Day Trading is Hard. My Typical Day.

For those of you that are consistently profitable day trading, please tell me your inner-most, darkest, money-making secrets.  I will reward you with….. gratitude.  Or if what you give me is gold, you get 5% of my profits. HAH!

Day trading is tough.  Shit, man.

I have been profitably swing trading now since about April.  I was once told, if you are putting in 6-8 hours a day reviewing your charts, making spreadsheets on your trades, tracking what works and what doesn’t, making sure you don’t make the same mistakes and being mindful of every thing you do, you will start to become profitable in 8-18 months.  It was about 8 months in April so that bit of advice for a successful trader gave me that extra confidence boost that “I’m almost there!”

And I’m glad I started off with swing trading.  I think most who start off and go straight to day trading either call it quits very quickly or lose their shirts and fall into that 90% fail category.  And I can see why.

Swing trading is slow.  You plan out your trades the night before, sometimes several days before.  You can work out your risk and reward.  You can find out where you want to take partial profits, move stops to break even, all while having a cup of coffee and catching up on your latest facebook feed.  So, sporadic, idiotic, spontaneous trades aren’t really an issue if you put your orders out and just let them trigger.

And you might over trade, but even if you do and you risk 1% of your capital, you’re really only going to lose on 5-7 trades a week if you’re really terrible.  Even when I didn’t know what I was doing, I’d have an occasional winner.  So you could kind of survive for months and months and just make a small dent in your account.  Maybe go 6-8 months losing small, losing small, before you finally start winning (like me).

 

bluemeth.jpg

Flip it over to day trading.  It’s swing trading on Walter White’s best stuff.  It’s fast.  It makes you pull your hair out.  When you’re done the morning, you’re left thinking, wow, why the fuck did I take half of those trades all while looking at that awful red P/L.  It doesn’t follow rules.  It’s swing trading’s ADHD brother who also has OCD.

Profit target, partials, stop loss and entry.  You pretty much have to calculate it all within seconds.  And sometimes you enter with a position size too small or too large, and then realize, fuck me, why is it when I enter with small size, the trades goes for me and when I enter too big, it goes against me.  That’s day trading.

I have my watchlist.  I usually go with momentum stocks I scan on finviz based on previous days top gainers/losers and I also trade stocks that gap up or down more than 3% and have pre-market volume over 20,000.  I have my strategies that I use.  But shit man, sometimes I don’t get a trigger and it’s like I’m a crackhead looking for some crack.

This is my typical morning day trading:

9:30AM – Have 2 charts on my platform up.  Both gapping down >3%.  What I look for is price to oscillate or go up slightly and go back down through the open and that’s where I enter.  Neither stock does so.  Sheeeiiiiiit.

9:47AM – Hmmm, no triggers so far.  OK, switch over to my momentum list.  Here I look for a stock that has shot up or down and is now pulling back.  I want to enter on the first pullback if I get a 3-minute consolidation or it gives me a nice reversal bar near VWAP. Hmmmm…. again, no pullbacks, these fuckers just keep hammering up or down with no rest in sight.  The rest are just shitting around like a drunk man stumbling.

10:08AM – I once read a technical analysis book that talked about triangle patterns.  *I squint at my stocks in my momentum list that haven’t really had any directional bias* That looks like a triangle!!!!!  Shit, lemme get in on that!  Enter.  5 minutes later, I’m down $100.  Why the fuck did you take that trade, dummy.

11:06AM – Alright you’re down a Benjamin.  Let’s get that back, no more dumb trades.  Oh, look at this bad boy pulling back (from my momentum list).  Oooooh, nice it’s coming down, you know what…. I’m just going to enter now and get a better price rather than wait for my actual trigger.  That way my risk is reduced and I will get more when it hits my target.

11:20AM – Da fuck dude.  You entered in on a falling stock, expecting the pullback and it just kept going down.  You idiot.  You’re down $200 now.  At least you stuck to your stop loss *pat on back*

11:35AM – *switch to 5-min charts* OK, let’s go through my ToS scanner, see what stocks are hot.  OH MAN, perfect pullback setup.  Doji on the pullback, right at around 50% retracement.  Good lord, lemme get in.  Entered.  Oh boy oh boy oh boy.  My target is only .10 away but I see so much green in my P/L.  You know what, the stock has already gone far enough, it might not even reach my target, so I should probably just take a partial profit now.  Nah, you know what, just take the whole position off.

