A Look at a Stock Trader's Day

[thalestrader 14]

I'll be out until noon or so, today.

 

Also, I failed to post a follow up of TLM - I bought the July 15 calls for $1.25

I will look to sell half for 2.50 and hold half until expiration or or a breakdown in price action.

 

Best Wishes,

 

Thales

[thalestrader 14]

Hi Folks,

 

Long EXC at 50.15

 

Buy Stopa on AKS & AIZ

 

 

 

Best Wishes,

 

Thales

[thalestrader 14]

hi folks,

 

long exc at 50.15

 

buy stopa on aks & aiz

 

 

 

best wishes,

 

thales

 

exc +.12

 

aks -.06

 

aiz +.10

[thalestrader 14]

I did not see this until after the fact, but MA's price action had a nice long trade opportunity with a BUY POINT BETWEEN 173.97-174.01.

 

The pattern doesn't guarantee a profitable trade, but it puts the odds of such on your side. So far MA has resisted the weakness in the general market, though that could change quickly.

 

This is a nice pattern to watch for no matter the time frame - 5 minute, daily, weekly, even monthly.

 

Best Wishes,

 

Thales

[thalestrader 14]

I did not see this until after the fact, but MA's price action had a nice long trade opportunity with a BUY POINT BETWEEN 173.97-174.01.

 

The pattern doesn't guarantee a profitable trade, but it puts the odds of such on your side. So far MA has resisted the weakness in the general market, though that could change quickly.

 

This is a nice pattern to watch for no matter the time frame - 5 minute, daily, weekly, even monthly.

 

Best Wishes,

 

Thales

 

Here is BLK, same pattern as MA but flipped upside down for a short sale. I did not see this until after the fact, and I did not take this trade.

Edited June 10, 2009 by thalestrader

[Dinerotrader 10]

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.

 

 

Thalestrader -

I am trying to understand and learn your methods and I wondered what different things you do when reviewing trades from the day or go through all the charts you mentioned above. Do you simply go through charts that have patterns you would have traded had you seen them and determine if it would have turned out profitable? Just curious what review process you use and think is useful in increasing your win to loss ratio.

Thanks.

[thalestrader 14]

Long WU @ 17.65, initial stop 17.41

[thalestrader 14]

Thalestrader -

I am trying to understand and learn your methods and I wondered what different things you do when reviewing trades from the day or go through all the charts you mentioned above. Do you simply go through charts that have patterns you would have traded had you seen them and determine if it would have turned out profitable? Just curious what review process you use and think is useful in increasing your win to loss ratio.

Thanks.

 

 

Every night I

 

1) I scroll through the S & P 500 5 minute and daily charts using freestockcharts.com and Telechart (Worden Bros) software.

 

2) I scroll through the IBD 100 stock list using Telechart

 

3) I print out the 5 minute chart of each stock traded that day, and put the chart in a 3 ring binder (I have quite a few binders filled with charts).

 

4) I flip through the pages of one of the binders just to keep familiarizing myself with the patterns.

 

I am not concerned with my win/loss ratio. I focus on R/R ratio (my average profitable trade/average losing trade).

 

I scroll and flip through the charts to sharpen my pattern recognition skills.

 

Best Wishes,

 

Thales

[thalestrader 14]

Long WU @ 17.65, initial stop 17.41

 

Long 17.65, stop 17.66

[thalestrader 14]

Long 17.65, stop 17.66

 

raising stop to 17.73

[thalestrader 14]

raising stop to 17.81

[thalestrader 14]

WU stopped at 17.81

 

 

+.16

[thalestrader 14]

And here is the WU chart identifying entry, initial stop, trailing stops, and exit

[thalestrader 14]

Anyone have any thoughts on where the ES closes?

 

924.75 - 926 looks like a good target to me.

[thalestrader 14]

How about a sell stop 934, with a buy limit at 926?

[Dinerotrader 10]

Does slippage become an issue for many of your trades. Since you are essentially scapling small profits from these stock moves, you must be trading quite a few shares to make it worth while. Where do you think someone trading like you starts to run into slippage problems - trading $20,000 per trade, $30,000, $40,000? I am still trying to get a hold of Don Bright's writing on the trading for profit and not percentage stuff but I did find your post about it.

 

Also, what setups do you look for on the ES? Your stock trading method with highs and lows doesn't seem to transfer over to the ES in my mind.

[thalestrader 14]

Does slippage become an issue for many of your trades. Since you are essentially scapling small profits from these stock moves, you must be trading quite a few shares to make it worth while. Where do you think someone trading like you starts to run into slippage problems - trading $20,000 per trade, $30,000, $40,000? I am still trying to get a hold of Don Bright's writing on the trading for profit and not percentage stuff but I did find your post about it.

 

Also, what setups do you look for on the ES? Your stock trading method with highs and lows doesn't seem to transfer over to the ES in my mind.

 

 

Slippage has not been a problem. If negative slip occurs, it is usually not more than a penny or two, though on some of the higher price stocks with less volume, e.g. MA, CME, I may at times get clipped for as much as quarter. For example, I did trade MA today and while my stop would have allowed for a 30 penny profit, my actual profit given my fill was only 17 pennies.

 

Those small scalps do add up quickly. For the week, I am up over $2/share traded. If you are a 1500 lot trader, that's 3k. If you are a 200 lot trader that's $400.

 

The trades I have posted here are actual trades, with actual entry stops and stop losses. Most of the time I am filled at my price.

