TGIF

We have made it to the end of another week. Nice work everyone. What a sell off we had intra-day. It was so fast I doubt many people noticed it.

Normally I do not enter too many positions on a Friday, so I haven't done much shopping today. Everything is scaling back a little bit, but that is all part of the plan, right?

I must admit that I like all this movement heading onto next week. I won't try and claim that I am bullish or bearish at the moment, because in my style of trading, it really doesn't matter. What I will admit is that the technical set-up heading into next week is a gem. There will be so many items to choose from next week to trade that I can't wait. I will go out on a limb and claim that next week will the the week of endless opportunities (be optimistic).

I am taking off early and heading down to St. George, Utah. If you haven't heard of it, pay it a visit. Great rock climbing, hiking, GOLFING, etc. The weather is supposed to hit 80's and I have tee times at Coral Canyon. Time to dust off the sticks again.

Anyhow, if you took a beating this week....relax. Take your lumps, and get ready to stick it to the market next week. Next week is the week of the ________ (insert your name here).

BTW- Tonya, feel free to post your system. In fact EVERYONE, feel free to post whatever the hell you want. I only ask that you do not advertise here. Also if you are going to post a trading system, PLEASE make sure you mention your backtesting results, expectancy ratios, or any evidence that you can offer to prove it's profitability. I want to make sure if anyone is going to be using it blindly that they have a feel for how it might have worked in the past.

Tonya, I will be watching for it! Can't wait!

Recommendation: Have a fabulous weekend!

Anyone else have the guts to play GES to the downside? I see a symmetrical triangle breakdown today, getting weaker into the close. I know it's an 'infallible' stock, but my risk reward makes it worth it.

Also, anyone notice SNDA? I think this stock is at the beginning of a special run.

I also took a bounce on WCG, but we'll see what happens.

Have a great weekend!

Jeff,

Have a great weekend. I wanted to give you a golf tip that has helped me immensely since I started the damn game.
" Swing hard just in case you hit it"!
I hope this helps.

Sean M.
CA

Brett,

I played WCG bounce as well. I had been waiting for an entry since I missed the last one. It almost looks text book. Hope its a win for those who joined in.

Sarah

Jeff,

I have a request. Why don't we discuss how to make a trading plan, its components, how to evaluate our goals, setting realistic goals... I think you get the idea. It is something that I really want do, but I have no clue where to start. I want to know your take on constructing a trading plan.

Thanks,

Brett,

Funny, I see an ascending triangle on GES. I looked again after reading your post, and I can see how you the upper trendline could be redrawn to make it symmetrical. However I prefer it as an ascending.

-John

Hi all, I was very interested in some comments made yesterday by Gary. He was asking about making the transition to a full time trader. This is my ultimate goal as well and although I'm sure the experience varies greatly from person to person, I would love to hear from anyone who has made the transition successfully. In addition to the things Gary mentioned, I'd also be interested in hearing about some pitfalls to avoid, and any words of caution or wisdom anyone would like to share. I have to work my other job this weekend but everyone else, enjoy yours! (the weekend that is, not the job;)

Cinda
(Santa Rosa, CA)

Cinda,
We are meeting on Monday with a friend of Catherine's sister who has been trading full time for two years after coming back from two years on a boat in the Carribean with his family. He decided the rat race wasn't for him and has done very well in full time trading. We're hoping to pick his brains (and leave enough of them for him to keep trading... although sometimes I feel like the less brain we use, the better we do.) and find out what type of trading he does. I know that he trades only puts and only big name companies (ie. tons of volume) but we're hoping to get some specifics on Monday.

We'll post our post-mortem on the discusion with him, Tuesday, after we've had time to let all the info percolate. Should be really interesting.

It seems that almost everyone you talk to who's doing this full or part-time has a different approach. The only certainty is the uncertainty of it. It seems like you have to find the one style (out of hundreds) that suits your personality and risk aversion... and run with it.