Boom.  +$65.42.  Yeah, I’m sooooo the man.

Oh wait, I lost $100 on 2 trades and decided to take profits at $65.42 on my only winner. And look at that bitch now.  It more than doubled my target.  Shit.  I hate you stock.  Why did you stutter before my first target, fake me out, then take off after you hit it. You’re such a bitch!

BTaKGgn9c

Yessir, that is my usual day trading day.  I make money swing trading and lose it all day trading.  Actually, I’m probably profitable 2 days out of 5 day trading.  But those winnings days are still smaller than the losing days or about the same.  So the day trading is bleeding me out.

It’s only been about 2 months since I started day trading daily.  I dabbled here and there for about 2 months.  And yes, all of my poor swing trading profits get funneled into my day trading losses.  I think of it more as a business investment so that one day I can day trade for my main income and swing trade for the cherry on top.   So of course, I should give it the same 8-18 month time frame before I can be profitable.  I do track all my trades, the time I took them, why, etc.  So I am being mindful after the fact even if I did take some bullshit-spontaneous-I’ve-got-ADHD-and-can’t-just-wait trades.

Hmmmm.  Maybe I’ll start up a sweet $199 course and start a Youtube channel with me yachting in the south of France and telling you how easy and sweet life really is.  If I ever do that, please refer my customers back to this post and let them know, you will lose money, you will slam your desk (many times), shout many obscenities, hate the stock market,  complain to your wife that this shit isn’t easy and, of course, come back to do it all over again the next day.  Day after day.  For months or years.  Yay.

Have a great weekend everyone.  Taking Friday off, although I do have some orders sitting out there for swings.  Taking the ol’ lady out for some din din and drinks.  And then get drunk and complain how hard it is day trading.  Don’t worry, she loves it! Cheers.

 

 

 

 

 

 

 

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Loser! Yes, got plenty of those.

I have been seeing some good success with my swing trades, especially involving the high short floats.  But as with all trading methodologies and tactics, you will have losers.  The key is to cut them quick and move on.  Another component to becoming a successful trader is to take the losers, analyze and see what you can do to enhance your trades next time.   Sometimes, it’s just probabilities and there’s nothing there.  Sometimes, there’s something.

While most of the swing trades I take now have a high short float and were in established downtrends and now looking to make its first leg up or reverse, many of the trades I took were also in established uptrends.

I thought it was kind of weird….. why is a stock in a strong established uptrend have 40%+ short sellers piling into it?  It doesn’t make sense.  To me.

I did some digging.  A lot of times short float does not take into consideration what the market makers are holding.  And they could be holding a lot (long or short).  Also, these funds and institutions usually know something we don’t.  So if they are holding a large amount of shares short in a stock that has been trending up all year, they probably know something we don’t.
What I’ve also found out the hard way is that they really pile in when the stock is looking to break out.  Whether it’s longs selling their positions or shorts piling in even more, once these stocks in uptrends with high short floats look to breakout, they immediately fail.  Stubborn hedge fund manager doesn’t want to lose on his short position?  Algos that are fading new highs?  Could be both, could be something else I don’t even know about.

Take a look.

HLF failed

Got into this one a few days ago.  Triggered in a few cents up and came crashing back down real quick.

 

MDXG Failed

I got stubborn with this one.  Was triggered in last week and when it failed, I exited rather quickly.  Then I decided I’d enter should it break the slightly new high it just made.  Entered again, hung around the highs for a day or two and came crashing back down.  2 losses with this one.

 

CHGG failed

I didn’t enter this one as one of the blog readers had emailed me on it.  Same story.  Strong uptrend, makes a new high, almost immediate failure.

 

So going forward.  I will not be taking these breakout trades with high short floats if they are approaching new highs or in an established uptrend.  The ones that work best seem to have been beaten down all year in a long downtrend.  Short sellers probably got lazy thinking they’d be cashing in until the stock hit single digits.  Once a buyer started pumping money into it, they got a little scared but not too much.  Then as more volume and buying came, some hit the exit and the ones that stuck around, really got clobbered and sprinted for the exit as is the case with CAR, OMER and PLNT.

Any other nuances or behaviors you guys come across, please post them.  I would like to get as many ideas and improvements as possible.

