thalestrader

Hi Folks, Here are today's results: Three trades, two stocks. Short PSA for +19 pennies/share, long BCS for + 15 pennies/share, and then long BCS again for -10 pennies/share. Total for the day +$0.24/share traded, and for the week +$2.49/share traded. Best Wishes, Thales

Hi folks, Here is a pattern that used to be quite common but has become rather rare of late. THO gapped open higher, but never followed through. Instead, price fell back into yesterday's range by 10:15 AM, holding just above a broken resistance point from the prior day, and holding at and above the 21.41 low (which marked a pullback to the 5 minute ema yesterday) made after the stock started a rising trend during yesterday's session. This part just states what happened prior to the pattern, and is not part of nor required for the pattern. Now, here is the pattern: Price then traded in a very tight range for nearly 4 hours before breaking down and continuing its drop. When I see a tight range like that, it is usually just a matter of time before a decent move is made. Sometimes it is a continuation, sometimes it is a reversal, but it is almost always a decent trade. In this case, 21.40 would have been the sell stop price, and price declined to 20.34 just before closing the session at 20.45 Any time you can grab a quick dollar/share profit, without ever having been in the red during the trade, that is a decnet trade! Regretably, I did not trade this opportunity today. It was brought to my attention by a colleague after the break down. But it was nice to see an old pattern repeating itself. Best Wishes, Thales

Like you, Brownie, I do not use volume at all in my day trading, though I do watch the order sizes being bid and offered (which, strictly speaking is not the same as volume), and I do so only after I am in a trade. There are times that volume will give important clues, e.g. if a security has a large down day (or week) on lower than average voume, and then that is followed by another down day (or week) on higher volume, but with significantly less downward movement, then that is a bullish indication. That being said, I am of the opinion that more time has been wasted and more money lost by folks seeking to find the some key to trading success in volume and volume studies.

TLM gapped higher and traded marginally above the 6-4 high (by 9 cents). A higher high than that of the first 5 minute bar would have been the go ahead for me to go long the July 15 Calls. As it were, that was the high of the day and TLM closed down 17 cents on the day. This is still a potential opportunity for me, but the go ahead price point notches up to 15.97 Best Wishes, Thales

I still do an es trade for my own account when I see something I like, but I am a more consistantly profitable day trader of stocks. So I focus where I succeed best. I always have and still do trade anything that moves. Best Wishes, Thales

So many fail at the trading game because they insist on taking the other side of this statement. I share your opinions about the lack of importance of volume. The rest of your post was also very good, but this point in particular is so rarely stated as to deserve a repeating. Best Wishes, Thales

Here's a possible opportunity for me to take a long position using calls. If TLM trades above today's high I will buy the July 15 Calls. I would have preferred an August expiry but the next month available after July is October. Best Wishes, Thales

I agree. When I traded the e-mini's regularly I would often wait for the pullback to the breakout level before taking a break out trade, and if the breakout failed, I go the other way (a Trader Vic 2B trade).

Hi folks, Two trades today, lost 23 pennies on COST short and made 15 pennies on TEL long. Total for the day: -$0.08/share traded. I may be done for the week as I have a meeting in the morning that will keep me from trading the AM session. Best Wishes, Thales

Hi there, I think that I could answer your question better if you were to post a chart. I confess that I am not familiar with the term "market excess" and thus I do not know what it would mean for it to "clear". If it is at all helpful, I really do not make it any more complicated than this: I buy new highs for longs and I sell new lows for shorts. I occassionally buy or short a pullback to the 20 ema on a 5 minute chart after a strong move. As far as "wicks" or "tails", this is a function of where a price bar opened and closed in relation to that bar's high/low. My view is that any chart that breaks price action into discreet bits of time, or volume, or ticks, or range, or any other way you can cut price action up is, in the end, arbitrary. So I pay little if any attention to where a bar opened and closed. In fact, if you look at the few charts I've posted of the ES, where I use Ninjatrader charts, I use high-low bars, which are not available on freestockcharts.com. Best Wishes, Thales

