anarco's blog

Boring

2009-08-31T12:58:00.000-07:00

The market is quite boring right now, and I do not find anything worth trading. It seems like this week will be very slow going into the three-day weekend :-(

AUG 30 - RMBS

2009-08-30T20:05:00.001-07:00

The chart above is the weekly for RMBS. Look at the beauty of the inverted H&S pattern and the perfection of the volume. If this baby breaks $20, it could go to $35. This one is a good candidate for my retirement account.

Aug 27 - TRV (NR7)

2009-08-27T13:04:00.000-07:00

TRV has a quite compelling daily chart, and that is why I kept it in my radar fort the last few days.

Today I was compelled to take the trade for the following reasons:
1. TRV held up quite well during the first part of the session while the rest of the market was selling off.
2. Once the sellers release the pressure, TRV made a decisive move above the $49 line which has been forming a base for the past few days.
3. After taking $49 (also the PDH), TRV paused and printed a series of IBs against the upsloping 5 EMA. The trigger bars was a NR7, but I used the previous day high as my trigger (plus a few cents) and the PDH as my stop loss.
My exit was a the R2 line.

Aug 24 - SHLD (C&H)

2009-08-24T13:33:00.000-07:00

SHLD gaped down big 3 days ago and since that time I kept it on my focus list to see what it would do. Today the stock gaped down again but this time with some clear bullish action. This is a nice C&H pattern (but also could be read as a nr7 contraction sectup). Either way, there is an orderly bullish action a very shallow pause with volume contraction and then a 100% extension.
Most of my trades these days are in the direction of the major trend so it was a bit hard having the 5EMA and PDL as potential resistance points, but SHLD did not have any trouble penetrating those areas.

Aug 20 - AXP

2009-08-20T15:09:00.000-07:00

The first chart shows how AXP was trapped in a channel for the last week or so. I noticed that yesterday so I placed an alarm near the top and another one near the bottom of the channel.

The second chart shows how I executed the trade in the 5min time frame. I basically placed a buy order a few cents above the ORH (which matched the top of the channel) and my stop loss was the low of the previous bar. I set my target at the 38% fib extension drawing the lines from the bottom to the top of the channel, which made sense to me since that was the range in play.

Away until August 20th

2009-08-13T11:47:00.001-07:00

Aug 12 - ALL

2009-08-12T13:17:00.001-07:00

ALL gaped up and the ORH matched the PP from a few days ago. Then it printed 2 IBs on the top half of the first bar, so I entered when the high of the 3rd bar broke. The target was 38fib extension drawn from the PDL to the ORH, but I exited as soon buyers hesitated. In a regular day, I would this a bit more room, but I did not want to risk getting chopped on the FOMC action. And also price had consolidated around 28.60 so I was expecting the next leg up to have more force.

Aug 10 - RIMM

2009-08-10T13:07:00.001-07:00

Traded it like 00NR7 and DayTrader. No need to post one more chart with this one. I also traded CNX off 2/15, but had to scratch the trade after the bear engulfing bar (7th bar).

Aug 5 - JPM (bull flag)

2009-08-05T14:01:00.000-07:00

This is exactly how I want to trade and I really, really hope I can keep this up. I am saying this not because this JPM trade was such a huge winner in dollar value, but because I think I executed according to my plan and my rules. I did not enter too soon and I did not exit in a hurry. I may have given up too much with my final exit, but I hope to keep improving there as well.
The rational for this one is simple and it matches my bull flag setup parameters:
- Initial decisive move with good volume.
- Orderly pullback (bull flag) on declining volume
- A bullish candlestick resuming the move up. That could be a bullish candlestick formation such as an offsetting bar, a hammer, etc.
- The bullish candlestick finds support from the rising 5EMA
- An IB after the bullish candlestick is a plus

Jamie: Your NR7 post is helping me a lot in defining trading rules. Thank you!

Aug 3 - SLB

2009-08-03T14:10:00.001-07:00

SLB gaped up into the PP and I was hoping for the second bar to be an IB, but it broke above the PP with a bullish candle so I jumped in. I took a partial at the next PP level and was ready to wait for consolidation before the next leg, but I exited after a bearish long wick candle that touched the $56 number.
At the moment I exited I realized I exited too quickly and that was a mistake for the following reasons:
1. At the point of my exit SLB was still printing higher lows, which means that the trend was instact.
2. I did not give SLB time to rest/retrace/pause before the next leg up.
3. I was operating out of fear. And fear and greed are the main enemies of a trader.

So while this was not a great trade in terms of results, it has helped realize the type of rules I need to define in terms of trade management.

July 30 - CL (ambush trade)

2009-07-30T14:03:00.001-07:00

CL was an earnings play and an ambush setup. There is a decisive first WR bar on high volume, a decisive move to the 50% % RZ (no choppiness), a reversal candle formation at 50% zone (a hanging man candle), a red bar that breaks the low of the hanging man confirming the reversal, and a NRIB to trigger the entry. I exited my full position at the ORL.

July 27 - AKS (Failed trade)

2009-07-29T13:06:00.001-07:00

The first chart shows AKS trading in a box for the past 6 days.

The second chart shows how I executed the trade. The first and second bars were WR and had nice volume. Bars 3 and 4 were IB with declining volume, so I thought that if sellers were able to break the second bar low, they would be able to break out of the box. I placed my stops 0.02 below the 2nd bar low and I placed my stop a few cents above the PDL and 0.01 above the second bar high. Unfortunately I was taken at both ends and AKS traded in a range for most of the day.
If you had any thoughts about why this trade fail, please go ahead and post. My two thoughts are: 1) The lower range of the box should have probably be $18, since the PP was closed enough and round numbers always provide some support/resistance. 2) The stop loss should have been 0.02 above the second bar high and that would have saved me.

July 27 - AXP (Failed trade)

2009-07-27T13:07:00.000-07:00

With this trade I paid the price of anticipation. The correct bar to enter the trade would have been the next bar after my entry. I entered early and I got stopped out :-(

Stewie's Trading Service

2009-07-26T14:43:00.000-07:00

About a month and half ago I decided to join Stewie’s Trading Service and now I want to review it to share my experience.
If I had to summarize the service in one word, that word would be WOW!!! Stewie is a great trader. He is passionate about trading and equally passionate about teaching people what he knows. He is a straight forward person, honest and 100% committed to his members.

I would like to split my review into the following brief areas:

Performance. This is for me the most important point of the equation because I want to learn from people that have a proven track record. Stewie calls his entries and exists in real time, so you can see right away what the trades are, his entry and his stop loss. The performance speaks for itself. Simply look at it on this page.

Setups. Stewie explains his setups and the reasoning behind each trade either before or after the trade is made, so you always know the reason behind each call.

Questions. Stewie responds to people’s questions right away. I only asked a few questions since I joined the service, and they were always answered within half an hour.

Education. If you want to learn from a successful trader in real time, this is a great opportunity. Also, Stewie sends updates about how he sees the market throughout the day and he is available most of the time in the members-only chatroom.

