SD's Short-term -seat-of-the-pants- swing trading

[sd]

Blygh,
Let me add,
Look at a daily chart of FXI- China 25 long .
For the past month, FXI has been uptrending, with only 2 significant down days- that were single occurrances, with a quick return to the uptrend.
On both down days, the price had gapped down at the open, so the majority gain would have only happened if you had taken the short position the day before- Which would have been a very ballsy (synonymous with reckless) move.
Each of those sell-off days turned out to be good buying opportunities in the direction of the daily trend, both times gapping higher the next day.
I'd rethink my strategy to stay aligned in the trend direction.
Note FXI gapped higher Thursday after a previous week's gap higher and then consolidation back to the trend/fast ema. Look for a similar backfill to occur next week, not a shorting opportunity unless the us markets sell off sharply-
Regards, SD

[sd]

The market continues to surprise me here.
It looked like it was setting up to sell-off today, with the futures down.
I didn't react, left my stops where I had set them last week-Part of my new trading approach- looking for swing trades. I'll adjust the stops progressively, unless there is a catalyst that will drive everything down and then I'll bail to reduce losses.

Did some reading this weekend that was sent to me on trading psychology, and it struck a note as I saw myself illustrated as just another guy at the poker table, not as much interested in winning the game as being involved in playing the game- There's a significant difference between the two, and it goes to how much effort one is willing to expend to "win" as to just be involved and 'playing' the market.
It hit home since I realized I can't spend the time intraday, and yet didn't want to commit to putting forth a diligent effort in changing over to swing trading.
I gave myself all the excuses- work, home, time demands etc., and in the end I realize I come up short handed -

It starts with my trading plan- MAKE MONEY! doesn't quite qualify. Here I've made a substantial tactical change in my trading (holding for swing trades) , stops using SAR or the moving avg's, and haven't done much else in real plan development. The key ingredient is where do I commit to following with stops to not get an intraday whipsaw, but at the same time to not getting slaughtered on the market selling off sharply at the next open over some unexpected news or whatever excuse it wants.

Until I actually do the required steps of calculating the potential loss at the levels I have set my stops, I don't really have a handle on what I may potentially suffer on a market sell-off. I feel that for initial stops they are reasonable , but haven't done any real calculations yet- The fact that I have set these stops that logically makes sense chart wise doesn't entirely fill the bill- I should know the Risk % wise, and adjust accordingly. It may be that I need to sell 1/2 a position at a higher stop .....
I think it's best generally to take a conservative approach, but there are times when the wind is at your back, that the potential reward may be worth the risk. Knowing when you are risking more than you should is a critical factor. I think I'm at that point even though I'm only using about 50% of my account across these trades. That was my mindset buying the financials even though they had gapped higher the prior day.....

This market has now put in 5 up weeks in a row- That's a decent uptrend and liable to change at any time. As a matter of fact, It has to change at some time in the near future, because we are going from oversold to optimistic, and that offers an opportunity to lock in some profits, and repurchase lower if the trend looks to resume.

Going forward- No excuses- If I am going to be trading, I need to allocate enough time to properly monitor the trades.
Presently I am feeling fairly positive because 1/2 of my positions gapped higher today. - What will I be feeling when (Not IF) they gap lower? This is where the rubber meets the road and a defined trading plan keeps one on an even keel , where losses are just a normal part of doing business.

I also need to be prepared to take the other side of the trade should it prove we have reached a peak and will be pulling back- I have no idea what the catalyst will be- perhaps financials.
If and when I take a short side trade, it will be a faster trade -

Good Luck, SD

[sd]

Today I ended up finding the catalyst- It didn't take long.
The recent gains started to evaporate today, and I ended up making sure all stops were above my entry cost, and then as it appeared this sell-off had momentum, I sold what was selling off hardest.
I'm left with PCU and AGQ as positions.

Had I been in these positions earlier, I could have afforded to give them some leeway-what makes me think this wasn't just a normal pullback to the trend line?

I think there's reasons for a set up for the market to correct for a few more days-
I'll be taking a short focused trade using TWM , and looking to enter on a buy-stop being met, with a narrow limit also -
Looking at price action in the faster time frames gives a better picture- I'll be attaching the 15 minute chart, because it tells me that going into the close, buyers were stepping in, with solid buying volume.

