First off, I think RKH may be a perfectly fine short... our methods for deciding what is a good candidate for a short or long might be different.
I only use price bars and patterns for trading, I do not use indicators or divergences of any sort. I do note them... because other people use them of course, but that's about it.
I commented on the timing mostly because RKH continued up yesterday; which led me to comment on protective stops.
When I walk into a trade I know the very second I am filled what my protective stop will be; my stops are based again on price action specifically invalidating my premise. In its simplest form., if a trigger off of yesterday's bar gets me short, my initial "crash stop" (one done just in case the world goes to heck and I can't put in a better stop later) would be at the high of yesterday's bar. I very quickly move that to a more reasonable stop off intraday charts.
Stops can be based on a % value - that would be a vast improvement for a lot of traders who have no stop methodology. But a price / price pattern based stop will generally outperform, based on my testing.
Back to the call itself - a symbol and a direction might be enough for some, but, imo, providing the background detail as to why you believe something is important.
For example, you merely said that "RKH is looking like a nice short right now" yesterday at 10:14am, with no mention as to details, what time frame you were looking at, etc.
When I saw that I wondered what you meant. On the daily, it was not a good looking bar, but:
a) it had not made a lower low than the day prior
b) there is no trend on the daily chart - its hovering in a congestion zone
c) by that time of the morning, only 1000 shares total had been traded. My experience with ETFs an HOLDRS is that they do not map on to their underlying indexes very reliably on an intraday basis, certainly not when the volume is puny. Bar appearances can be really skewed as a result. Generally it pays to consult the cash indexes for such things.
Not knowing what causes you to call it a short other than that one comment, naturally I wanted to ask for details.
One reason why I decided to speak out is that I have much experience in this area, and I know that the vast majority of readers out there simply want to be told what to do. We can say "do your own DD" but those words bounce meaninglessly off of many.
The fact that almost immediately after your post, RKH moved 1.50 higher, had nothing to do with my desire to comment. In fact, that marginal new high is an extremely useful part of a short setup, where if yesterday's low is broken today, I would indeed suggest RKH might all prove to be a good short.
Just offering constructive criticism, not criticism, and I hope you take it that way. |