We'll keep you posted. Meanwhile CME is forming a wicked sym triangle. It's steep shape makes me believe it's going to break out big time. Which way? Anyone willing to guess?

ICE has broken it's $130 resistance and it looks to me like $102 is the next stop. It might hesitate around $110, but I think it'll be a quickie (if you'll pardon my saying so.)

Jeff, hope you had a good time. We're headed to Colorado in a couple of months and might just pop down to St George for a day. I figured you'd be parked in front of the TV watching basketball with Jordan. They're never too young, you know.

Chris and Catherine.

Brett,
Better double up on the WM's my friend. I'm having a real tough time seeing the downside to GES. Yes it was down yesterday and broke the triangle formation by the tiniest bit, but it was on very weak volume. My bet is that it will wander back up into the triangle on Monday and keep us all in suspense.

SNDA looks like it could go, but it looks like a bad entry time. After having spent the last four months making sporadic, wild entries on stocks that were just peaking, I'm putting it on my watch list and waiting for it to come back to support.

I love WCG!!! perfect timing for the bounce (don't tell Catherine I love the bounce...) The options aren't cheap but I can pick up a few in my beleagured (if that's how you spell it) account.

Rodrigo... you mean we're supposed to have a PLAN?!?!?! Huh.... maybe that explains three weeks ago.

Chris and Catherine

Hi Everyone....
I want to first start out by saying "I am very nervous". Please remember that I am only a student trying to find a system that works for me, so that my husband and I can stay home and raise our son ourselves (instead of child care). I hate the thought of being reasponsible for somebody else losing money. So with that being said, lets evaluate my system, pick it apart, paper trade any ideas for improvement, and get wealthy together !!!

TRADING RULES:

Buy Signals: Use multiple tech ind
1) trend
2) support resistance
3) fibonacci retracements
4) candlesticks
5) MACD
6) market forecast

When to Buy: Due to my "tempory day job" (that's what I call it now) I do all my "homework" at night. If I see an entry, I place a limit entry order for the following morning. Ideally I would like to wait for market open and watch the first hr or so of the trading day and watch for the perfect entry point, but at this time, it is just not practical. ****Although, I do wonder if i had the luxery of watching and waiting for the "perfect" entry, if I would ever find it, or if I would just stare at the computer screen all day at the edge of my chair****

How Much To Buy: Since this (trading $SPX) is new to me and more "dangerous", I am only trading very small positions, even in the paper acct. Reason being....I don't want to paper trade 10 contracts of the $SPX, make tons of money in the paper acct and get false hopes for my real acct. ...SO, I have been trading 1 contract of the $SPX or 10 contracts SPY (when I switch to real $, this is the position sizing I will use for a long while, until I am 100% comfortable with what I am doing) It is a conservative approach, but I am using a position size that wont make me want to jump off the bridge if the trade goes bad.

Order Entry: ALWAYS USE A LIMIT ORDER

Order Exit: Place an automatic sell order when placing order entry. This works best for me, because I find myself renegoiating with myself regarding targets (this way the homework is done, it is an UNEMOTIONAL exit and I am only doing what the charts tell me to do). Also if my target is reach during the day, while at work, it will automatically sell for me.

Time Target: few hrs to 4 days

Additional Rules:
1) Do not hold over weekends (unless there is at least 3 weeks left befor expiration)
2) use a checklist for tech ind
3) define all outcomes before entering the trade
4) do not enter new positions on friday
5) REMEMBER **multiple indicators**


Okay, so there are the rules I use. These rules make for very few trades, BUT so far when I follow them they have worked very well. ** I'll admit, there have been a few times when I looked at the charts and thought to myself, "well I could place a trade for tomorrow, and see what happens" BUT then I look at my rules and say "NO, NO, NO, what is the sense of writing rules, if you are not going to follow them !! Don't be greedy, the perfect set up is just around the corner" **


HOW I USE THE TECH INDICATORS:
** Support & Resistance are #1**
To define support/resistance, I use trend lines and fibonacci retracements.
When price has gotten to support/resistance, then I watch the candlesticks, the MACD, and the market foreecast for confirmation.