 

Thank you Avis Car Rentals

Keep hitting base hits and eventually you’ll hit a home run.  We hear the phrase a lot in trading and in life.  For the past few months I have been grinding out small profits little by little.  Up $180, down $90.  Up $120, down $85. Sometimes down a little more than I’m up.  After commissions and all is said and done, I get about +2-5% of my account a month on swing trading.   It gets tedious at times.  It gets frustrating.  When can I make enough to buy a mansion and nice cars?  All this work and time to extract a few hundred dollars a month.  But if you think about it long term, doing this type of work day in and day out, for a few years and you have yourself a sizable return.

Well, finally, I hit a home run.  Months and months, grinding.  Scanning, analyzing, putting out orders, managing stops,  taking profits, pulling my hair out on losers.

This was a stock I had on my squeeze list.  All my criteria fit, the technical pattern was good.  All that is left is to put my order out there.

 

Car squeeze

I put my order out on Sunday night.  A stop-limit order to buy should it break the top of that range.  I was triggered in Monday morning while I was day trading.  I heard the British accent from my IB account “order filled.”  Focused on my 9:30-10 quick-as-shit moving trades, I didn’t even look over at my swing trade account.   Once I was in and out of my day trades, I took a peak over to see how my swing trades were doing.

“WHAT…. that must be an error.  Did I enter in with an extra zero? Holy shit!”

CAR had spiked up $4 in a matter of 20 minutes.  I was so ecstatic that I immediately took off 3/4 of my position.  Luckily it was near the peak of the day.  I still have 1/4 of my position on and moved my stop to break even.  My biggest trade of the year so far.

Extra motivation for me to keep doing what I’m doing and hopefully for some of you to keep at it.

What a sweet Monday.

 

 

My Squeezers Be Squeezin’

If you read my previous 2 posts on short squeezes (odds enhancer for breakout post and watchlist) and happened to enter on a few, you might be pretty happy.

Here are a few trades I am in that was on the list.

Red line was the trigger.  As I was still a bit hesitant about my own research and backtesting, I entered with smaller than usual size.  Fortunately the day after I was triggered in, we had a huge gap up and I took off 1/2 of my size.  I took another 1/4 off today as it pushes higher and will leave the last 1/4 as I trail my stop up below the previous close.  Awesome trade.

TWLO Squeeze

 

Here is another I entered with smaller than usual size, but it didn’t matter, as you’ll see on the chart.

Plnt squeeze

Boom goes the dynamite.  I’m out with 3/4.  Wish I would’ve stayed in full size as it would’ve probably been the biggest winner of the year.  Just trailing my stop up behind the prior day’s close with the last 1/4 size.

 

Of course, not all are winners.  Here is one that got triggered and I am still in.  I saw heavy, heavy selling coming it once it broke out. So either long positions are taking profits as they aren’t too convinced of the breakout or some funds are adding to their short positions.  Maybe the funds know something I don’t?  Well if they’re right, I only lose 1% of my account.  The reward is absolutely worth the risk.  If it breaks that recent high one more time, I think they’ll exit as they’ve brought this stock down from breaking out 3 days in a row and more eyes are on this stock to breakout long so we should have more buyers coming in as well.  Just my thought process on keeping my conviction.

 

MDXG squeeze.png

 

Last one I had on my list that I enteredSwft squeeze.png The day it triggered, it shot up and hit my first target. I thought, wow, this is going to the moon.  So instead of sticking to my rules, I only took off 1/4 of my position (instead of half like I have planned).  I forgot to move my stop to break even and 2 days later, I saw some red in my account manager and when I took a look, my slightly profitable position was now slightly losing.  Frustrated, I just closed it out.  My fault so it was my way of punishing myself.  I would’ve been alright if I stuck around but, meh.

 

The rest on the list either didn’t trigger or I missed and wasn’t able to enter.  I don’t always put out automated orders to enter.  I like to see what it looks like when it approaches the breakout point.  I don’t want it dilly dallying up there.  If I get a nice surge up, I want in.  So depending on my feeling, I may stay out even if all the stars align.

Here is one I had my doubts on that was on my list.  Reason being there were 2 points of resistance in May and March.  So I thought, it would hit some speed bumps at those points and I would rather a clean, rapid move up without any sellers coming in.

RDUS squeeze

Damn.  I gotta stop looking at this chart.  Keep kicking myself for not entering on this.