Cost of the service. The cost of the service is $50 a month, which is my opinion a very reasonable price, considering that if you had followed all of his live trades, your account would have grown 25% in 12 weeks, which I think it is a really good return.

The last thing I would mention (simply for the sake of full disclosure) is that I do not take all of his trade calls (unfortunately!) and that the trades I post at my blog constitute the bulk of my trading. I do not take all the calls simply because many times I do not fully understand the logic behind each trade and it is hard for me to blindly follow anyone on anything. But I definitely hope to pick up a few things from Stewie’s trading, particularly the Overnight Hold strategy.

Last but not least, the service has a three-week free trial, so I think it is worthwhile to give it a go. If you do, I’ll see at the chat room!

July 23 - MOS

2009-07-23T13:43:00.000-07:00

This was a very nice cup and handle play that extended to the 50% ext (lines drawn from the bottom of the pole to the top of the handle. The entry also coincided with the break of a PP.

July 22 - CELG - FCX

2009-07-22T13:32:00.001-07:00

First CELG chart show price trading in a range for the past 2-3 weeks.

Second CELG chart shows price breaking above the range and making a decisive move higher however price struggled at R1 and eventually failed. I made a bit on the way up and shorted a bit on the way down to the top of the range.

FCX was a B&B trade. The target was PDH. Price made it there but I exited a bit before.

July 20 - ENER (bear flag)

2009-07-20T14:22:00.000-07:00

The first chart shows how ENER bridged the low of 03.30.09 and pulled back on declining volume printing a number of bars with upper wick. Note also how weak the ENER is on the last 5 sessions compared to the rest of the market.

The second chart shows how ENER opened weak today and eventually bridged the bear flag line. I entered on the NRIB after the initial bridge. ENER kept printing small bear flags in the 15 min chart so I kept moving my stop to the high of each bear flag, until I eventually got stopped out.

July 16 - XLNX

2009-07-16T14:03:00.001-07:00

XLNX gapped up $1 yesterday and it gapped down $1 today, but today the buyers were more awake and where decided to move this forward. Green bars are always much higher than red bars. I could not find an entry in the morning but in the early PM it started basing around $20 (which is a significant round number). I entered a few cents above $20 and exited a few cents below S1.

I also traded CNQ off the 1:30pm offsetting bar at the base of PDH (15min chart).

Jul 13 - MOS

2009-07-13T14:08:00.000-07:00

Today I had a great day and Friday was good as well. Friday I played MOS on a capitulation setup and today I played MOS again while it held the support line.
The chart below shows the 15 chart of MOS for today and you can see how the line slightly below $40 held as support during the capitulation on Friday. It also held as support during the first hour of today's session holding above that line on closing basis. I liked 4th bar hammer-like but volume was low and I was not totally convinced so I waited for a more clear indication (I should have scaled in). I entered after a WR bar and a doji that closed above the 5EMA. I held until the end of the day and it worked very well.

Friday's trade was more risky (I find the capitulation trades to be in general more risky) but it worked. I managed it with the 1min and 5 min chart. I think it is good to have a realistic target in mind for these trades since it is unlikely that the buy action will have the same force as the sell off.

July 9 - RIMM - X

2009-07-09T13:12:00.001-07:00

These trades did not work out for me today.
X gapped up above a daily PP and the second bar prints a hammer like candle that closes above the PP. There is a lot of white space between this PP and the next PP at $33.5 so it seemed like a good setup to work off the oversold condition, but it all ended in sideway chop.

RIMM formed a base at the ORH which coincided with a PP from 2 days ago. Price touched the PP 3 times, each time making a higher low and with bars contracting in range at the 3rd attempt. Volume contraction was also promissing. Place my buy stop a few cents above the PP and again the buyers had a nice break out, but the sellers took it away on the next bar.

If you have any constructive criticism about these failed trades, I am eager to learn.

July 2 - SKF - CNQ

2009-07-02T08:07:00.000-07:00

I am calling it a day since I don't seem to get a handle on things. Entered SKF on 4/15 and stopped me out. I also entered CNQ at 2/15 and that stopped me out as well.

July 1 - FUQI

2009-07-01T13:05:00.001-07:00

Jamie mentioned in the comments of last night's post that the volume on FUQI daily chart was euphoric and that the end of the upside move was near. I think we all know that the euphoria and capitulation volume foreshadow the end of a move, but I sometimes forget the obvious. It is like having all the correct pieces for a puzzle, but still not being able to put it all together. Anyway, I guess it is all part of the learning process.
Soooo.... with all that in mind, I kept a close eye on FUQI and what I saw in today's charts was a sideway action with a lot of the bars leaving upper shadows, which I interpreted as maybe "the bears were taking the ball away from the bull." The series of inside bars that started at 1pm near the ORL and the NRIB at 1:45pm motivated me to enter the trade.

NOTE: It is interesting to see POT in the 1min chart from 1:30pm to 4pm. It is like a staircase or a series of small bear flags.

June 29 - POT-SU-MS

2009-06-29T10:25:00.000-07:00

All failed trades. POT and MS where ambush trades and SU was an entry on 4/15 that did not pan out. Very sad day.

FCX

2009-06-28T19:40:00.001-07:00

I think this is an interesting volume pattern and candlestick formation.

June 24 - AAPL - AKAM

2009-06-24T15:20:00.001-07:00

AKAM had good potential for reaching the $20 mark, but it did not make it and stopped me out just below R2.

AAPL was an IB filling the wick of the previous bar and above the PDH, but it stopped me right away.

So far is has been a pretty bad week for me :-(

Consistent Strategy - Consistent Results

2009-06-22T14:28:00.001-07:00

Most traders get obsessively focused on entries somehow believing that the entry is the most important aspect of trading. However, in doing some simple math it became apparent to me that one can make money in trading even if one is not very good at picking entries. I am sharing here two tables and before getting into my analysis of the data, I’ll explain what each table column means:
Win-percentage of winning trades
Loss-percentage of loosing trades
# Trades-the total number of trades evaluated in this row
R Value-the maximum amount of $ one is willing to risk (and loose) per trade
#R per Winner-is the average number of Rs won in the 10 winning trades
P&L-profit or loss for a given row

Although the math in the tables is very simple, it is quite revealing. A trader that performs with only 40% of winning trades can still make money. If the 40% winner trader was risking $100 per trade and was getting into trades that yield 2Rs, he can still make $200 every 10 trades. And if his winning trades yielded 3Rs, then he can make $600 every 10 trades. Amazing, isn’t it?
Normally, we would say that a person in any field that performs well only 50% of the time is not very good at what he does. However, if you manage to stay at 50/50 in trading, you can do very well. A 50/50 trader that risks $100 per trade, if his winning trades yield 2Rs average, he can make $500 every 10 trades, and at 3Rs he can make $1,000 every 10 trades.

So, I think that entering trades that have a the potentially high ROI and never loosing more than 1R are also very important, and maybe crucial, to the trading game.