Setting automatic sell order:
I have been testing 2 exiting techniques.
#1) setting a market sell order when price hits the price target
#2) setting a limit sell order at the price I want to sell the option at.
I think the latter approach may work better for the $SPX, due to the large spreads b/n bid and ask...one could only guess what the market maker would do for a "market order"
I think style #1 may be better for SPY.

Candlesticks: There is alot to learn in this department, and it seems very easy to get overwhelmed with these little guys. I think the key is to keep it simple. There are a few candle formations that seem to be most important here. My very good friend/study partner bought me a book called "Profitable Candlestick Trading" by Stephen Bigalow, it has everything you will ever need to know about candlestick, and then some. Also, a fellow student of ours (I think his name is Benton) posted a website link on the forum which had good PRINTABLE information on candlestick formations....
http://stockcharts.com/education/ChartAnalysis/CandlestickDictionary.com
Go here and print it out, it is just over 4 pages.

Application:
If you pull up a 5 yr or 2 yr chart of the $SPX and just look over it, you will be able to see how these tech indicators work together, if you are patient i know this can make you money....
ie...
5-13-05 market forecast shows a possible buy signal, 5-16-05 candlestick confirmation, MACD (histo) did not give buy signal until 5-17 or 5-18...so depending on when you got in, it was an easy 20 point move, no sweat (if you are daring (which i am trying not to be) maybe even a 30 point move.
If you bought enough time you could of stayed in until 6-22 and got almost 50 points. That would not be my strategy, it is too risky, greedy, and long term for me. I want to be "in, out, nobody gets hurt" that is my motto.

You can also see how using **multiple indicators **is CRITICAL, for instance, if you get a "call" buy signal from the market forecast at the top of the short term uptrend....well lets just say, it probably wont be such a great trade...remember **multiple indicators** may keep you out of a few good trades, but will also keep you out of alot of bad ones.
Because of the wild and crazy nature of the $spx, it is reasonable to take a 4-5 point move on almost any given day, so if you wait for the tecnicals to line up, you will have a great move. If you are reaping the rewards of a 10 -20 point move, who cares about the $2 spread??

Okay so now i will show you my paper trades for last week....I think last weeks will be most relavent, so I wont go back any farther, I don't want to "hog up" the blog (well maybe I already have)
ANYWAYS....
I had/have resistance drawn in around $1433 (the previous weeks trade rode right up there like i thought and stopped).
3-22-07 DOJI (indecission) in the past, a doji at the top or bottom of the very short term trend has indicated a reversal
3-23-07 no confirmation, still waiting, MACD flattened out
3-26-07 now this candlestick has me puzzled, i know i have seen it in my readings and i think when found at the top of an uptrend, it indicates a possible reversal...is it a hanging man ?? for the life of me, i cannot find where i read it...BUT i took it as a bearish reversal indicator, as long as i got confirmation with a bearish candle the following day. The MACD came down a very small notch and the blue & red line on the market forecast were heading down. Price still at my resistance line.
3-27-07 FINALLY confirmation, a bearish candlestick and price below resistance.
My price target was $1410. I picked $1410 b/c I thought it was reasonable regardless of whether the market stays bullish, bearish, or sideways. It had been used as resistance a few weeks ago, and seemed very attainable whichever way the market decides to go.
3-30-07 target was hit and i am out of the trades. It was a reasonable target and it was hit intraday and now i am out.

Now it is your turn, tell me what you think. This system can work on spx, spy, oex, rut, qqqq, ndx, etc....
I developed this system b/c I NEED something cut and dry, something with a check list and lines to follow.
I am terrible with fundamentals and i find myself being very impatient with the $5 price targets for regular stock moves.
I am anxious to hear what eveyone has to say...please paper trade it, modify it, paper trade it some more and let us all know what works...maybe a few of us can tade it on different ETFs and Indexs and compare notes to find out where it works best.