 

I trade the ES infrequently and I do trade it differently than I trade stocks.

[MC 10]

And here is the WU chart identifying entry, initial stop, trailing stops, and exit

 

At first glance the risk/reward looks way off on that initial stop. But to clarify...the runners take care of the rest correct? A few runners could make your month if your trailing stop method lets you milk the bulk of the big moves.

[thalestrader 14]

At first glance the risk/reward looks way off on that initial stop. But to clarify...the runners take care of the rest correct? A few runners could make your month if your trailing stop method lets you milk the bulk of the big moves.

 

Most of my trades are for small lossess and small gains. Inital stop on that trade was less than 25 cents, if I recall correctly. Few of my trades are stopped out at that inital stop loss, but I always have the stop go into the market with the entry order in case of an emergency.

 

Yes, the few runers more than take care of the small wins and losses.

 

Best Wishes,

 

Thales

[thalestrader 14]

Does slippage become an issue for many of your trades.

 

Two stock trades this morning - sorry for the late post, as these charts are after the fact and not at all real time, so I am posting here in the stock trader's thread instead of the real time chart reading thread.

 

imorgan had asked about slippage. Today, my buy stop for GENZ was 54.59, my fill was 54.64. That is about as bad as it typically gets, and it doesn't get that wide often.

 

My sell stop for CNX was 33.31, and I was filled at 33.31 on the penny. This has been my experience on most of my trades, especially if there is sufficient liquidity and the market on the stock is not all that "fast."

 

Best Wishes,

 

Thales

[thalestrader 14]

My sell stop for CNX was 33.31

 

Stopped out with a +25 penny profit. I wish I had seen that reversal coming and reversed my position, but at least I had the trailing stop to lock in some profit.

[1320trader 10]

Do you pay attention to the futures price action closely when placing your trades?

[thalestrader 14]

Do you pay attention to the futures price action closely when placing your trades?

 

I watch the ES but not constantly nor closely unless I see a real strong trade opportunity setting up, and then only if I am not already in several stock trades. I keep the cash DOW and Nasdaq COMP quote in my trading window. I monitor the market, but I do not decide to tkae a trade based upon the general market.

 

I will not let a weak general market keep me from taking a long trade.

 

I not allow a strong general market to keep me from a particular short trade.

 

I do watch the IBD 100, which by definition, are the real market leaders. As goes the IBD 100, then typically, so goes the general market.

 

Also, when IBD Big Picture says the market is in a confirmed rally, I find that the majority of my trades are long trades.

 

When the IBD Big Picture says rally under pressure, my trades tend to be more balanced between long and short.

 

And when IBD Big Picture says market is in correction (i.e. bear swing) the majority of my trades tend to be short.

 

This is not because IBD says so, i.e. I do not make a conscious decision to focus on long trades, or a mix long and short, or short trades because of what IBD says. But, it does happen that that is how my trades fall, and IBD has a very accurate way of determining the immediate character of the market.

 

If you have been tracking my trades since I've been posting here, you will see that for a while, most if not all of my trades were long, and most were profitable. I was on a real run.

 

Then, about two weeks ago, I was still taking mosty long trades, but my results were not as strong - more losers than during the positive run, and few larger profits. I started to add some more short trades.

 

Right now, I am about 50/50 long and short.

 

If the downside picks up momentum, then I will likely shift to almost all short trades (as I was doing almost October 2008 until about 2/3'rds of the way through March.

 

In other words, in my opinion, what the market is doing today or on any particular day is not nearly as important as what the intermediate (weeks to months) trend in the market is doing. If the market is in bull swing, then even on a down day I will find some strong long trades.

 

If the market is in a bear swing, then even on a strong up day, my best trades will still likely be short trades.

 

Best Wishes,

 

Thales

[thalestrader 14]

You conjecture that such confidence comes from much practice drawing trendlines and determining if you were right.

 

But how will you judge whether you were correct or not?

 

The implication is that upon having drawn a trendline or otherwise having identified a support or resistance level, you would then paper trade around that information. If that trade would have been profitable, you would then conclude that you drew that line correctly. Conversely, if that trade would have lost, you would conclude that you did not draw that trendline properly. You would learn nothing of value from such an excercise. After all, trading based upon support and resistance is not a holy grail that will assure only profitable trades.

 

For example, here is a trendline drawn on a 5 minute chart of BP. Buy point was 47.11-.15 depending upon slippage (I was filled at .12 with a .11 buy stop). You can see here that price has broken above the trendline, and has now returned for a retest.

 

I do not know if price will then continue higher, and if so, by how much. I am long at 47.12 with a stop loss at 46.96. If price trades above 47.18, which was the high before the throwback, then my stop loss will be raised to a penny beow the low of this throwback. If price does not continue higher and instead reverses lower, I have my stop loss.

 

The correctnes of that trendline does not depend upon the outcome of this trade.

 

Win or lose, this is an excellent trade.

 

Best Wishes,

 

Thales

[thalestrader 14]

And here is why you always trade with a stop loss in the market: I was long LM from soon after the open, and at one point I was up nearly 2 dollars (about a 1.70 or so). My stop loss was just beneath a recent pulback low, when the bottom fell out of the stock. My 1.70 profit was reduced to a mere 36 pennies when I got filled on my stop loss.

 

Now, the question is, do I short it using a sell stop at 23.85, or do I let it be?