June 18 - ABX

2009-06-18T13:17:00.001-07:00

As we can see in the chart, ABX has been struggling with the $34 Pivot Point. Today's initial action lead me to believe that buyers would have the power to break through that line, but the move ended up being a head fake. After the bearish candle formation on bars 2, 3, and 4, I thought price would either chop around or drop down. The 9th bar was a nice, red offsetting bar below $34, but it was a bit wide for me so I passed. The next opportunity was when price broke below PDH forming a Doji below PDH and an IB with a small body filling in the lower wick of the Doji (very bearish).
I exited in full at the RZ line drawn from PDH to PDL.

June 17 - RIMM (bear flag)

2009-06-17T13:09:00.001-07:00

I played this one as a huge bear flag (it might continue dropping tomorrow depending on how OPEX plays out). I entered $0.02 below the S2 ($78) and exited in full at $77.00. Why $77? Well, I saw two possible targets: the swing low of the day at $76.16, or $77.00 (round number). I opted for exiting at $77 out of a gut feeling that price would not reach the swing low (nothing very technical about this decision).

I also played CELG as DayTrader but my exit was a bit different.

A sign of the times ...

2009-06-16T19:58:00.000-07:00

I'm getting back into my routines and slowly started my day-trading.
Some companies are starting to ask that employees work for free. Read this article. All I can say is WOW!!! From where I stand today I think that "I'll never work for a corporation for free." But one never knows what life might bring ...

Away until June 8

2009-04-17T07:57:00.001-07:00

Good trading everybody!

April 15 - VNO

2009-04-15T13:05:00.001-07:00

Another down day for me. VNO touched an important daily PP in the first bar. The second and third bar print higher highs and higher lows and the 4th and 5th bar are NRIB on the top portion of the 3rd bar. I was quite sure that this one would at least touch RZ, but it stopped me out right away :-(

April 14 - SU

2009-04-14T11:48:00.001-07:00

This one did not work out for me. The reading of the direction was correct, but the entry was a premature.

April 13 - MS - JPM

2009-04-13T15:46:00.001-07:00

Banks closed very strong last week and opened strong this week. MS printed and IB (second bar) with the body filling in the upper tail for the first bar. I entered on the break of the second bar high and closed at $26.00 which is R1 and also an important PP in the daily chart.

JPM chart is similar tp MS and I had the same entry and exit strategy. The target for this one was also R1.

April 6 - SOHU

2009-04-06T15:55:00.001-07:00

It was a real chop fest today, so the setups are not as clean as I like. The entry was a NRIB above the PDH. My exit was the R1 level.

April 4 - WFR - MOS

2009-04-03T07:53:00.000-07:00

I am going to quite now because today does not seem to be my day. I entered WFR before the bar completed and the next bar stopped my out in seconds. I entered MOS after price is not able to close above RZ. I got stopped out by a penny only to see price tank after that.

April 02 - MT

2009-04-02T09:06:00.000-07:00

I am going to be in meetings the rest of the day but I managed to score a nice trade on MT. This trade applies the new way that Trader X is drawing fib lines (although there are not really fib lines anymore at these levels). The idea, is that we measure the move from the ORL to the swing High and draw 25%, 50%, and 75% levels. A retracement to the 50% level is normal for a trending stock, but if price stays in the to 25% are is quite bullish.
MT gapped up at the open and buyers kept the pressure up. Then there was a slight retracement, but it stayed in the top 25% area, and then there was a reversal candle (DOJI) that closed above 25% line. I entered on the break of the Doji high and exited at the 38% fib extension. This one will likely continue up, but I need to shut down for the day.

Swamped

2009-03-31T12:35:00.000-07:00

This is just to let you know that I have been swamped at work and I had very little time to trade or post over the last few days. I managed to put a few trades in today, but it was quite rocky out there. I'll try to post some charts in the next few days.

March 25 - AXP (again)

2009-03-25T13:39:00.001-07:00

At yesterday's trade we said that AXP was unable to hold PDH on the important PP below $15. Today AXP tried to rally at the open but struggled with RZ forming a lower high with offsetting bars around noon. I entered short when price broke the higher low formed around 11am. I exited in full at the PDL and went long with half position 2 bars later. Why did I go long? The 3min, 5min, and 10min chart printed very clear doji reversal candles and there was strong support from PDL and R1. Overall I just have to say that "it felt right" going long. Anyway, I was not 100% committed to my intuition, that is why I entered with 1/2 position. Fortunately, it worked well.

I also had a number of smaller trades like RIMM with entry at 3/10. Took a partial at RZ and exited on the reversal bar. Overall, a very nice day.

March 24 - AXP

2009-03-24T14:29:00.001-07:00

The first chart is the AXP Daily. The area below $15 acted as support around the 20^th of January and now is acting as Resistance for the last few days. Another additional resistance indicator is the downlsloping 50 MA.

Yesterday, the end-of-day short squeeze put price at the resistence area. Today AXP gapped down (as most sectors did) and made a feeble attempt (low volume) to take the previous day high. It failed at 11:30am and it failed again at 1:30pm. So as soon as I detected clear weakness (solid reversal RED candle), I decided to jump in. Volume picked up right away, so I thought this move could go to the $14 area. I took a partial at $14 and placed my stop loss for the reminder of the shares above the next bar high. AXP reached the RZ line at the end of the day, which in my mind was the ideal target, but I was really conservative with my stop loss criteria.

March 19 - NKE - WFC - BUCY

2009-03-19T14:57:00.000-07:00

As we all know, there are multiple events affecting the market this week: Fed, Option Expiration, etc. So after the huge "Ben Rally" yesterday, I came into the session with the idea that market would pause or chop around. That was true for most sectors, although the financial gave back a bit and some of the commodities extended the rally. But the main point is that I wanted to profit from smaller moves, as opposed to trying to catch big moves. That is what I call target trades. The profit target for the "target trades" is typically a major PP or another meaningful indicator such as PDH, PDL, or round numbers.

So here are my for today:
NKE gapped down, but the bulls were in control and took price to RZ, NKE then retraced to the PDL and printed a nice NR bar with a long wick at the base of PDL. I used that as my trigger bar and exited at RZ.

WFC showed weakness at the open and printed a nice h pattern. The trigger bar is an "in the tail" weak bar and the target was RZ.

BUCY was also an "in the tail" trade after a successful retest of R1. The target was R2.

March 17 - POT and retirement account

2009-03-17T12:48:00.000-07:00

Yesterday I traded SKF on the long side with an overnight hold. I entered yesterday at $128 and closed my position today at the open at $146. This trade was in my retirement account, which is up almost 20% since the beginning of the year. I'm very happy about that.

Today I traded POT. I played it like a C&H with a NRIB, Doji as my trigger bar at the base of PDH. I exited in full at RZ.

March 13 - CNQ

2009-03-13T15:38:00.001-07:00

This is a very nice setup that I trade often.
CNQ gaps up but cannot hold price above PDH. Then it prints 2 NRIBs in the tail of the first bar and below PDH. Something very important to note is that although the fourth bar is WR red, the volume is very, very low, that for me was an indication that sellers were not in control. The fifth bar prints a green hammer on high volume and I thought to myself that the party was over, so I took a partial when the high of the hammer was taken. Fortunately, price kept dropping (very slowly) until it reached my target: RZ.