Well i am starving, and the baby keeps throwing his bottle, so gotta go.
Have a good weekend

Tonya W
daytona beach

Like i said before, one of my coaches begged and pleaded for me to paralell trade the SPY and $SPX, so I did and I must say the results were good either way.
I like the $SPX b/c it is fast, almost instant satisfaction (I am a lttle impatient and demanding at times) BUT i like the SPY for the spreads and the "calmness" I felt when trading it. Even thought my dolloar amt for each trade was about equal, I felt more calm with 10 "cheap" contracts, that I did with one expensive contract.

Tonya,

I too have spent a bit of time with the SPX. I have paper traded everyday for the past 4 months to get a feel. For indicators I agree w/most, I also like using the 20,50 MA's. I especially like the 50 it shows extremes and matched along the with macd,fib's candles you ususlly get some good signals. I tried to look for consistency skimming a few points every trade rather than bigger moves unless I can really watch it,because of it's volatile nature.

If you are on think or swim,check out "shadow trader" ,he spends alot of time on the SPX and SPY throughtout the day discussing major pivot points,support/resistance,etc.

Thanks for sharing. I think you're really on to something. Good luck.

Sarah

I forgot to mention, I began live trades about 2 months ago with the SPX . Some good,some not so good. the swings were intense,so I went to SPY's and decided to spend time working with the system there until I have built up a big enough account, that the spreads and fills won't be a concern.

Sarah

C & C,

I really think I should have your email address. Please send it to me (and any other info you want me to have. It would be great to bounce trade ideas off each other.

bdatlas@yahoo.com.

Thanks,

Brett

Tonya,

Thanks for sharing your approach to trading the SPX. I hope you are very successful.

I am going to do some back testing and see if it fits my style of trading.

Bob

Hi Tonya,

I have been trading the SPX, OEX, RUT and NDX for a little while now (BTW - Look at the OEX if you don't like how expensive the SPX is.. movements are almost identical and its a bit cheaper)... Based on the system I use, I think all the basics are covered. Here are a few of my thoughts after reading your post:

1 - You are right on about the fact that it is all about order placement. In my opinion you would be CRAZY to trade the indices using market orders. One suggestion I have about your exits: Use the black sholes calc, or the theo price calculator on tos to pick an exit OPTION price based on your forecasted movement in the underlying. Although volatility will change throughout the day, this will give you a good idea of where your premium will be based on how the index moves

2 - Do you factor in news announcements at all? Although this can be frustrating and tough to monitor if you are not in from of the market all day, I think it is VERY important if you are watching and trading the broad markets. For instance, the day before bernake's most recent rate announcement, I had some pretty strong signals telling me that the market was at resistance and that the market had already priced in his expected announcement... but boy was I wrong... Knowing that he was going to speak kept me from making a trade and saved me some money, too :) Also, I have noticed that the news has been really moving the market ever since the big sell of day awhile back...

3 - Volume. Similar to news, do you look at $TVOL? Shows the volume on the NYSE... although its not a primary indicator or mine, i like to know whats going on with that.

4 - VIX/VXN - again, just like to watch to make sure things are all working in sequence.

5 - Implied volatility - again, wont keep me from making a trade because of my extremely short time frame, but I watch this to track how it affects the pricing... (ivolatility.com and type in the index at the top to look at the chart)

6 - I also use 20, 50 and 200 MA's... sometimes these strengthen a support or resistance level for me

Thanks again for the post and good luck to you... Like I said, I have been doing this for a little while and although I am still working out some little things here and there it has worked great for me... The more you do it the more comfortable you will get with the rapid movements and as a result your nerves (and stomach) will get stronger.

What do you guys think about a bull flag on SHLD? It has a 10 pt pole and it is flagging around support at 180 or so. If it breaks to the upside it should hit 190 easy.