For a stop, I'm using the swing low in the pm and parabolic Sar. This is a very close stop - about 3%, but my premise for taking this trade is that there will be additional selling tomorrow, and ideally my order will fill and price will not retrace that 3%.
The prior gap down gives this an opportunity to run to 63-64 before any substantial resistance comes in. I'll be taking profits there.
SD

[sd]

My TWM trade started off as I expected, with price moving higher from the open.
I raised the limit to 59.50 because that was where the last trade (after hours) showed up . I was expecting that price could gap up at the open , it often does, and I wanted to have the opportunity to get a fill but still control my costs.

My stop was exceeded in the first pullback by about $.06, and I was stopped out $57.46- or a 3.5% loss. As I looked over my trade this pm, I feel this was still a decent trade, controlled risk, just proved wrong.

My PCU position got stopped out @ 21, for a gain, still holding AGQ. I will look to reenter PCU if it drops back to the fast ema ,
thesis there is the commodities- seem to have the lead here.
Good Luck, SD

[sd]

Been busy,work & home, since my prior post I had reentered PCU lower and took a loss. I had "confidence" in the move, and took an oversized position, based on the 60 minute chart. Felt I was getting in at a quick oversold reversal to the upside. Obviously, the daily chart didn't support the early move, I allowed my preconceived beliefs to cause me to take a impulsive jump in. In addition, I entered 2x, the same day to a 1.5x position size. Lessons learned slowly. Will try to post some hind-sight charts later on if time allows.
Went all-in a week ago following the prior week's pullback - Bought some EEM, FXI as they had appeared to be moving back up from the pullback- Also bot a range of stocks . Took a 1/2 position in F, and it moved up nicely, Rimm, BRCM (didn't set an accurate stop) NTG energy - (followed it due to Tim Seymor) Over the weekend , the swine flu news took most positions down , with my etf trades all stopping out. The EEM has since broken out to a new high, while FXI is right at the point where it should likely be a good buy-stop entry on a move higher. I have to ask why the EEM rapidly pushed above to a new recent high, while FXI is lagging - The EEM may present a better trade. Both have moved up well on the weekly , with EEM out in front and FXI consolidating.
Wish I had the insight to determine if an upmoving market -EEM- will add support to the UCD commodity trade- or if there is any relationship at all?
Energy is moving, and I may also take a buy-stop on NRG. I have no idea exactly what this company does, but the chart looks good.
It has put in a dbl bottom on the daily, and has moved up nicely the past 3 days., It's underperformed it's sector , and may see if it can get back up to the recent 24 range.

Time to get to the garden! Most of it is in now-
SD
SD

[sd]

Follow up-
it's a good Monday with a wide spread market rally.
My prior posted trade of UCD - with a buy-stop @ 20.50 saw the trade open @ $20.53 , but my limit $20.55 was never filled- Price moved past my order. I had expectations that a potential move higher was in Friday's chart, but wanted to see price exceed the recent range. I also didn't want to have a wide price range - and did not expect the gap up to exceed my offer-
We are taught not to "chase" trades, but I am raising my limit here to the $20.80.

Why? Well, while the stock gapped higher for the prior 2 trading days, I look at the $20.50 level as exceeding the prior resistance, and could/ should potentially provide initial support.
That's not to say a retest of filling the gap won't occur.

This is not that far beyond my initial entry, and if the level exceeded does indeed provide support , potentially we go higher.


