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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: Dan Duchardt who wrote (4283)	9/21/1999 12:22:00 AM
From: OZ	Respond to of 18137

"How do you balance the idea that three down candles mean nothing with the fact that 3 5-minute bars can at times be a 5-10% drop and the need to protect profits and avoid losses?? On Friday I gave away CSCO at about 2:40 at (you guessed it if you looked at the chart) 72_1/16. CSCO went on to close at 73_1/2. TRUE, 3 candles down can mean allot. Did not mean it as a rule. It just depends on the time frame you are trading. But if you look at an intraday chart, the stock was trending up and it made several series of 3 consecutive down bars pulling back to the moving averages. But they were making higher lows and higher highs. The next rally failed to take out the previous high (for the first time. That made the next pullback to the same level much less tolerable and probably shook off a few more. How could you have made more??? Well if you are trading enough size, you could have exited your position incrementally. Pulling some money off the table gives you more confidence going forward. Or you could have re-enterded the position on the triangle breakout at 3:05... But trading off the middle of the chart is always easier than living thru it <g>. My original comment was made in the context of a STRONG swing type (1-3 days) setup on the DAILY chart. As long my predetermined stops are not hit, 3 bars down on an uptrending intraday chart will not shake me loose. Conversely, a 5-10% drop like you mentioned will always shake me loose. OZ

To: Dan Duchardt who wrote (4283)	9/21/1999 4:34:00 PM
From: TraderAlan	Read Replies (1) \| Respond to of 18137

Dan, <How do you balance the idea that three down candles mean nothing with the fact that 3 5-minute bars can at times be a 5-10% drop and the need to protect profits and avoid losses??> One meaning is that you got into the trade at a bad reward:risk position and weren't able to withstand some wriggle without getting shaken out. You have to assume that the market will act in such a way to cause you the most pain. That usually means your best execution will occur when things look the worst. Alan