I don't know anything about trading the $SPX, but I am enjoying the comments. Keep it coming! I have the opportunity to be close to a computer during the day, so this may be something for me.

Amy

sarah
where do you find "shadow trader" on the TOS platform ?? I would like to follow it on thursday...thanks
tonya w

You can find shadow trader on SUPPORT/CHAT on the top left corner of TOS platform, besides the account INFO title. Click there, then a window open showing Home tab, Live Support, CHat rooms and audio settings tab. Click on the chat rooms chat.
Then it will appear a list where shadow trader is the second under chat name. Click first to LISTEN TOS on the right bottom corner and then double click on the shadow trader and you will be able to see your name and others on teh people in room and listen to shadow trader. Sometimes you need to click listen TOS bottom again.
Hope it helps.
Alessandra

X upgraded to...NEUTRAL today by prudential.

I always love a brokerage who provides real value for their clients. A stock doubles in 5 months and THEN the company decides to upgrade it to NEUTRAL. So basically the whole ride up they had an 'underweight' rating on it?

Tonya,

I find shadow trader on the far left under "live audio",there's a pull down menu and select" shadow trader live tos"

Sarah

Hello
I posted a big response to Tonyas blog but for some reason it did not get published. I wanted to thank Tonya for her time but also i was discussing the use of iron condors for monthly income on the SPX I will re post later. Also take a look at MICC breaking out today

David S

Tonya,

One more thing you might want to consider is to look at the advancers/decliners in your analysis. By the way do you have any back testing reults?

Sarah

DO YOU SEE WHAT I SEE???

Here's a fun exercise...

Everyone check out CTSH today. Do you see a double top forming or a trendline bounce???

Tonya and Sarah a big thanks! I have just started what you have been testing for several months. Glad to see that I am on a similar path and I was going to add the futures advancers/decliners concept too. Back testing results would be very helpful and David S. that happens to me all the time too. David, please do post your iron condor monthly income on the SPX strategy. Just found the shadow trader on TOS and sounds like this is something I need to listen to for a bit to get the hang of it. I feel like a sponge and thank you all for your valuable education.
Bob H.

CTSH...

Hmm. I would not take a trade yet until I new which way, but my vote is for a support bounce..looking at the candles from 3/2 - 3/6 (with volume, horizontal support back to June, plus the industry group as a whole could be at a support area, though I am uncertain to as how strong that support is.

You would know right away if you are wrong, so a good risk/reward...

TIE

Symm Triangle.....6 pt move???

Brett,
I see it all, my friend. Looks like a double top... and it has busted through it's trendline. Mr Fibonacci says $86 could be strong support so if it keeps heading below that level... it looks like about $80 would be the next floor on the elevator to the basement. As I write this it's gone to 85.84 so if it holds here during the day I'll bet you a WM it ends up at $80 before earnings at the end of the month. But you have to come to Oakville to collect. Or Chicago in August.
Chris and Catherine

I see what's shaping up to be a nice support bounce at $85.00. I need confirmation either way.

BEAV..

Bull flag forming and sitting at support...(retest)

I see history repeating. you could see this stock trading in a range last 2-3 months and then it broke out. It could be a nice set up for a support bounce. You can take the trade and if you are wrong and it breaks support you get out. Low risk. This is a strong stock and nice trend, so I would not want to short unless there is specifick knowledge ie bad news etc.

David S

CVH

Ascending triangle..waiting for breakout, 4 pt move...

Also keeping ATI on the radar..

Hi Everyone
OSK is breaking down from a sym triangle. Just need some more volume to confirm. Potential $6-$7 move.

Have a good one

Jodi
Canuck

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About me

  • I'm Option Addict
  • From Saratoga Springs, Utah, United States
  • I am a professional trader and an instructor for Investools. I've had relations with the markets for 9 years. Born in Concord, CA, but reside in Saratoga Springs, Utah. Father of THREE, Husband of one.
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