At this moment in time, I have been fortunate in that the market direction has decided to favor my longer term swing trade approach. -essentially 10 days ago I went long the market and decided to set wider stops- several of my positions- EEM and FXI stopped out- The remaining positions dropped lower, but didn't violate the stops and have now proved to all be net profitable- UYG having the biggest gain just as I was ready to bail out on it.
Note that both EEM and FXI have now moved much higher than where I entered and got stopped out- I blame the swine flu scare, but it illustrates that almost anything can take our positions down harder than we expect.
Whilew most of my positions dropped lower Monday/Tuesday, the majority didn't hit my relatively narrow stops % wise.
Much of the past 2 months I have been expecting the market to do a substantial retest, and I finally realized that while I have expectations for the market to act in a certain way, I simply need to try to work with the market as it seems to be at the moment and to the extent I can be involved. If 2 months ago I had taken long positions with wide stops I'd be sitting up 30%. If 4 months ago I had taken positions with wide stops I'd like;ly be down 30%.
Having a sense of where the market is heading is crucial, but tthat mindset gives one a perspective on what "should" happen in the future. All the while, it's more important to recognize where the market actually is going. After many months of high volatility and reversals,
When a 2 day rally turns into a week rally, one expects a correction. When it's 2 months long into the rally, and defies the atypical expectations of what should happen, one has to say , should I adapt my trading to fit what seems to be a new environment.
In my present mode, I'm trying to spend less time involved in the market, using daily charts and set stops. This approach is dependant on my perception of what the larger market will be doing. At the present time, I am going with a continuation of the bull market, despite the fact I believe (fear) that a massive correction is really justified.
Every approach entails risk- In this case I went against my belief that a correction was not only justified, but impending- Because it has not happened when it had the opportunity. It may happen next week- A new asteroid may threaten the earth, or global warming will flood NYC.- Or a nuclear missle may thought to have been smuggled into NYC>.
Despite the potential fears, and my prior stops being hit, my present remaining positions from last week have surged higher-My most "speculative " trade- UYG- coming from the red to lead the blue.
A bull market has the tendancy to make all of us feel we are stock pickin' whizz'es. This is but a moment of generosity if we can take advantage of it. No Idea when it will lose it's luster.

SD.

[sd]

I was filled on SQM today, in the first 5 minutes of the market open. Actually, the first 5 minutes hit the day's high and the day's low all in that one bar. It then proceeded to move lower.
I'
ve included 2 charts here, a daily, and a hourly. The daily chart up thru May 4 showed a stock that has moved up out of a recent consolidation range, and has moved higher.
As I looked at the chart, I saw that previously it had hit a $32.41 high and then had pulled back for a number of days, and was again retesting that prior high. As I looked at the hourly, The volume and the buying was solid throughout the day on 5-4 and it ended up near the high at the close. I also like candlesticks, and a bullish hammer candle was the 5-4 -It's all the same thing, but a daily candlestick gets translated into hourly snapshots that tend to give a closer view of the intraday action. Hopefully, one comes away with some useable information.
I set a buy-stop entry @ 32.50 with a 32.70 limit. This ensures that price would exceed recent attempts to go higher.
My expectation was the stock would push higher, and indeed it did, but fell back immediately afterwards. The market was down slightly today, and perhaps that was the cause. OR, Potentially , the stock is rolling over here and will go lower.
Either way, I needed to determine where to set my stop-loss based on today's fill- and action.
Even though I'm striving to swing trade with a daily time frame, getting started, I still refer to the hourly charts to try to guage where a viable stop can be placed.
As I looked over the chart, I see some prior lows that I could set a stop beneath- but these are 13% below my entry.
I then looked at the range where price recently moved up from, and then where price had gapped higher as the stock moved up.
I'm choosing this level for this type of break-out entry. If wrong, it will cost me 8% on this specific trade. Since the stock did break out, but closed lower, it will potentially retest lower, but should not exceed the recent range. I tried to illustrate this thinking on the hourly chart.
If I was trading on the faster time frames, I would have likely closed the position already. Swing Trading on the daily , I'm trying to see if this more generous approach will be rewarded. I fully expect this is linked closely with the fortunes of the market in general.
Charts attached:

[sd]