That’s all for now.  Hope to give you guys a few more to look at and hopefully you can make up your own trade ideas and share!

Great weekend everyone.

Squeeze List for the Week

Following up with my last post, I’d like to share with you ladies the list of stocks I have on my short squeeze list this week.  They provide great swing trade ideas as well as trade ideas you might want to implement intraday.

PLEASE do your own due diligence.  The worst thing newer traders can do (I’ve been there) is blindly enter along just because it kinda looks OK.  Know why you get in, what your risk is and where you will take profit.  These are just ideas for the week.

 

RDUS squeeze.png

Looks great for a trigger this week.  All the short sellers have been happy lining their pockets since mid-February and I think the short party has come to an end.  Had a gap up and big surge up that was met with a huge “nuh uh, not today,” selling pressure.  Whether it’s algos, a hedge fund manager who hates losing or a fat finger trade, doesn’t matter.  We know the shorts piled in here and are feeling confident.  But wait, uh oh.  We had a nice pop back up and re-testing the high of that big gap up-shut down day.  Looks like a great pattern to get long, perhaps this week.  If it does, those shorts are gonna be in pain.

Next up, (gotta love that ticker symbol) THC.

THC squeeze

Again, it was a short party for the last few months.  Shorts were happy, taking profits, adding to their positions.  Then May.  Boom.  I bet a lot of shorts got caught in that gap up and “doubled down” on their positions thinking that the gap up would get closed.  They are really feeling the pain now as price is re-testing the resistance in that consolidation.  If it breaks out above that red line, I’m definitely getting in.

 

Next, kind of strange one.  Not sure what is going on here but you might want  it on the radar.  Not as clear cut as the last two but worth noting, and who knows, might even be a better candidate.

ANGI squeeze

Here we have an uptrending stocks.  Why are there so many shorts involved?  I don’t know.  Bad news?  Lawsuit?  Again, I dunno.  But with that many short sellers, it’s in a pretty decent uptrend and looking to break out this week.

 

Last up for this week is RES.

RES squeeze

Again, short sellers loved this stock since January.  Piling in, taking profits all until April when the next pull back was a bit bigger than most short sellers wanted.  Then a higher high formed and now we are in an uptrend.  57% short sellers in this!  Wowzers.  I think that big green day 4 bars from the right was the first day of a small squeeze and my thinking is that the short sellers piled in more which brought it down hard the next day. Then we had a small gap down and a doji.  Buyers came back in and short sellers were feeling the heat and another ramp up on the most recent day.  I think if it breaks that orange line, a lot of short sellers who piled in on the last false breakout will have had enough and scream “uncle!”  And I’ll be there, cranking back on the Brett Hart sharpshooter collecting my benjies.

Hope this provides some of you guys with some trade ideas for the coming week – either swing or intraday.

It will be interesting to see how these stocks work out.  It is a newer tactic I have started implementing with good success so I hope to see it continue.

Happy Sunday fun day.  I just love running these screeners hungover.

 

 

 

Odds Enhancer for Breakout Trades

One of my favorite swing trades is the traditional breakout or breakdown trade on the daily chart.  My favorite breakout pattern is probably the cup and handle.  The name of the formation is not important.  What is important is that price reached an area of resistance 2 previous times (when going long) and is now approaching the resistance area for the 3rd time.  Also important is that the previous swing low was higher that swing low before that. Some get fancy and call it other names, ascending triangle, head and shoulders.  Whatever it is you want to call it, the important thing is that if price doesn’t break the third time, there are some big players that don’t want it going up.

Not the most picture perfect example but you can see resistance back in March was then sort of retested in early May then a sharp move up again in later May.  When it comes roaring up like that, I’ll take my chances that it’ll breakout on a strong stock like this.

MU June Swing

So that is just some background on regular vanilla breakout trades that I like to take.  Nothing more, nothing less than what I just typed out.  Don’t need to get cute with super precise entries on an intraday chart or have any super complicated money management other than the 3×3 method I covered in an earlier post.

ALRIGHT BRO, so what is the odds enhancer?  Get to the good shit.  I don’t care about the plain jane stuff.  Gimme the grail!

Well the past few weeks I have been trying to up my game, add some new weapons if you will.  Of course in the past I’ve read several times about short squeezes.  Never took an interest in them as I usually associated them with penny stocks or day trading stocks that have big gaps up where short sellers panic after a sharp rise and prices just go to the moon.  I accidentally came across some articles on short squeezes for swing trading and did some research.