March 12 - CNX

2009-03-12T13:05:00.001-07:00

CNX dropped quickly at the open and printed an "in the tail" red bar below PDL and S2. I used that bar as my trigger bar and took a partial at S1. CNX printed a very clean hammer (hint of a reversal) and a NR, Doji at the base of S1. I exited when the high of the doji was taken and at the same time I entered long. Partialed my long position at PDL and held the rest until EOD.

March 10 - SLB -JPM

2009-03-10T12:29:00.001-07:00

What a great day! I have meetings starting at 1pm PST but I wanted to post a few trades. Note that there is still half hour to go, so the charts are "unfinished."

JPM gapped up and printed 3 very bullish bars at the open, but I did not see an entry. I thought that price would retrace 50% from the initial swing low to the high and that would have matched $18. However, JPM printed a doji just above $18 so I decided to jump in. The draw back was that R1 was just above the high of my trigger bar and could act as resistance. Price took off after my entry and I exited in full at $19.00.

SLB was a beauty. The second bar is an IB (but leaves a higher shadow). The third bar fills the shadow of the first and second bar and closes above R1. The draw back here was that the PDH could act as resistance. My first entry was on the break of the 3rd bar high. Price took the PDH and printed a NRIB (doji) at the base of PDH. I liked very much that formation so I added to my original position. I took a partial at R2 and exit the rest at $40 (important PP).

March 9 - FCX

2009-03-09T15:27:00.000-07:00

Last Friday FCX gapped above the $32.00 area, which is an area not visited since Nov 2008. Today FCX gapped down and although it was strong at the open, it could not take the PDH. FCX struggled with RZ throughout the morning and printed a nice NR bar (doji-like) below RZ. The next bar was a NRIB and the body of that bar was on the lower wick of the previous bar. Volume also decreased at these two candles so I thought this had potential for a nice move down. I took a partial at S1 and exit the rest at the end of the day. Very nice R return!

March 2 - CAL AMB POT

2009-03-02T13:14:00.000-08:00

I am a bit frustrated today. The market gave so many opportunities, and I just feel that I was focussed on the wrong stocks. I made money today, but I should do better.

POT had a steady move down until around 1pm and then it printed a higher low and a small base. I entered on the break of the base, took a partial at the previous swing high, and exited when buyers could keep price above $76.

This is a "top out" setup developed by Trader X. I entered on the break of the 4th bar low, and exited at the close of the 5th bar. I did not really like the long lower tail at RZ and that proved to be the right call.

AMB was a nice setup but I ended up taking a small loss. AMB gapped down below PDL and S1 and it printed 2 NRIBs. The volume pattern was not great, but I thought price would collapse. Well, it hang around that area for a long time (while the rest of the market was tanking) so I finally decided to exit (four bars after my entry).

February 26 - STI

2009-02-26T14:30:00.001-08:00

Very nice dummy setup on STI. Price open strong with buyers in control and clearing both PDH and R1. The second bar is also strong, clears R1 and leaves a small upper wick. The third bar is a hammer-like IB with the body filling in the wick of the second bar. Entered above on a break of the 3rd bar high and exit in full at R2 (a few cents below $14). I considered taking a partial there, but I find the market not having a lot of follow through, so I took it all out.

The next one was inspired by the trades that Jamie is doing on the lower time frames. The pattern I saw was an inverted H&S, and the entry was perfect, but I chickened out 4 bar later on the red candle with high volume, so I exited in full. That was totally silly, and if I would have stayed ...

Church debate - do dogs go to heaven?

2009-02-24T16:29:00.000-08:00

Please do not look if you get easily offended on religion jokes.

February 25 - SU

2009-02-24T13:29:00.000-08:00

Last night Tyler and I were chatting about the "top out" pattern developed by Trader X. And today, I saw one that seemed to be a perfect match, and although I am just starting to study it, this one seemed too good to pass. I entered on the break of the 3rd bar low, which closed below the half-way point between the ORH and RZ. I think one needs to be watch out for RZ acting as support, but if price breaks through that line, then the next clear area of support is the ORL.
I exited at $17.00 because it is a round number and potential support area. Price reversed exactly at that point.

February 20 - AEM

2009-02-20T14:32:00.000-08:00

I am certainly happy with today's performance. This trade was a multiple R winner and one that put a lot of pesos in my account!
I played AEM as a C&H although in the 5min chart it could be interpreted as an inverted H&S (Jamie is the expert on this pattern, and many others). I really liked the base that formed at the $53.50 level which is quite orderly in the 5min chart. I also liked the NRIB (and doji) that formed in the wick (as Trader X would say: "in the tail") of the previous 15min bar. Price took off nicely. I took a partial at R1 and exited at PDH.

Trader Tax

2009-02-19T18:18:00.000-08:00

One more thing to add to the many ridiculous things that are going on right now: a congressman is trying to pass a law that would impose a 0.25% transaction tax on traders and investors.
If this comes to pass, it will have a huge impact on traders like us. Please sign the petition to say no to this. Thanks!

February 18 - ABX

2009-02-18T12:25:00.001-08:00

So far February has been a struggle for me. I am at break even for the month and do not seem to be able to pull ahead. It is quite sad to be spending so much time on this and not really be profitable. But I guess that just means I am not yet good enough, and need to keep working at it.
I have meetings later in the day so I decided to post this chart before the market close. I played ABX as a C&H. The bar that actually broke the base was too wide for me, so I decided to see if there will be a pullback. And the next doji candle was perfect: only 0.15cents from high to low, so this was a nice trade. I exited in full at RZ because I find the market quite choppy and wanted to lock in some profits. Normally, that would be a place to partial and then hold the rest for the ride.

February 12 - CLF - WFC

2009-02-12T14:32:00.000-08:00

I would say that there is a lot of fear in the market right now and the action was choppy until the last hour. What the hell happened in that last hour?
Anyway, I missed the morning action (again). But these two trades gave me something. CLF is not a very high grade setup. I am basically going against a stock that is making higher lows and higher highs (intraday) but the failure to hold above RZ and the shooting star against RZ encouraged me to participate.

WFC is a bit cleaner, Weak sector, gap down, struggle with ORL, and a NR bar (doji) against the ORL. Unfortunately, WFC printed another doji 2 bars later and that doji foreshadowed a reversal.

February 9 - SU

2009-02-09T13:24:00.001-08:00

I had a couple of trades like this one with no follow through :-(
and I could not trade in the PM. Last week I also had a few days like today; ending at break even.

However, I am only trading two setups right now, and that allows me to be more focussed and hopefully learn those setup quite well. My main goal right now is to obtain consistent and steady profits. As I mentioned in this post:
I believe that the only way to get consistent results is by applying consistent methodology and consistent execution.

