Thursday, December 23, 2010

Focus on a few and then hit them hard!

As we wrote in our last blog post, ideas are a dime a dozen.  What's key is to be able to hone down the list into an actionable number.   There are literally dozens and dozens of "ok" set-ups one can fill one's watchlist with every day.   But in our experience the more mediocre set-ups you watch the less money you will make.   Focus on only the best and then hit them hard.      These are ALL the trades that triggered for us for the last trading week winners and loser complete with the reviews the next day that we wrote for our subscribers.    As you can see each day only 2 or 3 trades triggered.  Not less, not more.     

Last Friday's triggers:
"We had waited for this MON 64 breakout for weeks and had written on Thursday night that it was our best set up going into Friday.  We wrote to watch for base and break 50 cents under and indeed that's close to where it set-up.   Nice run for over 1.5 points.   We're still swing long partial of the daytrade that we did not exit.    We had on pretty big size in this trade -- we had waited weeks for this (including an aborted target swing trade), and we would be damned before we missed our MON breakout!"
"DECK we wrote was a "high-end" set-up which means for the most part to hit and run.  We wrote on Thursday to watch for base and break between 83.4-84 for a run to 85+.  Worked very well at 84 and a lot of you daytraders caught this.  Nice. "
"WYNN we wrote needed one more day to set-up at 107 (it was a one day touch on daily).    It didn't wait and ruined the spot on Friday.   One touch spots have a relatively high failure rate and this one was no exception.  Too bad as it could have been a nice spot on a good runner."
Monday's triggers:
"AMZN opened at our 179 number, ran up two points, and then reversed down to base on R2, made higher low, and then ran up to 182 secondary breakout for a decent 5 point move from our alert.  A bit of a roundabout approach (common to crowded trades such as this one) and we imagine most of you who were involved caught the opening rip but fewer caught the secondary move."

"CRM 134 short alert technically worked for a daytrade but it was very extended by the time it hit our alert and was not a good risk-reward entry.   If you wanted it short then possible entries were against the 9EMA this morning as it was trending down.   Even though 134 short was successful for a quick daytrade that's not the type of trade we'd want you to take."
Tuesday's triggers:
"APA 118 clean set-up at number and travelled 80 cents before reverting back to number.   Somewhat boring but we don't expect much from big cap stocks in holiday weeks. "

"We liked how GOOG touched the minor spot in the AM -- this was a good type of trade to buy pullback in near the 9 EMA on reversal back from R1.      At 603 it was Indy type set-up as stock was riding up the ascending EMA with 603 resistance on top.   If you didn't get in before entry was 603 with stop on 20EMA which at that time wasn't even a point (incredible for a 600 dollar stock).   However stock didn't do much  as it bumped up a few points and closed on the alert.  "
"MEE had some news this AM and opened at our number and did nothing all day. "
Wed triggers:
"DVN based at 75 and then had a decent 1.6 point run. "
"SU opened at our old 37 spot and rose for 2%.  If you're holding swing prepare for some choppiness in the 38 zone -- long time resistance. "
Thursday (today) triggers:
"We had been watching this CF 130 spot for a long time -- and it really set up for this breakout yesterday.  Two days ago we wrote that it still wasn't ready but last night we wrote "Looks good for breakout anytime now".   Very nice 4 point rip. "

"GM 35 was an old alert that came back in play yesterday.   Very nice little trade here from our spot. "
Remember, focus on the best and then hit them hard!

Happy holidays to all our readers -- stay safe and see you next week.

Monday, December 20, 2010

It's the execution stupid!

There are abundant good money-making ideas running through StockTwits every day.  Yet there are also thousands of traders who read these same ideas but just can't seem to work their away above "churn/grind" status (not to mention the number who actually lose money).   Why is that?

Because it's the execution of the idea that makes the difference between a profitable trader and a non-profitable trader.  Develop an execution methodology and then filter all external ideas from others through that framework; otherwise you'll be lost in the noise.    What does this mean?

Basically you have to figure out what kind of trading you want to do before you trade anyone else's ideas.   And no one can do that for you -- that's the hard work that many  wannabe traders avoid.   

We have a very defined methodology that revolves around support and resistance.    It's the only thing we do and the only way we've traded for now 13 years.   We've taught it to our subscribers for almost 5 years now in the HCPG newsletter.    We don't do options, we don't trade gaps, we don't trade small-caps, we don't trade earnings, and  we don't trade news.  But what we do every day is trade in a very specific way around support and resistance on a small set of stocks (around 200 candidates, with a high percentage in momentum and commodity). 

Even though we have opinions on what the market will do they become completely irrelevant once the market opens.  We might feel bearish but if our long alerts trigger and set-up well ( conditions being good volume, and set-up under two intraday strategies we've developed, base and break and Indy) we will go long.  It really is as simple as that.    What we believe and what we do have very little to do with each other.  Of course one's bias helps one's conviction but in the end the set-up will always trump everything else in our trading.   This is the beauty of having a pre-defined watch-list -- it removes your opinion from the equation.  

We keep it very clean and very simple.  We focus on very few stocks for each day and all the homework is done the night before.  We rarely trade any stock which was not on our watchlist from the night before.   We often watch the same stock for days before our we finally pounce as our alert triggers.   This gives us conviction in the trade as we have become familiar with the stock's behavior.    This is our methodology.  What's yours?

Figure it out before you jump on our or anyone else's ideas.