The UCD trade worked out and is an actual position and even garnered the coveted win in the Horse Race this week!
Several of my present positions were entered on the basis of that type of entry, on wanting to see the price have the ability to move higher before taking the entry.
The "adjustment" I am forcing myself to do with swing trading with the daily is keeping an appropriately distanced stop within the boundaries of the trend.
Also, is my prior mindset that believed we would see a market retest, and as we extend even higher here, I wonder what will truly precipitate even a short term correction of any magnitude.
The Swine flu was but a 2 day hiccup- although I suspect we haven't seen the end of that story yet. Maybe next fall that will rise- if not sooner.
Obviously trading with the trend of the larger market -particularly in a trending market- is the only way to go- Yet I don't have a "belief" in the continuance of this rally, but it continues none-the-less. It seems that bad results in the Stress test are actually good results. Go Figure-
This is like the Algebra class I had to take multiple times.
Previously I had adapted my trading to a changed m,arket and strongly benefitted from it- At this market change, I was Awol , not focused on the market, and didn't recognize what was occurring .
I was ready, in the back of my mind, to wait for the big climatic sell-off and then steel myself to go 100% long- It's said the most successful traders will do what doesn't feel comfortable-I waS READY - I wonder if that's only the opinion of the survivors. Maybe the others are risk takers long gone and forgotten.
At 4 weeks in, when numerous stocks had moved back up huge, I still "expected" a big correction., to a few I discussed the 'market' with, I was quick to point out that this was just a bear market rally and was designed to fake you out- Weeks later, I finally relented to stop fighting the trend . This is likely the sign of a top- when all the bears decide to jump ship and go long!
However, that prior attitude had been the wrong attitude, It affected my perception of what was happening- I am still a short-term trend trader, I was slow to adapt to a major change in trend and to change my mindset.
As traders, we get accustomed and feel secure to do what has worked in the past, and are slow to change.
Or we sit things out and wait until our one mindset seems to be a winning strategy.
Ultimately, what preserves and improves our trading capitol is the best approach. When we try to lead the market, we take on a larger risk. It's important to know when we are wrong and when we are on track.

[sd]

My well intentioned-but-wrong warning to a friend that told me he was thinking of buying GE just as it had run up to $10-SD

[sd]

EEM- emerging markets - Tight stop to control risk, missed the follow up move higher. SD

[sd]

What happened?
On a sign of market weakness, I sold 2/3 of my UYG position on a raised stop -@ 4.30 Monday The remainder was taken out @$4 .Tuesday. Entry $3.55 That was a net profit. Not to worry, the remaining positions are all in the green.....
Yesterday , my Rimm position wsas taken out at my entry price. I had also raised the stop there.
Today, I had 3 other positions also
stop out./
I also went long TWM this am with a buy-stop above the 10 am price action-and was filled , and am up on this trade.
Technically, this is the highest TWM reversal above the downtrend- Is this the start of the market wide correction? Don't Know- It's enough to prompt me to be defensive , and to not be complacent about the direction of my trades. SD

It appeared that this may be more than a one day hiccup

Rimm was taken out yesterday at entry.

[sd]

This rainy Sunday has forced me to stay inside and given me the opportunity to try to update my trades.
I've got a chart of TWM, and the basis for my entry was both the market conditions- Prices are topping and rolling over, suggests there may be some potential long awaited correction possible, and the reflected chart action which confirms.

The market has been solidly uptrending for the past 2 months, and TWM has been in a solid downtrend for that same period.
At the beginning of the week, it was consolidating sideways, and that suggested there could be some follow through to the upside.
Anyone who has gone against the trend these past 2 months has had to be very nimble to make any gains, and it's a stacked deck to fight the trend.
As I looked at the chart consolidating sideways, and many positions losing strength, I took on a potential buy-entry if price reached my $49.50 stop- limit $49.60.
Price was filled @ 9:56 am .
Unfortunately, for many of my other trades, TWM's improvement meant the others declined. I had also raised stops on my other trades, and what had been a profitable 1-2 weeks turned into a "salvage profits where possible and minimise losses."
I was actually working to continue to try to allow the trades some room to go, and hoping to hold for additional upside gains over the longer term. I was late to that mindset, and this party may be long in the tooth. Or it may just be a 5% correction . Either way, as I saw solid profits evaporate , I went more defensive at the end of the week. Will have to see what stocks, sectors regain ground here- I have one position -SQM- still going strong- at least as of Friday's close. And I added AGU long Friday.
The Chart:

[sd]

some charts of trades

[sd]

Don't know why the charts are spaced so far apart, and the conventional reply box does not function now for me in this thread but appears fine in others.

[sd]

Also, the page size is now huge? Any thoughts?