Bob Marley's 64th birthday

2009-02-06T14:04:00.000-08:00

In celebration of Bob Marley's 64th birthday, watch the video of a new rendition of the Marley classic "One Love" as put together by the global musical and multimedia movement Playing for Change. Nice!
Find it here

February 4 - MUR - LLY

2009-02-04T13:23:00.000-08:00

MUR
Entry criteria
- First bar is at the PDH but it is a doji (potential reversal)
- Second bar partially fills the lower wick and closes below PDH
- 5 DMA offers additional resistance
- 2nd ard 3rd bars are inside bars

Entered at the break of the 2nd bar low and exited at $44.00 (round number near RZ)

LLY
Entry criteria:
- 3rd touch of the $38.50 (base)
- 2 bars prior to trigger bar build momentum
- Doji is (in my observation) bot a reversal and a continuation pattern depending on the placement in the chart. See this post on Doji

Entered at the low of the doji and exited at RZ

February 3 - GS

2009-02-03T12:23:00.000-08:00

The day is not over, but I am done. This market is a grind. Up-down-up-down-up-down.
I managed to catch some action on GS.
Criteria:
- First 3 bars price is unable to close above PDH
- First 3 bars more than 50% of the candles (from high to low) is below the PDH
- First 3 bars are IBs
Negative elements:
- 5DMA is close and could act as support
- Volume is not declining orderly

Entered on a break of the 3rd bar low and exited at RZ.

Nationalizing Banks

2009-02-02T08:38:00.000-08:00

I happen to like and agree with some (not all) of Paul Krugman's point of views about economics and politics. He wrote this column in the NY Times.

If the government decides to nationalize banks, we can expect that sector to be valued at zero. And if banks are not nationalized, we could also that sector trading at penny value. If that comes to pass, SKF could easily reach $400.

No trades today

2009-01-28T13:06:00.000-08:00

PBR and SLB are very nice charts, but I missed them in real time. I missed SLB altogether in real time, and with PBR I hesitated because the second bar was a bit extended. But the 3rd bar (15min chart), I think, was the perfect entry: a hammer-like candle closing just above the ORH.

January 27 - RIO

2009-01-27T15:27:00.000-08:00

I have to say that trading the plan is not as easy as I thought it would be. During the trading session I am tempted to take other trades, but it is nice to only execute what you think works. That gives you the chance to see how the other trades (the ones one does not play) unfold. And I can see that if one wants to get consistent results, one has to apply consistent methodology and consistent execution.

I only traded RIO today.
Entry criteria:
- First bar is bullish
- First candle characteristics:
= It closes on the upper half of the 15min bar range
= Body is at least 50% above the RZ line
- IB characteristics
= Top 50% of the previous bar
= Fills the wick of the previous bar

Target
Initial target is the PDH
Final target is $13.96. That is R2, the 38% fib ext drawn from PDL to PDH, and it is also a few cents below $14.00 (round number that is likely to act as resistance).

For me, the most important psychological aspect of this trade was the red bar at 11:30am. In the past I would have exited at the first sign of red ink. But now I know that I need to give price the chance to test the previous PP (or the previous consolidation area) before moving on. In this case, it worked like a charm.

Going for it

2009-01-26T17:53:00.000-08:00

It is clear that if I want to become a better trader I now need to:
1. Stop trading multiple setups in a mediocre fashion. Limit the number of setups I trade (one or two), and know my setups inside out.
2. Define my trading plan
3. Define my trading rules
4. Eliminate revenge trading (or trading on emotion)

One of the setups I will trade will be based on IBs that happen at the open gap. The other one will likely be some type of retracement play (but I have not made a decision about that).

I only traded POT today. I entered on the break of the 2nd bar high.
Criteria:
- Gap up
- First bar is bullish
- Body of the bar clears the PP or is at least 50% above the PP
- IB is on the top 50% of the previous bar

Exit criteria. After the shooting star, I moved my stop to break even, because it was quite clear that buyers were loosing steam.

Achilles’ heel

2009-01-25T10:41:00.000-08:00

From wikipedia
“An Achilles’ heel is a fatal weakness in spite of overall strength, actually or potentially leading to downfall.”

Friday’s session provided me with a clear, raw view of my own Achille’s hill: I loose psychological control of myself when I have a loosing trade; I start trading with anger and frustration and ignore my setup rules and every new loss clouds my judgment more and more.
I rather ignore this fact. I rather pretend it is not there. I rather sweep it under the rag. But I cannot. I know that if I want to grow as a trader, I need to face this.

When I started 2009, I defined my main trading goal as: to gain a deeper understanding of price action. I cleaned my charts from indicators I was not using, and started studying the many rules that comprise the mechanics of price action. But now I realize that I need to set an equally or even more important goal:
To use the loosing trades as a psychological trigger to awaken the wining mental power and focus that allow me to be the trader I want to be.

I view trading as an extremely competitive endeavor. And when I am partaking in a competition, I am very, very competitive. When I was younger I played volleyball for the national team of my country, so I know what being a high performer means. And I also know the psychological struggle that goes on when you are down, and you need to pull the very best in you to come back and win. I now need to apply this to my trading. I need to exercise the psychological muscle that allows me to come out a winner after being down.
Yesterday, at the Australian Open, I witnessed two inspiring comeback stories: Safina, who was down 5-3 and 40-15 with Cornet serving for the match, rallied to win 6-2, 2-6, 7-5. Safine could assume the top ranking if she wins this competition.
Also, Roger Federer (one of the best male players in the world) was down 2-0 and ended up taking the match from Berdych. That was another amazing match, and this is what Federer had to say:
"It's great satisfaction," said Federer about winning a five-set match. "I don't play five-setters every day so it's a very nice feeling. I guess especially coming back from two sets to love when you feel like everything is going your way in the end and the other guy is all of a sudden under pressure. After you felt one way for one and a half hour, then to be able to turn it around and then be leading all of a sudden is a great feeling."

I also find interesting that most of the conversations among traders are centered on the subject of entering trades or market analysis. And considerably less is spoken about trader psychology. Even the successful traders I know (most of them do not blog), they hardly every speak about the psychological obstacles they had to overcome to become successful. I would really like to hear or read some of those stories.

Building Success

2009-01-22T17:11:00.000-08:00

I sometimes have very ambitious goals with my trading and that makes me neglect certain setups just because they are not so "grand." That is totally stupid. I think that success comes from building on the small and simple strategies that work for oneself.
Imitate while you learn. Innovate when you become yourself.
I like the work that Tyler is doing with his trading.

January 22 - MTB

2009-01-22T14:05:00.000-08:00

Although MTB gapped up (it was in my gap up list), it sold off furiously and by 10:30am price made it below the PDL. I knew it would retrace at some point so I placed an alarm in my eSignal software at $36, which was a bit below the previous day swing low of the afternoon. Price touched that line and printed a bear candle (kind of like a cloud cover but not really), so I jumped in. Exited at exactly the 38% fib extension (draw it from the PDH to PDL).

