Here's my thoughts on CF. Very strong trend, slight pullback,but now looks like it may be resuming the uptrend. Increasing volume,MACD's rolling up,strong industry,etc. Just my 2 cents, since I'm in this trade.

Sarah

Who isn't long GLBL and IIG?

I'm not thrilled that I bailed on PCP with 5 minutes left and the stock rallied back to close $.01 below my ATR. However, it was a great trade (actually 2 trades in 1 that I added to along the way).

Nonetheless, hopefully i'll get to reenter on a bounce.

I bought CF. @ the close. My indicators gave me a GOOOOOO! I have a score to settle PSA see what happens in the AM. POW!!!!oy

CF.. and did I mention a higher low.

Sarah

I know everyone says this but EVERYONE you are great thanks for the education and support. Jeff, HOUSECALLS!!! We have a guest room and are only 25 minutes from Disneyland...family time you know. Housecall excepted! (Have to talk to Pam first though) Maybe you can show me how to BBQ too. Eric said you owed me at least a taste :)
Bob H.

Brett..

I gotta tell ya buddy, I am NOT getting how you applied the ATR to PCP to get a stop at $105...which just happens to be my stop based on my support lines. I stayed in even though a penny shy...

Did you subtract $2.25 from todays open?? I feel like a dope asking, but hey, I want to know. I'll owe you a mocha..

Jeff,

I feel an awful lot like Stephen, I can't even get this blog to work. I did so well on paper. I don't know what I'm doing different,

Michael

I entered PSA at the last roll with anticipation of a break out as the market rolled. I saw it as very little risk if it when up against a little better reward if it doesn’t break. VERY big reward if it does break.

I wish I had the stones for the BLGL flag after a 4% move.

CF ran into a bad week that broke its strong upward trend. I wouldn’t get overly bearish until a lower high is confirmed.

IIG… nice action with volume on a down day. Again, I personally don’t have the stones for this one.

John

Bob,

look up jeff's archived post on using the ATR...it's basically a trailing mental stop adjusted upward based on closing prices. I backtested and found that I would be rich if i used it over the last year.

The hard thing about using it is you NEVER want to exit when it gives you a signal. Then again, check out how the ATR saved me a huge profit in WNR recently.

I see CF as a symmetrical triangle (or pennant) - lower highs, higher lows with 2 touches on each trendline, broke out today.

Amy-
Not yet sure about the live classes here in the fall - didn't know about them till you gave me the heads up - thanks! It would be great to attend those classes if possible. I wonder if there are any other D/FW folks who read this blog?

Trent
Dallas, Texas

Stephen, thanks for "steppin' up to da plate" to be a case study. I thought I was reading about my tradeing when I read your post. We will all learn as you bare your soul. Thanks. A lot of us are in the same boat.

Hello Everyone,

I just want to say thanks in advance to anyone who takes the time to read through this. I know your time is valuable so I honestly appreciate it.

For those interested, I will go ahead and spell out my situation exactly. I turned 27 in March and I have been studying the program for nearly one
and a half years. Since I started, I have lost a total of $19,000. At the close of 4/11/07 the remaining balance that I have to trade with is $4215. For a lot of people studying this program, $19,000 might be how much they spend in commissions every year, but to me, it is everything I have ever saved. As much as I want to blame someone else, I know there is nobody else but myself to blame for losing this money. A lot of the loss came early and I was far too inexperienced to have been playing around with it in the first place - and thus made some pretty awful mistakes.

Originally, I had dreams of making a nice living with the program and being able to help my
father retire a couple of years early with my trading skills, but that seems to be the furthest thing from my mind at this point. My family is not aware of how much money I have lost as I have just chosen to not talk about it at all with them. In fact, they still think I am doing really well with it
and are even trying to get me to help them open an account for them so I can invest some of their savings.

Anyways, that is the background of this case study - I hope you do not have visions of me crying into my keyboard as I type this:) Usually when I get angry I close my computer and go running. I had to make a new notch in my belt last night and my neighbor thinks I am training for the Boston Marathon:)

On to my rules...