After absorbing what I had read and putting together a tactic and paper trading it a few times, I had a very high success rate (for at least the entry).  I won’t go into money management because I am still working on that.  Just using the 3×3 method for now and seems to be working.  I went live with it this week and so far I have 2 winners (paper trades I was 3 for 4).

So how do you do it.  Spill the beans.  Take me to paradise.  You just wasted 5 minutes of my time writing all that nonsense above.  Alright, alright.

Head on over to Finviz.  On the screener, we want to search for stocks susceptible to short squeezes.  What this means is that we want stocks priced over $10, avg volume > 750k and here’s the important titty-bits.  You want to search for “short float” over 15%. This is the percentage of total shares being shorted.  The higher, the better.  Also “short ratio” you want 5 or more.  This is the total number of days short sellers have to cover their positions.  It is relative to the average daily shares traded and short positions.

Here is one I’m in now.  Notice the red box.  This stock is being shorted out the ass, almost 26% of shares outstanding are shorts.  I don’t know why, I don’t care.  But it’s in an uptrend and about to break out of the resistance I drew in with an orange line.  I placed an order to buy should this stock break out and it did.  And they usually will, if you picked the right spot where short sellers are getting their stops hit.  That is up to you to determine where it may be.

 

 

PLNT Squeeze

That’s it for the screener.  What’s the trigger?

So what we want is an entry at a point where short sellers are thinking “oh shit.”  And a traditional breakout point (long) is the perfect place where a lot of stop orders will be hit and other short sellers will be feeling the burn.  You do not want to use this tactic with stocks that are down trending strongly or in a wild range.

Here is another one I’m in now.  I never know if there will be strong follow through or not but the odds are definitely on my side.

Twlo squeeze.png

Just look at that.  Half of all the shares outstanding are being shorted!  That is pretty crazy if you think about it.  And it has been showing an uptrend as of late (although weak).  There is also a nice breakout formation where I placed the orange line.  I was entered into this trade on Friday.  Hoping to see some continuation on Monday and the more this goes up, the more those short sellers are going to panic and get out of this and that means more $$ in my pocket.

Here is one I paper traded.  Wow.  Just look at this squeeze.  I believe the short float at the time was over 50% as well.  The short sellers are still trying to get out of this and panic has set in.  Who knows how much higher it will go.

Omer squeeze

As for now the way I will approach these going forward is to scan for new potential short squeezes every Sunday.  Put out my orders a cent or so above the breakout point and let them do their magic.  Unfortunately, although you may get a candidate or two per week, they don’t always trigger.  So you might go a week or longer without any trades.  It’s a great odds enhancer and a great way to boost your win rate if you can stay patient and take only these types of trades.

I’m also researching how these might be good day trading candidates as well.  Imagine getting into a trade like OMER with a tight stop using day trading size and just trailing the stop up above the previous day’s low.  My goodness that’s a monster trade where if you can nail one a year, it’ll more than make up for all the small losses.

Will update on the results and how these are going.  Happy trading.  Ya filthy animals.

 

Market Makers, Institutions and Indicators

When I went to university over 10 years ago now, I had a friend from New York and his dad always carried in his pocket, a big roll of 100 dollar bills in a rubber band.  Money never seemed to be an issue for him as he bought his son, my friend, a nice SUV.  The dad himself drove a nice car, he always took us out to eat at nice restaurants and tipped well.  He usually swiped off a Benjamin to give to his son to tell to buy some beer for himself and his buddies.  Cool guy.

Never really wondered at that time what he did for a living.  Even if I had known, it wouldn’t have really mattered.  Only recently did I get back in touch with my friend from our days in school and out of curiosity asked him what his dad did (I even thought maybe he was in the mob).  He wasn’t exactly sure and said he worked “doing stocks,” at the NY stock exchange and then switched over to JP Morgan and now is retired.

So of course, I had to talk to him.  I asked my friend for his number and gave him a call almost immediately.  After some small talk, I dove in.

“So…… I heard you used to work in Wall St.?”

“That’s right.  I was a market maker and later went over to JP Morgan as an institutional buyer.  We used to make most of our money on the spreads but you can’t really do that anymore.  We had to adapt and most of us went the way of the dinosaur.”