Doji

2009-01-17T10:05:00.000-08:00

Long time ago I went for a job interview and the interviewer asked me if I was “passionate” (that is the word he used) about certain task I would be performing if I got the job. Well, most of you do not know me in person, but I am quite transparent so it is easy for others to see what I really think by just looking at my face. Anyway, I was not truly passionate about that task so I started laughing. Of course I did not get the job.

Anyway, the story above is simply to say that “I am” passionate about Japanese candlesticks. (Although I tend to reserve the word passion for other aspects of my life.)
So in 2009 I want to dive deeper into candlestick formations and how to effectively use them in my trading.

For the first two weeks of the year I focused on the Doji, and more specifically on the Long-Legged Doji. And to be even more focused, I excluded the Gravestone Doji (no lower leg) and the Dragonfly Doji (no upper leg), and also the Doji with very, very small legs.

My approach is very practical and my observations are based on real-life charts, so that is what I will share here the blog. I hope it does not contradict textbook definitions, but if it does, so be it. By the way, the best book I read on the subject (and continue re-reading) is the Japanese Candlestick Charting Techniques by Steve Nison. It is quite excellent!

I observed that Long-Legged Doji represent:
1. Reversal (the most common and accepted view)
2. Continuation (not many books see it that way)
3. Pause
4. Prelude of acceleration

Reversal
I think that for intraday trading, one of the safest plays is when a trend is established and price prints a Doji while it pulls back to test a significant PP

Continuation
The primary requirement for playing Doji as continuation, is that the movement prior to the Doji needs to shows significant strength. So if there is hesitation, there is more risk of failure.

I think one of the keys to success in trading is to know your setups and patterns inside out. If you cannot find and recognize patterns outside trading hours, you are less likely to find them in the heat of the moment.
I am planning to continue this type of posts.

Freakish Charts

2009-01-16T17:29:00.001-08:00

Do you see what I see?
One is the 1min chart between 12 and 1:15 today. The other one is the 15min chart over the last 3 days.
You need to start seeing these patterns if you want to get at this ;-)

January 16 - AXP

2009-01-16T12:38:00.000-08:00

AXP gaps up but the bears take it away printing 2 WR bars. The first bar penetrates the retracement zone. Bars 3 and 4 are IBs with declining volume. I entered on the break of the 4th bar low and exited in full at PDL.
The major thing I did not like about this trade was that $17 was somehow close to my entry and potential support. I could have taken a partial there but I decided to hold in full (this time it worked out).
The other aspect somehow negative is that the two IBs are a bit far from the RZ line and I am trying to enter my trades near major PPs. For IB trades, I don't think the IBs need to be touching the PPs, but being closer to a PP gives the stock more room to run. I am still experimenting with this.

January 14 - AUY

2009-01-14T13:14:00.001-08:00

AUY opened just below RZ and printed two bearish bars. Price could not close above RZ, so I thought this baby would be going down. Exit at $6 because is a round number and a potential support area.

January 9 - POT - FWLT

2009-01-09T16:11:00.000-08:00

FWLT was a perfect reversal hammer at RZ. This a Trader X type of setup and it actually feels good to find one in real time and be able to execute the entry with success. Partial at PDH and then I was called for an emergency job meeting so the exit was a bit rushed :-(

POT was a bull flag setup at the base of the PDH. It was nice and orderly and it took off after my entry. I partial at the ORH (and R1) to protect my profit and exited after the shotting star in the 15m chart.

January 7 - DUG and SU

2009-01-07T14:22:00.000-08:00

I am back!!! It feels like 2009 started today for me!
I am unable to upload images to blogger (for some reason), but here are my trades:
DUG: Entered at 7/5. With that bullish bar the bulls invalidated the bear move on bars 2 to 4. I exited at the 38% extension of the fib drawn from the PDL to the ORH.
SU: Entered at 10/5. Price tries to recapture the PDL, but the bears take it away on the 10th bar. Exited at the doji bar that takes place at $22.68. The whole sector seemed due for a pause so I exited in full.

Edited to add the charts.

January 6 - SLB

2009-01-06T16:15:00.000-08:00

In choppy days like today, I tend to stick to the 5 or 15 min chart, but for some reason, today the 1min chart made more sense than the others.
My first entry is on weakness at the PDH ($49). That level was tested yesterday without success. The second entry was a triangle play. The range contraction lead to the expansive move down. Price found support at $47.70 which was the ascending 20MA in the 15 min chart.
I am still trading with fear to loose and in the "trading not to loose" frame of mind. I need to trust the setups I see and keep the original stops in place. It was a positive day, but it could have been much better.

January 5 - Failed trades

2009-01-05T17:48:00.000-08:00

I spent most of the holidays studying charts, so after so much time and effort dedicated to my trading I wish I had better news to report, but the reality is that today was not a good day. My inability to perform according to my own trading principles and rules was a bit alarming. Maybe it was just a bad day and I am making too much of it, but when I trade like today, without actually "seeing" or "understanding" what I have in front of me, it is a bit depressing.

On the first BP trade, I traded 2IBs at the base of the ORH. That did not work out (and I need to keep observing this pattern to understand better why this did not work. So far I can only see the red bar prior to my entry as the cause for it). The second entry was a revenge trade, in which I did not even wait until the bar finished forming. That was a quick loss and a type of trade I need to eliminate 100% from my trading.
In 2008 I took a handful of these trades and I thought I had that under control, but obviously not.

DIG was a C&H pattern that looked really nice with the handle almost looking like an ascending triangle (higher highs and higher lows). After my buy stop order was hit, price moved my way, but the market started reverting at 2pm (as it regularly does) and buyers could not stop the selling pressure.

ENDP was an inverted C&H that looked neat, but the $24 PP held as support. My entry was too aggressive and I should have waited for a break of the PP and a retest.

Overall a -2.5 R day :-(

December 30 - JPM

2008-12-30T17:01:00.000-08:00

JPM gapped up slicing the PDH at $30 (round number and an important PP). It consolidated for a few bars at the ORH and pulled back just to touch the $30 line printing a perfect doji reversal bar (trigger bar). I sold at the first sign of weakness because of the way the market behaves during the holidays. A more reasonable strategy would have been to allow price to retest the ORH.
JPM was trapped between $30.60 and $30.25 most of the day and went it finally broke, it provided a nice entry. Sold at $31.00

Robin Williams on Obama's election - Very funny

2008-12-22T05:48:00.000-08:00

December 19 - MEE

2008-12-19T13:53:00.000-08:00

After the initial swing down, buyers try to recapture the high of the day (first bar high and open price for the session), but are unable to make it there. Price then slices through the PDL and pauses, that is where I entered. I am still figuring out the exit strategy. I exited as soon as I saw some buyer's power, but maybe it would have been smarter to take a partial at the swing low of the day and then let the stock ride.

I am posting below a trade from yesterday, which was a very difficult day around the house. There was a freeze the night before, which is unusual in the area I live (north of San Francisco), so a pipe line on the roof broke. I was half hour into the trading session and I had to stop everything and get a plumber to fix the issue. Anyway, the whole ordeal took most of the day. But I was fortunate to see this setup in the last hour of the session. I exited at the 38% fib extension.