These following 2 sets of rules are for Support Bounces and Flag Breakouts. The flag breakout rules can easily be applied to any sort of breakout, but I specifically mention flags to be more detailed.

If you have any questions, please do not hesitate to post them or email them to me. I will answer all questions honestly and as quickly as possible. I have to drive my girlfriend to work in the morning, so I might be away for the open.

step_investments@yahoo.com

Thank you again,

Stephen

Trading System for directional options (calls and
puts) Support or Resistance Bounces:

-Timeframe: Short term Bullish / Bearish Continuation

-Document Earnings date (min. 10 days away & plan to exit trade prior)

1. Identify stock is approaching a clearly identified support or resistance

2. Use 30, 50, 200 MA to identify trend and S or R areas

3. Use candle patterns to confirm support/resistance areas and exit points

4. Use Fibonacci lines to confirm S & R areas

5. Use Bollinger bands, MACD(8,17,9) & STO(14,5) for market sentiment but do not use them for entries. (i.e. bullish if 2-line MACD above zero)

6. Buy on confirmed S or R bounce -OR- place a limit order to purchase option when stock is at least .10 above yesterdays candle on bullish or .10 below yesterdays candle on bearish trade

7. Place stop at .25 below the identified S or R (low of yesterday on bullish trade and the high of yesterday on bearish trade)

-On a daily basis (last 15 minutes of day)

1. I will move my stop to break even once the stock has shown a profit of $1

2. I will lock in profits of 50% as my stock moves beyond $2 in profit

3. I will lock in profits of 90% once my stock has reached 75% of my target price. At this point, a trailing stop of 10% below the current option price will be used.

4. I will set a stop at .25 below the low of the day on any bearish candle formation.

5. I will exit the trade early if I see a confirmation on any bearish candle.

6. I will exit the trade early if I see price weakness and a turn down in the MACD or Stochastics (I will not use MACD/STO alone for exits)

7. I will exit any trade that is moving sideways for 7 consecutive trading days.
 


Trading System for directional options (calls and
puts) Bull/Bear Flags

-Timeframe: Short term Bullish / Bearish Continuation

-Document Earnings date (min. 10 days away & plan to exit trade prior)

1. Identify Bull/Bear Flag and support or resistance

2. Draw flag pole & and flag channel to identify S & R

3. Use 30, 50, 200 MA to identify trend and S or R areas

4. Use candle patterns to confirm support resistance areas and exit points

5. Use Fibonacci lines to confirm S & R areas

6. Use Bollinger bands, MACD(8,17,9) & STO(14,5) for market sentiment but do not use them for entries. (i.e. bullish if 2-line MACD above zero)

7. Buy on confirmed flag trend line break -OR- in anticipation of breakout, place a buy stop order to purchase option when stock is at least .25 above the upper (bull) or lower (bear) trend line of the flag

8. Place 1st stop at 1% below the upper trend line of the flag. (If not in front of PC, set a 1st triggers to set this stop)

-On a daily basis (last 15 minutes of day)

1. I will move my stop to break even once the stock has shown a profit of $1

2. I will lock in profits of 50% as my stock moves beyond $2 in profit

3. I will lock in profits of 90% once my stock has reached 75% of my target price. At this point, a trailing stop of 10% below the current option price will be used.

4. I will set a stop at .25 below the low of the day on any bearish candle formation.

5. I will exit the trade early if I see a confirmation on any bearish candle.

6. I will exit the trade early if I see price weakness and a turn down in the MACD or Stochastics (I will not use MACD/STO alone for exits)

7. I will exit any trade that is moving sideways for 7 consecutive trading days.

stephen,

Thanks for sharing your rules. As I looked at the 3 trades you mentioned in your previous post (FAF, TTWO, PCAR) I can see my self trading the same flag breakouts and I know I would have lost money on all of them and and the only thing I would have done is, I write down on entry the point where my orignal entry has failed i-e where am I wrong and exty as soon as I see that i-e as the price move back below the flag breakout point, I would exit (with a loss) the idea is to keep the losses small that way with my success rate of 30% i still make money ( I would love to get a better success rate then 30%)

I look forward to following and providing any support you and this group needs to help us all learn from this expereince and in the process make you a successful trader (which in turn will make us all successfull also)

Good luck

Mahmood

Stephan,

Your not the only one buddy..Hang in there..I currently share your pain...as it seems do others...


