was playing pullbacks...and I was stopped out. Another trade where I was getting chopped up but still risking a very small amount and stood to gain quite a bit! I'll have to keep this in mind going forward so it doesn't become a habit. Do not exit a trade or give yourself an excuse if you haven't been proven wrong! BE stops should be put in when well in the money or when it is expected that price moves away and stays away from your entry price within a short period of time. A screenshot of two of the scratches that I did this on.
So just wanted to post an update since the last time I posted my pnl 7/21= +26 7/25= +30 7/26= +117 7/27= -34 7/28=+81 7/29= -110 So...have not been doing bad since the last time I posted in this log. One thing to note is that before this I was trying a variety of things and not having alot of success. Today... was a massacre. lol. Right off of the open had a stop that didn't trigger in a trade and I exited well away from it. Another trade gapped through my area where I had my out and got out at a loss. Had 1 winner on the open...the rest I just got grinded up. By 9:30 was down close to 80 bucks and had to fight to comeback with only 1 trade since my daily stop out is $100. Didn't get any good setups into the close and was stopped out. One constant that I have noticed is that a majority of my losing trades are on the open when I attempt to trade the first 30 minutes or so. I have been attempting to trade based off of tape reading and I am finding it hard to trade! However, I grinded back on most of these days by having good trades into the close and mid-morning. Price action, volume, shorting weak stocks and buying strong ones, trading when they setup and things feel right. Today was one day where I couldn't because I was so close to my loss limit. Now I have a choice here...I have found an approach that I trade and I have had success with. But, there is so much money(volatility) that can be made off of the open that I continually return there because I know it will eventually pay off. However, I trade much better into the close and mid- morning. The only success I have had in the morning is not paying alot of attention to the level 1/2 and trading based off of just the chart. Looking for pullbacks in the breakouts and strong trends in the morning. I think if I combine these two I will be on the road to profitability(mid-morning and close). If I do this I will have to neglect the tape reading aspect, which I think may be helpful in the future. Does anybody have any advice to my current situation. Continue to trade with the tape in the morning, or stick with what I have had success with and neglect the level 1 and the first 30-45 minutes of the day. I know many traders make most of their money right off of the open, but it's different for everyone right?
gut feeling--what a strange vocabulary for traders to use and to incorporate into their trading system geared toward making donations to whatever products they are trading.... bring on a trader who also trades with gut feeling and you'll see a trader with progressively depleted trading acct.... HUMAN EMOTIONS ARE VERY ELASTIC AND THEY ARE VERY POOR GUIDES IN TRADING AS WELL.... confound it.... trader friends.... use your stats, strats and risk/reward money management objectives.... TO PRACTISE AND TO TRADE LIVE.... pls do leave your gut feeling out of your trading....
You may be taking my words out of context, the "feel" is just the discretion involved in "discretionary" trading. Brett Steenberger summarized it nicely to me in his article about "learning to trade" and implicit learning! Also I talked alot about balance between a plan and "feel" or whatever you want to call it...maybe read the whole post next time http://www.marketedu.com/articles.cfm?t=4&d=12&id=17
You can trade from your "gut" after a decade or so of experience. You've been doing this for a few months, so regardless the subjectivity of the word, you should have a discrete trading plan. I wasn't a fan of the guys' "Trading Coach" book but it's great for a beginner to help with developing a trading plan, regardless if discretionary. But yes, when you have enough experience you develop intuition, an unconscious thought process that is arguably more robust then anything modeled and/or automated. Aside Jim Simons, the top long-term hedge fund managers (George Soros, Paul Tudor Jones, Stanley Druckenmiller, Michael Steinhardt, etc.) traded with their instincts. For another thought, every strong down open is a lay-up fade... not just in hindsight but in the near future. The risk-reward is great. Risk .50% on the S&P 500 to try to bring it near flat (1% - 1.5%). If the market is down more than 2.5% then don't fade. With all the failed US debt plan talks and mediocre GDP numbers AND THE MARKET STILL WON'T GO DOWN... quite resilient. If you don't recognize the market strength among the negatives then you shouldn't be trading. You also have to consider equities as a hedge against inflation... finishing flat is actually a real loss. There's no way the US "officially" defaults but they can still "default" by going to the printing press. Stocks can't go down because inflation seems inevitable. It would take quite a punch to crush stock prices... (Google Weimer Germany in, I believe, 1924 where stocks soared to a worthless currency). If you have enough capital you can always be long equities, short USD/commodity currency (e.g. Brazilian Real, CAD, etc.) Whatever the current CPI is, it's bullsh1t... the CPI isnt showing as much because a lot of companies are hedged in the short term against currency risk with swaps. Look up commodity prices and we obviously have much more inflation. Stocks should only be going higher or staying flat even with bad news in the short-term. Point... every decent down open is a fade. Have a stop at 2%+ down on the day and don't fade too much volume.
sorry, my trader friend.... if anyone wants to become profitable in trading.... it is best to base each trigger on your own trading plan, your very own stats, your personal strategy and most importantly your tested out money management application plan....; human feelings in trading will only breed more uncertainty, self doubt and.... allow a good trade according to your trading plan.... to quickly slip by your fingers.... if a trade setup according to your trading plan, stats, strategy shows up on your screen.... by all means.... pull your trigger and enter the trade.... without any feeling or doubt.... at least that is how i trade live.... but then it may not be your style at all which is perfectly alright too, you know.... all traders do trade and see each trade differently according to one's experience and target objective.... K? i'll cheer for your trading success too....
I recommend papertrading the first 15 or 30 minutes until you are showing a clear edge. Volatility is attractive but can be hard to read.
The open is hard and not good for new traders imo. Use the open to identify the right stocks to watch. There is too much volatility, let the stocks / market show its hand and make an informed decision, not a gamble. I also agree that your gut will fail you because you haven't seen enough scenarios. Trades can progress in many, many ways. I think I read you are a member of Trading Raw or something. I didn't know what that was until I looked it up. I watched some of his youtube videos, and while the guy is obviously profitable, he takes some pretty big risks. He is able to do so because he has a gut for pain and lots of experience and conviction. You can probably learn good stuff from him, but it will be hard for a new guy to implement in my opinion. I was watching the videos and telling myself that this guy would have blown my account up quick if I was new. My advice is to choose setups you are comfortable trading, and stick to them. Starting trading new setups as time goes on with light size. At this stage in the game, you're watching and developing your skill set. I tell you this because when I began, I traded all sorts of stuff, used my gut, and I paid for it. If I could do it all over again, I would have written out a clear plan and started trading only certain setups. Doing so teaches you to be selective and patient. Market action and office activity will draw you in. You need to learn to shut it out, remain calm and rational, and maintain your focus on your plan. The market and office hype has sucked me in time and time again.