Social Security

2008-12-19T08:25:00.001-08:00

Stop the giveaway of the Redrock Wilderness

2008-12-18T05:45:00.000-08:00

If you are interested on stopping abuses against nature, read this short article by Robert Redford. You may also sign the petition at the bottom of it.

List of ETFs

2008-12-17T19:31:00.000-08:00

Here is a very useful list of ETFs

December 17 - SRS

2008-12-17T14:09:00.000-08:00

I was mostly studying charts today but I saw this setup and I put some money into it.
SRS gapped into the previous day low and it lingered there for a few hours. In fact, since it wasn't doing anything, I decided to set an alarm (in eSignal) close to the PDL. BTW, I find alarms to be quite useful in these cases, but many times I even forget the functionality is there. SRS broke the PDL with a solid WR bar and high volume and it retraced just a bit to touch the PDL forming a quite bearish candle that I used as my trigger bar.
The first blue arrow marks my exit and the second one a potential second entry. I was really, really close to entering a second time, but I chickened out. Too bad!

December 16 - CELG (chart)

2008-12-16T14:26:00.001-08:00

These are two beautiful charts to study. I did not play them, but they look really great!

December 12 - SLB (head fake)

2008-12-12T16:19:00.000-08:00

Hmm ... I am not sure about this one. Certainly the volume pattern on the first three bars is correct. And the second bar is beautiful (NRIB). No major PPs in sight. Now the third bar is not ideal, but is it that bad? The third bar closed green, with a higher upper wick and higher close than the previous bar. Could that bar be the cause of such a reversal? There was some support around the $40 area on the daily chart, but since the first bar passed through it, and the third one did not make it up to $40, I thought that price was going to continue dropping.

Need exit strategy

2008-12-10T15:41:00.000-08:00

I thought I executed a good entry on this one. A NRIB at the upper part of the first WR Green bar. But what happened with the exit? IThe 4th and 5th bars are bearish, but instead of exiting at the bottom of the 5th bar I decided to give this some room (as you know, a few of my recent trades failed for exiting too quickly). The truth is that price dropped quite abruptly and I exited pretty much at the bottom of the 6th bar, which was exactly the very bottom of the retest. From that point, PBR moved almost a point and a half. Very, very disappointing.
Where would you have exited?

Mumia Abu-Jamal

2008-12-09T14:14:00.000-08:00

Yesterday night I saw a documentary called “In Prison My Whole Life.” This documentary covers the unfair imprisonment of Mumia Abu-Jamal, a former Black Panther Party activist, a real journalist, and civil right fighter. He was falsely accused of killing a cop and put in jail on December 9, 1981. Today marks 27 years of that event.

He is only allowed three fifteen-minute phone calls a week, and he uses that time to report about life (or hell) in prison. Democracy Now is one of the few radio stations that broadcasts him. He also wrote an amazing book called: “Live From Dead Row.” For current info about him, visit the Abu-Jamal News site.

December 9 - X (again)

2008-12-09T14:02:00.001-08:00

My X trade yesterday did not work out well, but the one from today did

Price rallied above the PDH and retraced to the 34MA (which acted as support) where it printed a lower high. Price bounce from there but it hardly made it above the previous high. Also the volume on the second push higher was not very large so I was curious to see how price would react to the 34MA. This time the MA did not hold, and a few bars after the initial thrust X printed a nice bearish bar just below the MA. I entered on the break of that bar’s low andI held my position until EOD.

Note: This past weekend I started playing with the 34MA in my 5 min chart and all I can say at this point is that it is another interesting point of reference. Right now I am experimenting with it. We'll see if it stays.

December 8 - X

2008-12-08T19:14:00.000-08:00

I traded the same chart as Trader X, but my trade failed and his succeeded. This is a great learning experience so I'll simply point you to his post. In the "Comments" section of his post you can read further insights on how Trader X played this chart. And he also answers questions from me and others. Here is the post.

December 5 - Q's - BTU - UAUA

2008-12-05T14:37:00.000-08:00

The hardest thing about the Q’s trade was the psychological struggle of seeing the market going up (after the initial move down) knowing that the unemployment data was the worst in over 30 years and thinking all the time that the market should be really going down. Anyway, I was able to get over that and traded the chart. And that was really a success in itself.
The rationale for the trade is simple. An initial thrust down and a steady climb up hat makes higher highs and higher lows. Finally, price breaks above PDL, retraces back to the trend line, steps up above the PDL and prints two IBs, with my trigger bar being a NRIB. I exited at $28 considering the RZ, the 50EMA and 5DMA (in the 15min chart). Anyway, price sliced through that area. And, as it usually happens, I felt like a fool for not riding it all the way. But hey, nobody wins them all.

BTU broke down below PDL and at 11:00am started climbing up slowly, but steadily. The two sets of offsetting bars (point A and B) told me that buyers were in control of the action. Just before 2pm BTU makes a decisive move above PDL and then it retraces to test the trend line, and it proceeds to form a small base. I set my buy-stop order a few cents above the top of the base and my protective loss-stop at PDL.

UAUA did not work out. I saw a picture perfect bull flag and I entered on the break of that flag. But I was shook out because price came back to test PDH. I exited because I thought the whole thing was a head fake (especially when I saw that full body, WR red candle at 12:30) , but UAUA ended up making a very nice move to the 38% fib extension (without me).
If you know or have any theories about this failure, please let me know.

December 4 - HAL

2008-12-04T14:52:00.000-08:00

I discovered this one at the end of the trading session. I entered short on the break of a very weak, bearish bar that is sort of hanging from the previous day low line. Although my target was the 38% fib extension, I exited as soon as I detected buyer strength. And I should have gone Long at that very moment, like Jamie did with the e-mini trade yesterday.

December 3 - RIO and WFC

2008-12-03T15:30:00.000-08:00

My charts are a bit cleaner now and although I will continue tweaking things, this is a bit more comfortable for me.
- the doted acqua lines are the previous day high (PDH) and previous day low (PDL)
- the black lines are the value 0 and 1 of the fib extension (in my charts when the lines coincide with the PDL or PDH, the black line hides behind the doted acqua line)
- the red lines are the -50% fib and –1.38 fib retracement
- the green lines are 38% and 100% fib extensions

I took two trades with RIO. The first one was a long trade after a head fake at the ORL. After printing two offsetting bars (the second one with long lower tail) RIO printed two NR bars. The second bar was also touching (although a little bit lower) the ORL. Exited at the first sign of weakness around at the –50% retracement area.
The second entry was short when RIO printed a spinning top right below the –50% retracement area. I exited at the first sign of strength.

The second trade was a failed one and I played an offsetting bar right at PDH. I am going to study this chart a bit better because I am not sure why it failed. One possible cause is that WFC had already tested the ORH at noon then made a lower high before testing it again. So one way to interpret the chart at the point of my entry could be to see it as an inverted C&H. Another thought is that price in fact reversed at $25.50 (around 2pm), and that is pretty close to the ORH (ORH was $25.64). So in fact the real support area was the ORH, not the PDH.

