Wow, lots of responses here, and in private message. The questions are all along the same lines, so let em try to lay out what I'm doing, and then if that falls short for you, message me again and I'll try to elaborate :)
#1 Remember the market is fractal... You will see similar patterns on a 3 minute, 30minute, or 30 day chart.
#2 Stops are your best friend as a speculator, I never EVER enter anything without setting a hard stop at an uncle point...the spot where my opinion would be proved wrong. The reasons for my stop placement vary, but I determine where it will be before I take any shares. After all, without knowing the risk you are assuming, you can't predict an expected risk to reward.
What I'm doing is taking all my trading and chart reading skills, and backing out in timeframe. Here is an example of such a trade...
This trade also taught a good lesson about sticking to the plan and holding your stop. I remember doing a video lesson on it. That should be either on the video page, or in the course's video archive.
realitytrader.com
Here is a monthly, weekly, daily, and 60 min view of KO.
KO had double bottomed on the monthly, but had been pretty quiet. After a nice weekly rally, KO broke hard and sold back down on heavy volume. I figured if it bottomed, it would test the 48-50 area, as there was 40ma, and chart resistance there. It slammed down into the .786 Fibonacci retracement zone and stopped selling. Dropping to the daily I saw another double bottom, and to sweeten the trade it was a "peek". A peek trade is a trap play. A stock breaks below an important T/A level, "peeks" it's head down, then flips and heads back up. The shorts who just entered on the breakdown get squeezed, and the longs seeing confirmation of support begin to buy. The next day The stock gapped down and began to rally, we picked it up at $44.25 Oct 25. Stops were set a little under the prior days trading. (think it was 43.60 or a .65 stop)
It hacked and gasped for a few days, then kaboom! After the first blowoff day we took 1/2 profits at the daily 20ma for a 2.7 to 1 gain. Then the rest was exited into the daily 200ma at about 6.2 to 1.
This was a multi timeframe trade...loads of timeframes all coming into alignment at once. Other trades recently.... NVLS entered long 31.18, partials at 39.9, the rest exited at 39.4. AMAT short entered at 39.50, stopped above the weekly highs at 41.35 (looked so nice :) ONE short which stopped (entry 34, stop 35) SAPE long (5.47, stop 4) etc..... you get the idea.
Does this mean all my time as a daytrader were a waste? Daytrading a failed relic of the bubble? Pfft!!! No way, these intraday skills just add lethality to your skill set in these deeper timeframes. AOL was an example of this.
realitytrader.com
Monthly chart again in the Fibonacci reversal zone so AOL is on my watchlist. Weekly is forming a "peek" bottom. Daily sets up after a nice doji, but 20ma is right overhead so I want to see it prove itself first. Next day it shows nice strength, but closes roughly. The following day is a very narrow one. Support is manifesting itself, so I enter long into the base using scalping skills with a stop set below the lows. (entry 32.22, stop 31.80 .42 risk) A sweet gap the next day, then after a pullback the uptrend begins. Took profits in three lots, trailing my stop up to breakeven after my first set of partials (as I always do). Profit was +1.38 (3.2 to 1),+4.18 (9.95 to 1), and final lot at +6.5 (15.47 to 1)
My daytrades never showed me more then 3 to 1, as my goals were much more scalpy. Now, I can use my short term trading skills to nab tight entries into weekly and monthly trend changes. I take profits at 2 or 3 to 1, then slap a breakeven stop on the position and let it ride until a level of weekly resistance is challenged. For me it is a wonderful hybrid...
I know I'm not reinventing the wheel here, but I have not seen much mention of this style on the web. in the choppy intraday markets I find my accuracy rate fluctuates more then I'd like. These trades have been very stable, and with the high R/R yield, you can be wrong an awful lot and still do just fine.
I hope this answered the questions, if not...msg me or email to bo@realitytrader.com and I'll try to help!
Good luck and Good trading!
-Bo
P.S. I have an article coming out in the Feb issue of Activetrader Mag on bottoming formations. These patterns are what I look for once I see a stock at monthly or weekly support... |