Wow.  Some great insight.  I had to go further.  I want to know it all.  Indicators, ratios, algos, whatever it is, I need to know.  Unfortunately, I was quite underwhelmed with how he said they operated.

“Well, VWAP is important.  Keep an eye on that.  I didn’t use it, but a lot of guys did.  A Fiba-wha?  I don’t know what that is.  Yeah pivot points (he actually had a different name for them, I can’t recall) are levels to look at as well.  Time frame?  Doesn’t matter.  I just go off the tape and feel.  I used to trade AAPL and didn’t need a chart.  You told me a price and I looked at the tape and knew when I wanted to buy.  I’ve been retired for 15 years now, so I’m not sure how those guys work these days.”

So after about 40 minutes of talk and questions, I learned a lot but also reinforced what all of us traders know already.  It’s all about experience, time in front of the screens and the “feel.”  There was no secret.  No formula.  No grail.  He had put in 6 years as an intern then an errand boy for a few more.  No formal education.  10 years in they put him on the floor and that’s that.

Interesting, as after our talk, I decided to add pivot points and VWAP onto my charts. Removed all EMA’s, prior day H/L/C.  I never used Fibo’s.

You’d be surprised at how, to the cent, you’ll find reversals, support and resistance at these levels.  More than an EMA, more than a fibonacci.  So some ways I’ve been trying lately to incorporate these levels into my trading is to use them as an added odds enhancer.  What you’ll notice is the charts that look ugly, don’t follow any rules.  VWAP, pivot points, your secret juice EMA crossover.  Won’t do shit.  That’s because price there is completely random.

IF, however, you find a nicely trending stock where you absolutely can tell institutional interest is happening (higher volume than normal), you’ll be amazed at where pullbacks will stop right at the VWAP, reverse back to the dominant trend and find profit taking at a pivot point, rinse and repeat to the end of the day.  The hard part of course is finding these stocks as they are happening throughout the day.  Only in hindsight do you wish you could’ve had that stock to trade during the day.

Here’s a stock I’ve enjoyed trading the past week.  Notice the VWAP reversals.  I usually look for a doji or low risk signal bar near VWAP (it can be above or below by a little) and take entry .01 above it with the stop .01 below it.  Targets are usually 1/2 at 1:1.  Then if it takes off, I will wait for the next pullback and stick the stop under that.  If it’s starting to get choppy, I’ll try my best to take the rest off at at least 2.5/3:1. If I sense exhaustion, I’ll take profit.

MOMO

MOMO 2

 

Here is JD, another trade I took with trigger near the VWAP.  Best trade I had all month.

JD

Same stock a day later.  Outstanding doji signal bar at about 10:15, entry is .01 break below.  I should’ve held my second half longer as I exited when I got a 3rd bounce off of the day’s low.

JD 2

A few days later.  Notice this time it was hard to find an entry at 10:30.  I don’t recommend taking a blind entry just because it is at the VWAP.  You need a signal bar or entry technique which this kind of provided, but with increased risk (entry under that green bar means large stop).  Just after 12:00 provided a good signal bar or even at 12:45 but I don’t usually take trades at lunch time.

JD 3

Last trade I took yesterday.  MU.  Entry was at 11:50.  Perfect signal bar, just look at that narrow range doji.  Took entry .01 below that.  1/2 off at 1:1.  Then I took the second half off right after that bounce at 12:35 for about a 2.5:1.

MU

 

 

Some more trades I’m in (6/1/2017)

Forgot to add these to my last post.  That one was running a bit long so I thought I’d just start a new post with a new watch list.

A – 3×3 method.  Looking good so far

A Swing

Bottom red line was my trigger.  Middle red line is +1.5% where I will move my stop loss to break even.  Top red line is +3% profit target.  Again, as always, if the price hits my 1st target without a pullback, I will take off the full position.  If it pulls back before my first target, I will take off 3/4 when it reaches it as usually after a pullback it sets up for another run up (not always, of course).

Same story.  3×3 on DRI.  Middle line is +1.5%.  Just about there, hoping for some strong continuation today before the weekend.

DRI Swing

 

Last trade I am in is VFC.  This is the pullback consolidation method.

VFC Swing

Looks like the recent uptrend has come to a halt and the first pullback after the confirmed down trend is occurring.  Triggered in at the top red line.  Price made one attempt to go lower about 6 days prior to my entry.  So this is the second time prices will attempt to go down so I like the odds.