December 2 - POT (chart study)

2008-12-02T19:42:00.001-08:00

I am still playing with the cleaning of my charts and I actually want to change the color settings I used in the past. I am not sure this one will stay, but I will give it a try tomorrow during trading hours. I am primarily a visual person and I am convinced that the colors in the various chart elements and the size of lines and text have a definite influence on how I perceive and decode market action. This tone schema I created has fewer colors:
- the doted acqua lines are the previous day high and low
- red bars are obviously down bars
- hollow bars are up bars (I am experimenting with removing the color here to see how that goes)
- black lines are the 0 and 1 value of the fib extension
- red line is 50% and –1.38% fib retracement
- green line is the 1.38 fib extension
- the MA is the 34MA (but I am not sure that will stay)

I could not trade today but found this chart quite interesting. Actually, what I would like to remember (and that is why I am printing this chart) is the 3-bar formation that takes place before the trigger bar: first a red bar that breaks below ORL, then a doji-like candle that marks indecision, and then a very decisive up bar that closes above the ORL and above the high of the previous red bar. That to me means that the bulls regain control. On top of all that, we have a NRIB (the trigger bar) that lives on the upper part of the wide range green bar.

Back to studying. Please check this chart posted by Trader X. It is educational to see how fluid is that trading. And how accurate!

Quick Update

2008-12-01T19:15:00.000-08:00

I am currently trying to simplify my trading strategy. That means getting rid off the indicators I am not using, which will lead to having simpler and cleaner charts. In the 5 min charts I got rid off everything except previous day high and low and the Fib extensions. I am also considering on eliminating the 10EMA That is very similar to the charts that Trader X posts at this site.
I also want make more clear the setups I find more profitable and the ones that are not so successful. So, I am 100% in study mode. Making money is not a priority for me right now. I studied 100s of charts this weekend and today I paper traded with this new setup.

In reviewing Trader X strategy I found this post, and the following paragraph resonated with me:

In my opinion, there is not a Holy Grail in the sense of a single indicator or setup; there is only understanding price action and how to read charts...and that to me is the true Holy Grail.

So this is what I am up to now. I want to dig in and really understand price action because I also believe that that is the key to being a successful trader. I will post some trades later in the week.

November 24 - PBR

2008-11-25T12:40:00.000-08:00

PBR gapped above the previous day high, but immediately dropped below the ORH (previous day). The 5^th bar was a NRIB below the ORH, but I decided against this entry because I thought the upslopping moving averages from yesterday’s move may act as support.

PBR bounced against the 20EMA and rallied above the ORH (previous day) but again dropped right away below that important line. My entry and exists are marked on the chart.

November 20 - OIH

2008-11-20T13:46:00.000-08:00

Although I sometimes trade OIH, I mostly use it as a reference to know what is going on with the oil sector throughout the trading session.
After the first 3 bars, OIH printed a quite bulish offsetting bar and from then on started to move up printing higher highs and higher lows. Point C is higher than point A and point D is higher than point B.
As price approached point E I thought that the S2 line (orange) and the forming trend line (from point A to point C drawn in blue) would act as support and OIH would continue its way up, but in fact the opposite took place: the 13:30 bar closed below S1 and the trend line. The next bar was a NRIB below S2, and that was my trigger bar.
I drew my fib line from the previous day high to the ORL and I exit my full position at the 38% fib ext. But I should have taken a partial there and hold the rest till EOD.

November 18 - YHOO

2008-11-18T16:21:00.000-08:00

Yahoo gapped up but could not really make a solid move above the ORH. At 11:30 price broke below the ORH with a solid red bar and then YHOO printed 2 IBs. I entered on the break of the second IB's low and exited at the 50% fib retracement line. I plotted my fib ext lines from the previous day low to the ORH following Trader X post: Fibonacci lines, indicators, and the Holy Grail.

Away until November 17

2008-11-03T13:56:00.000-08:00

I have not been able to trade for the past few days, but I continue studying. I really like the Fab Extension strategies that Trader X is posting at his site, and hope to incorporate some of that into my own trading. I will be gone until November 17. Have a good first half of November!

October 28 - SKF

2008-10-28T13:46:00.001-07:00

This was one of the best trades of my life :-)

The logic for entering this trade is as follows:
1. Price rallies to point A
2. At point B price retraces below R1 and below the 5EMA. That in itself is bearish, but it was early to tell since at this point SKF could form a C&H pattern
3. Price tries to rallies but it fails to move above the previous day high (point C). Bearish.
4. Price retraces again to point D, which is lower than point B. I have to say here that I entered short on the break of the 13:05 bar, but I got stopped out at break even a few bars later. Bearish.
5. Again price tries to rally but it stops below R1: Bearish. Another interesting point here is that the line from D to E is pretty straight and it resembles a bear flag, but the angle is a bit too vertical and also the volume does not seem to confirm that since in fact we have ascending volume, instead of descending volume.
6. All the above describes a situation in which you have lower highs and lower lows. I entered on the break of the 14:05 bar.
The Q's and the financials were exploding so I was quite aggressive (more than I normally am) with my partial and exit points.

October 27 - SRS (mini C&H)

2008-10-27T10:21:00.000-07:00

I discovered SRS by reviewing Stewie's post from Sunday and I added to my ETF list. By the way, I highly recommend his site; Stewie has started doing videos a few weeks ago, and his trading is very interesting.
Anyway, this C&H set up like my LUK's trade last week, although there was not real capitulation here. Normally, I would expect a 100% fib extension from the low of the pattern to the base of the cup, but I decided to take a partial at the 38% fib ext, since the market was so choppy today. Price reversed and stopped me out at my price entry level.

October 23 - LUK (capitulation + mini C&H)

2008-10-23T13:40:00.001-07:00

LUK appeared in the Top % Losers Since Open scan on my IB software.

I spotted the capitulation on the 5min chart but I traded the mini-C&H bounce on the 1min chart. The initial target was the 100% fib extension drawn from the low of the cup to the base, and my exit was the 1.38% fib extension. Both targets were met without any difficulty.

On vacations until October 22

2008-10-10T12:28:00.000-07:00

I wish you all good trading!!!

October 9 - ANR (Inverted C&H)

2008-10-09T13:10:00.000-07:00

This inverted C&H (Jamie style) worked out nicely; in fact it was the best trade of the week for me. I wanted to sell on a real spike in selling volume, but that never took place, so I kept moving my stop to follow the steady selling. My goal was the 100% fib extension drawn from the high of the cup to the base, but price did not make it there.

Volatility

2008-10-08T08:52:00.001-07:00

I am not posting very much because:
1. I am preparing my vacations starting on Saturday :-)
2. The high volatility is truly throwing me off. Since last week I have been getting into trades like the one above and I get consistently stopped out. Since I am mostly trading not to loose, as soon as price takes off in the direction of my trade, I move my protective stop to break even and then a few mins later I get stopped out. It is truly a learning experience to daytrade in this market.