It was a good year to be a trader in that we all learned something, be it noobs or veterans. This is our second crash since we started trading in the late 90s and the trench war experience has made us into stronger more seasoned traders. The positive of being a trader this decade is that it makes one have faith in one's abilities -- if we survived this, we can survive anything.
Short-term emotions will always reign supreme, but long term logic always wins out which is the reason we are technical based for short-term decisions and fundamental based for long-term decisions.
For purely psychological reasons (and not technical) we went flat in our day-trading and swing-trading accounts today with only nominal positions (LIWA and AVL.TSX) in our long-term fundamental based account.
Like experienced sailors going out to fish, we're confident and look forward to starting 2010 and yet will always be respectful of the power of the market.
Happy New Year to all of you -- have fun and stay safe, and we'll see you next week.
HCPG/BTG
Thursday, December 31, 2009
Wednesday, December 30, 2009
Base and break GS
As our readers know this week the #1 stock on our lists has been GS. We wrote in our newsletter last night, "No clean spot -- you just have to watch for the set-up, most likely a base and break near 165.5."
We were off by 30 cents as GS set up very well below yesterday's high of 165.2. The day-trade entry was anywhere from 165 to 165.2 as the volume surged in before 11 AM (we were in swing from 164.1 from yesterday but our day-trade add was at 10:57 AM at 165.08 av). Stop at this point on the day-trade add was 164.8 or max 164.6, that is 30 to 40 cent risk.
We wrote real-time about the basing under 165.2:
As our readers know base and break is our bread and butter day-trade strategy -- in which one can put on a large position with a relatively tight stop (on liquid stocks anyway). It's the most successful day-trade strategy that we have traded and one that we always rely on for large day-trade positions.
We were off by 30 cents as GS set up very well below yesterday's high of 165.2. The day-trade entry was anywhere from 165 to 165.2 as the volume surged in before 11 AM (we were in swing from 164.1 from yesterday but our day-trade add was at 10:57 AM at 165.08 av). Stop at this point on the day-trade add was 164.8 or max 164.6, that is 30 to 40 cent risk.
We wrote real-time about the basing under 165.2:
As our readers know base and break is our bread and butter day-trade strategy -- in which one can put on a large position with a relatively tight stop (on liquid stocks anyway). It's the most successful day-trade strategy that we have traded and one that we always rely on for large day-trade positions.
Tuesday, December 29, 2009
Market Talk
We love this commodity pull-back -- a few more days like this and we'll have a plethora of decent support trade candidates.
This is the type of trade we're looking for going forward -- CNX 47 support reversal. Note how many balls line up for this trade - trend line/50 SMA/ 20 SMA. Also hopefully we will have multiple stocks in the same sector in the newsletter -- another great factor which often lines up as the sector hits support at the same time (increasing chance of support bounce).
As we've written ad nauseum in our newsletters in the last 4 years -- the more ducks line up in a set-up, the higher the chance of it working.
This is the type of trade we're looking for going forward -- CNX 47 support reversal. Note how many balls line up for this trade - trend line/50 SMA/ 20 SMA. Also hopefully we will have multiple stocks in the same sector in the newsletter -- another great factor which often lines up as the sector hits support at the same time (increasing chance of support bounce).
As we've written ad nauseum in our newsletters in the last 4 years -- the more ducks line up in a set-up, the higher the chance of it working.
A day in the life of a day-trader
As many of you know we have been watching GS for a while -- patiently waiting for the trend-line to break. GS has been acting terrible of late with poor relative action. Today it started to firm up and act better, showing good relative strength. Here is our trade (all tweeted in real-time):
At point (a) we have the base and break under the number (usually a clean number but in the case of GS was around 165.5 - 166). Note the volume spike. We were long in size at 164.60 av. The stock pulled back on light volume and then rallied straight up to R1, which is a great day-trader exit --we took off 20% at point (b). So far so good for the stock but the problem was that the S&P started failing and hit low of day, not good as GS can't run by itself. We sold most of our position at point (c) and held some at break-even stop (164.6), which was hit shortly after (d). We still made some money on it due to our size but we of course would have preferred a successful break-out -- if that had been the case we would have sold a good portion by end of day but kept at least 20% for swing.
Over the years we have normally day-traded 80% and swing-traded 20%. We've been increasing the swing position lately and plan to do so for as long as the market volatility remains low and the bull uptrend remains intact.
At point (a) we have the base and break under the number (usually a clean number but in the case of GS was around 165.5 - 166). Note the volume spike. We were long in size at 164.60 av. The stock pulled back on light volume and then rallied straight up to R1, which is a great day-trader exit --we took off 20% at point (b). So far so good for the stock but the problem was that the S&P started failing and hit low of day, not good as GS can't run by itself. We sold most of our position at point (c) and held some at break-even stop (164.6), which was hit shortly after (d). We still made some money on it due to our size but we of course would have preferred a successful break-out -- if that had been the case we would have sold a good portion by end of day but kept at least 20% for swing.
Over the years we have normally day-traded 80% and swing-traded 20%. We've been increasing the swing position lately and plan to do so for as long as the market volatility remains low and the bull uptrend remains intact.
Monday, December 28, 2009
Continuation versus New positions
The strength in tech has been impressive and this chart is something to behold. If you've been swing long for a while are are enjoying gains every day -- great, take some off and be on the look-out for potential reversal. But it's our job to come up with new picks everyday for the newsletter and it's getting more and more difficult with each up day. A pull-back would freshen the air and set-up many more charts (tonight we had one of our thinnest newsletters this year with only a handful of new picks).
A January reversal would fit the bill.
A January reversal would fit the bill.
DayTrading/SwingTrading
Within our system the only real difference between day-trading and swing-trading is time. Our entry strategies are the same (be it buy on support or buy on a break-out) and our exits are similar (an extended move away from the base/ a run to resistance).
We've shown before how we day-trade support -- buy on an extended move away from the intraday base on a bounce to daily support and sell into intraday resistance (often the 20 EMA on the 5 min chart).
Here is a perfect parallel swing-trade on a daily chart in which you would have done something very similar but instead of taking 30 minutes it would have taken a couple of weeks.
BHI 38 was a newsletter support buy pick -- the exit was today on the 50 SMA failure. We got in at the right time near 38 but sold much too early. We still have to work on that patience thing....
We've shown before how we day-trade support -- buy on an extended move away from the intraday base on a bounce to daily support and sell into intraday resistance (often the 20 EMA on the 5 min chart).
Here is a perfect parallel swing-trade on a daily chart in which you would have done something very similar but instead of taking 30 minutes it would have taken a couple of weeks.
BHI 38 was a newsletter support buy pick -- the exit was today on the 50 SMA failure. We got in at the right time near 38 but sold much too early. We still have to work on that patience thing....
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