Middle red line is my 1st target.  I’ll take off 1/2 my position here as that will cover my initial risk.  The bottom red line is my 2nd target where I may take off 1/4.  Like I said, I don’t trust the market to follow technical analysis books – this is a clear cut downtrend but expecting prices move down below the previous low is a lot to ask for.

Like I said, even if I’m wrong, I like profiting.  If I subscribed to the 4:1 rule with my full size, I’d be pulling my hair out at any bounce or movement against me.  Peel off some money as it moves down.  I like it.

Actually, no watch list stocks today as it is Friday and I don’t take swing trades on Friday.  So will manage these positions today and look for new picks over the weekend.

Holla.

 

 

I love quick hitters – Swing follow up

If you took a look at my previous swing trade posts and followed up, you’ll see that a few of them have hit their targets within a day or two.

That is the best part of trading breakouts with a reasonable target.  They are usually hit within a week, and if you are lucky, within a day or two.

Here’s the follow up to my swing trade posts with a few additions.

MU – target hit in 2 days.  Entry was at $30.01.  Using the 3×3 method, first target is +3% so, $30.90.  Hit on the second day and I actually took off the full position.  Usually you should take off 3/4 and let 1/4 ride to 6% or more if you can.  I didn’t want to sit through the pullback and actually my available margin was all used up so I wanted to concentrate on other trades.

MU June Swing

 

Next trade was AAN.  This method was the pullback-consolidation-breakout with my first target at 1.5x risk.  So the way I handle these are wherever my stop is, let’s say $1 away, my first target will be 1.5x risk (+$1.50) and I will take off 3/4 of my position there.  This means that my original risk of $1 @ 100 shares =$100 is now actually positive since my first target profit will net me $1.5 * 75 shares = $112.50.

AAN Swing

If you’ve studied anything about your expected R, it dives into your expected return.  If you are always risking $100 per trade and you make $150 on your winners and 50/50 win to loss your expected R stays positive.  By making a first target that exceeds your maximum loss and having a 50/50 win to loss, you’ll always make money.  And then leaving 1/2 or 1/4 position on to run will sometimes get you that home run trade with little to no stress as you’ve already banked a profit exceeding your original stop.

So if you use this method and your first target is the only one that is ever hit and you only win 50% of the time, you will still be profitable.

*One thing I’ve learned is to not chew off more than I can eat.  Most technical analysis books preach you need a 3:1, or 6:1 or whatever target.  And I used to subscribe to that. Only, my targets were rarely being hit, and the losses piled up.  Or a trade would go my way 2.5x my risk with target at 4x and start pulling back and I would panic and end up selling at .8x risk and my profit is less than my original risk.  Doing this while taking full losses will net you a losing trader.

In my experience, the 4:1 or more trades is a tough game to play.  Your winning percentage will be lower and your patience tested.  Are you confident and patient enough that if a trade went your way 2x your risk and is now pulling back to take you out for a full loss, that you aren’t just going to take that little bit of profit before it goes to your entry price?   You keep doing this and you’re screwed.  If you don’t mind striking out 4 or 5 times to hit 1 home run then great.  Me?  I like hitting singles and doubles every day with an occasional home run.  Keeps my confidence high and my draw downs light.

Also, taking off 1/2 or 3/4 position at a reasonable target that is below the recent swing high or swing low ensures that even if you were wrong about the trend, you’ll still profit. That is a very powerful thing – to profit even when your expectations were wrong.  Expecting price to exceed the previous high or low not only takes patience but a very confident mindset.

Enough rambling.  Great trade.  Took off 3/4 of my position at the middle red line which ended up being close to 2x my risk.  So moved the stop to break even and my next target for the remaining 1/4 is at the top red line.

 

CSX.  Another 3×3 breakout trade.  The middle red line is the +3% target.  Reached in one day.  Yesssir.  Love these quick hitters.  I actually took off the full position on this as well rather than leaving another 1/4 in play.  Reason is like MU, if my target is reached in a day or two, I’d rather just take it all off than sit through an impending pullback.   If the pullback happens before my first +3% target, then I know it has room to run again and I’ll take off 3/4 in that situation with the remaining 1/4 hopefully netting me +6% or more.

