One of my favorite sectors is the steels and I like trading AKS. I have been trading breakouts to new inter day highs for a while with some success but not real great. A trader in the chat room (one of the good ones) pointed out an example or two of charts setting up by pulling back with a trader-x type trade. The chart on the left is how I looked at things. I bought the breakout to new highs 24.50 and once the stock started trading sideways, I sold at 25.65 for a quick profit. When the stock broke to a new later around 10:35 I did not get in because it look to extended and other steels were not trading well. If I was looking at the chart on the right, I would not have taken the first trade (and should not have) but had guts to take the second one because the risk would have been only 10 cents.
In the second example, I took a trade at a new high 50.86 with a stop below the recent low. I got stopped out just to see the stock continue higher. If I was playing the pullback bars and using the lows as stops, I had entry points once the highs were broken on the 2nd, 6th, and 8th bars. This would have allowed me to build a position and make a decent profit off of a stock that did not have that big move. In both cases (and I hope I caught the other traders thoughts correctly), I would have done better using the charts on the right. End of result of the day - never got in sync with markets and lost 150.
1 comment:
What convinces me about a trade is a well defined stop with a well defined entry--its so easy to say darn the market maker took me out and such excuses but you can learn as much from the bad trades as you do from good ones.
As an example take a look at MER today--the maximum you would have lost would have been .06 cents ( difference between trigger bar and then the eventual reversal on the next 15 min bar) and that is after it gave you an opportunity for about .25 cent profit. One good and helpful thing I ve found is take a slightly bigger position and take a quick profit as soon as position moves in your favor and hold the rest with breakeven stop--this way you will hold your winners a bit longer too without being worried about making money--needless to say your win % will count cause you will be taking on bigger risk with bigger position. But if you have a healthy win ratio then it shouldnt be a problem.
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