which do not always stick ... took me out at the market +15 pennies/share

which beget higher highs

New highs beget new highs

Buying new highs - Buy Stop on TEL @ 19.78 Filled 19.78

Two trades today - both great trades, but both were losing efforts. I am not one to post-mortem losing trades. I do flip through 600 charts each night (the 5 minute chart of each issue in the SP500 and the daily chart of each IBD 100 stock). I do review each day's trades. I print each chart, place it in a three ring binder, and flip through these charts from time to time. However, I feel that there is no need, in most cases, to autopsy my losing efforts. This is because I trade the same way all the time: I'm either buying new highs or shorting new lows; or else I buy or sell the occassional pullback to the 20 ema on a 5 minute chart following a strong move (as I did today with my second losing effort, GILD). Very simple and straightforward, with the result that over time, most of my trades are either small wins or even smaller losses, with the occassional profitable runner thrown into the mix (as LM was yesterday). Once I am out of trade, I am out, both financially as well as psychologically. It matters not whether I am stopped out with a loss and the stock immediatley reverses to move in what would have been my favor. I do not care that I am stopped out with a profit and then the stock resumes its favorable move without me. If I'm neither long nor short, I do not care what a stock is doing. However, the COV trade today handed me what I believe to be my largest loss of 2009 - I lost 42 pennies/share on that trade. And for the first time in a long time I was not pleased with the manner in which I managed a trade. So, while I am not one for performing forensic dissections of my trades in general, I am going to do so for this one in particular. I bought COV as it made a new high for the day. My buy stop was 37.30, and my fill was 37.33. The HOD today was 37.34. It happens, and there is nothing I can do about it, and it doesn't bother me in the least. I often find I shorted the low tick or bought the high tick for the day. It is something that will happen from time to time if you trade in the manner that I do. However, typically, when I have bought the high tick, or close to it, my loss is, also typically, quite small. How small? Usually less than 20 pennies/share, often between 10 pennies and breakeven. This is because when a stock (or any instrument, for that matter) makes a new high that it can't hold for even one 5 minute bar, then that breakout to a new high is usually a false breakout. I know this, and I typically take myself out at the market. As I said before, once I'm out, I'm out. I move on. This time, in spite of the quick retreat from new high ground, I stayed with COV. It immediately started a decline and pulled back to 36.92, and then it rallied back to 37.20, where it stalled. And that was the best it could do over the next 12 bars. And here is where I really misbehaved. When price stalls at a level after repeated attempts to push through that level, then odds favor that what you are looking at is not a continuation pattern, but a reversal. I could have cut the loss at 13-14 cents, but I didn't, and I had nearly an hour to do so. Instead, I stuck it out, only to watch the slow death roll of a failed rally take me out at my revised stop of $36.91. I've said in other posts that for me, every trade begins as a scalp, and if price action doesn't confirm me to be right immediately, I take a small profit or small loss. Today, COV should have been such a trade. I've attached a chart of the COV trade, as well as the GILD trade. GILD was a simple retracement to the 20 ema, it didn't work, and I was stopped out for with a dime loss. The COV was a failed breakout to a new high of the day that I should have cut off immediately but I didn't. The longer a consolidation takes, the more likely it is a reversal in the making, and not a continuation, especially if price stalls at a level below the high of the consolidation. I know this. Today, for a few hours, I forgot it (or chose to ignore it). Lesson (re)learned. Best Wishes, Thales

Hi Folks, Here are today's trades. Both were great trades, but unfortunately neither one resulted in a profit. The COV trade may actually be my largest loss on a single trade (42 pennies/share) this year. I'll post the charts over at the "Day in a Life" thread. Total loss for the day: -$0.52/share traded Best Wishes, Thales

I presume from your post and your responses that you are day trading or at least trading a smaller time frame than a daily chart. If so, then what will be most helpful to you right now is lots of screen time watching live price action. This can be watching price charts, e.g a 5 minute ohlc bar chart, or it can be watching streaming depth of market. Also, "Buy Low, Sell High" with respect to trend trading is incorrect, and it should read "Buy High and Sell Higher (for longs trades) and Sell Low and Buy Lower (for short trades). You yourself note that when you sell high, price more often continues higher to deliver you a loss rather than decline to hand you a profit. Also, and this will be key to determining fi you succeed or not - You must not abandon the principle of "Cut you losses short but let your profits run." This is the road to rishes, not the road to ruin. Blowfish suggested that you read Joe Ross's Law of Charts. I've attached it here for you. Best Wishes, Thales Law_of_Charts.pdf

It might be best for you to search "jack hershey"

I agree. While the bulk of my trading day trading stocks, I do trade futures for my own account, and for a long time I had traded only futures. My personal futures trading account has been with Infinity for some time now. Infinity has hands down been the best all around futures broker, and Infinity's AT platform is hands down the best I have used, and I too have tried those mentioned by Jean. My broker is Josh Harris, and his partner is Patrick Zielbauer. These guys always answer the phone, and it is very common for Josh to respond to my emails within minutes, even if I send an inquiry on a Sunday! I wouldn't trade futures anywhere else. I very seldom recommend any vendor of any sort of service. But infinity is the only broker that has ever earned my loyalty. Best Wishes, Thales

What really grabs my attention is that the scaling in the second chart distorts price action to such an extent as to occlude the trade opportunities that otherwise jump out at you on the first chart.

I agree that trading a limited number of futures intruments compared to a universe of 500 stocks will present fewer opportunities to trade in the manner that I prefer to trade. But you can trade futures the same way, but as you suggest, patience would be required to wait for these moves to present themselves. I also think day trading stocks is easier than futures. Additionally, day trading stocks is less risky and easier to control one's risk. This is why it baffles me that the feds let folks swing a 40k, 60k, even 80k notional value futures contract with a $500 margin, but then the feds insist that it is too dangerous to let someone buy and sell 100 shares of a 20 dollar stock using even 100% cash unless they put up 25k! I do trade options, but not for daytrading. I trade IBD 100 stocks, and will use options to take positions if a particular stock is optionable. These trades last days, weeks or months. I am usually buying a call option with 3 months. Best Wishes, Thales

Hi Folks, Here are today's trades. Total Profit $2.85/share traded. Best Wishes, Thales

Limited out at 22.40

Natural Stop is now 21.98

I do not use fixed targets unless there is a time issue, e.g. I will use a prior high/low as a target for a trade entered late morning where I will not have a significant profit cushion to get the trade through the lunch hours, or an afternoon trade and we are nearing the close. For me, every trade starts out as a scalp. I presume I may be wrong, and if price does not soon confirm that I have decent odds of having bet right, I will take a small loss or small profit to close the trade and then I can re-think it, and either re-enter or move on. If price does confirm that I am probably on the right side of the bet (as it did in each of the three trades I made thus far today), then I assume each trade is a runner, and I will trail my stops as the market develops them naturally. FDO was stopped for a nice profit, and ISRG for a small gain. Right now, the natural stop on LM would be below 21.36. Unitl another natural stop develops above the 20 ema on the 5 minute chart, I am trailing 25 pennies below the 5 minute 20 ema. It is more mechanical than I'd like to be, but it has worked for me in these cases where a stock moves an additional 3% or more following a pullback without a subsequent pullback. Best Wishes, Thales