CSX swing trade

 

SBUX.  On a roll here.  Just about .10 from my first +3% target.  It is tough not to just take it now, but if you do that, you’re risking messing up your whole system.  So, stay diligent and only take profits when your targets are hit.

My stop loss is also up to break even ($61.99) since it surpassed the +1.5% mark (middle red line).  If it goes through a pullback before reaching the target, I will take off 3/4.  If the target is hit today or tomorrow, I’ll take off the full position.  Again, if it hits the target without a pullback first, I usually take the full position off.  Don’t like sitting through pull backs and risk it tapping the entry point to take my out.  Also frees up capital for other trades.

SBUX Swing

 

Next up is EXEL.  This was on my list back on the 15th to enter.  Luckily I wasn’t following it and it actually had a false break down at around $19.50.  Since I missed it (luckily, because I would’ve been stopped out) and it pulled back, I placed a small order of half my normal size at $21.99.  Price shot down the next day and re-tested the new break down point.  I had my normal size here at the break down (top red line) and was triggered and first target hit in one day.

EXEL Swing

Took only 1/2 off at the first target of -3% (middle red line) because I had bigger size on it than usual (since I used a front-running entry in addition to the break down).  The next day showed some weakness, so I took off another 1/4 position at the bottom red line.

The last 1/4 position I moved to break even.  Price eventually shot back up and took out the 1/4 position.  Great trade.

 

Last one in progress is DKS.  Posted this with trigger a few days ago.  The top red line was my first entry trigger.  This is using the pullback-consolidation-breakout method.  I was triggered in on that big red candle down.  Just missed my 1st target for this method, which is the middle red line.

The bottom red line is the break down point.  I am contemplating whether to just leave the full size on in anticipation of the break downor to take some size off at my first target to lock in some profits in case it bounces or to even add to my position at the break down point.

DKS swing.png

I think what I will do is just leave the full position on in anticipation of the break down and if it bounces, I will take off 3/4 of my position.  If it re-tests the break down point, I’ll add 1/2 of my normal size for the 3×3 break down play.

So you can combine the 3×3 method with the pullback-consolidation method for good results.  Just don’t get too greedy.

 

DUDE, YOU’RE SO FULL OF SHIT.  You only posted your winners.  Anybody can do that.  Yes, I know.  I called these trades out a few days back and am following up now – there was no editing or additions made to that post.

BUT, inevitably, I did take a few that I didn’t post and I will share those with you.  And yes there are losing trades.

SBGI.  Failed immediately.  Was triggered in and the day closed at kind of a doji.  The next day when I saw the momentum shoot up, I exited before my full stop was hit.  So I took about 75% of my full loss.  Lucky me as later in the day it shot up even more so it would’ve taken me out at my full loss anyway.

SBGI Swing

I think when you see this kind of momentum going against you and your play is a break out or break down, it’s better to get out early than to sit and hope and pray.  And keeping losers smaller than winners never hurt anyone.

 

And the last stinker I had was NWL.  Again, played the 3×3 break out on this and it pretty much failed immediately.  I exited after the day finished down a solid red.  So, again, I took less of a loss on this than the full -3%.

I think if you are triggered in and the trade kind of oscillates at that break out point, you want to stick with it.  These strong bounces off of the break out point is a good sign to get out with a smaller than usual loss.

NWL Swing

 

In Summary: 2 losers, 5 winners, 1 trade in profit.  Every winner’s first target was at least my full risk.   As I mentioned earlier, shooting for 3:1, 5:1 targets is, to me, a really really tough game to play.  Trust me, I’ve played it for the past 5 months.  My advice – keep your targets reasonable (1x, 1.5x) and take a partial.  If you think it’s a 4:1 trade, let the last 1/4 position go until your 4x target.  If you’re wrong, you still profit.  If you’re right, you profit even more.   Don’t trust the market to stick to technical analysis rules.  You’ll be disappointed A LOT.  Squeeze out what you can and don’t get greedy.

Long post.  I’m up about $1500 this past month on my swing trades on a $10k account. Not bad.  This is the second month in a row for profitable swing trades.  I think I’m starting to hit my stride.

Hope to keep this momentum going.  This is a good way to journal as well.  I hate journaling but I don’t mind posting my charts on here.  And I like bragging.  Just kidding.  I hope some of you can take what I’m journaling and put it to good use.

Cheers