My chart I keep clear..the only indicator on my chart is volume. I ignore all moving averages and place in my own support and resistance lines. I do not bother with any moving averges, fibb's, bollinger, MACD, Stochastics etc. (I used too!!)

I admit I am playing around now with ATR and White Mochas...and am trying to buy JKB stock...


It is amazing what you can see on a chart just keeping it clear and watching price action, volume, and putting in your own support and resistance lines.

What does everyone else use??

I GES I was right on that one too!

Brett..

Are you still in X...;)

Of course...

Is the SQUEEEEEEZE on in IIG???

hey, anyone want to hazard a guess as to WTF is going on with WCG this morning???

Stephan,

I too am guilty of using too many indicators. The only thing it leaves me is confused. I use a moving average...it helps me clarify trend. I also use volume to support the price move. I am trying to keep my eyes off of MACD and Stoch.
It sounds like you have a lot of pressure to be successful. This is still the learning phase. Don't put too much pressure on yourself to retire next year. This is a tough business and we need to give ourselves time to learn.
Keep your head up. We have a great support system in this blog and Investools.
Amy

CTSH....NOT HAPPY.....

I just got slapped by CTSH..I'm out....

John Logan, thank you for posting the link to ATR. I haven't used it and admittedly have been bounced out of trades early. If it has helped Brett I am all about figuring this out.

Brett, LM appears to be breaking down for you. Nice analysis again.

I still see the IYR (real Estate ETF) breaking trend line support and the 30 day. I am looking in there for bearish trades. Currently short PSA and AVB from there roll-overs.

Keep an eye on ICE for all you Fib traders. Attach the fib to the 6/13/06 low and the 2/21/07 peak and you see it is finding support at 61.8% retracement. Could be in the process of making a higher low and starting a new intermediate trend. Add it to your watch list.

Jamie

Bob,

Are you crazy? You got 'slapped' by CTSH? It's the first hour of trading and this is called a RETEST. So far it's holding. this is where i look to ADD to the position.

Jamie,

thanks for the props, but LM isn't mine.

Save your praise for when SNDA hits $30.

I have a nice gift for all of you this morning. Maybe it's because I had my first White Mocha in a week (don't worry, i still have been eating the chocolate covered espresso beans). Anyway, take a look at BTU. Nice 6-month sym triangle broken STRONGLY and now leg 2 of the uptrend will resume. Earnings are in a week, but i will hold through them since this is a longer-term trade. Very nice target.

I don't have to point out GES too, do it?

Anyone take that LM trade last night like I did? It's looking like it wants to penetrate 94 for real today.

Jeff, could you move Stephens rules post to the main post page so we don't have to hunt for it in the comments please?

Long: GLBL,IIG,PCAR,HWCC
Short: LM, AVB,PLCE,

Thanks.

MikeH

Brett,
I'll probably never have this opportunity again, so let me relish it!... WCG - I had called the doctor to get my head examined as you suggested when I exited the trade yesterday for a nice profit. BUT, I can now cancel the appointment!!

I don't know if it is the stagflation issue with rising costs and less income for the patient or what, but the bounce didn't have the conviction that I had hoped and with it failing to get above 91, I took the profit!! Don't worry, I have enough to spot you a White Mocha!!

Also sold GES yesterday since my anticipatory purchase was taking too long to form - another smart move!

I'm long IIG, RS, ATI, HWCC adn Short AXP, ASF, FLML.

I'm out of money but still think HOG's drop yesterday was just a start of more downward trending to come.

Gary
freezing rain in Boston!!

Amy/Bob/Jeff,

Thank you for writing. I want you to know that I do not have to have confirmation on every single indicator to take a trade. If you look at my last trades on FAF, TTWO, PCAR - you will see that I bought on confirmation of the bounce at a defined area of support. These are the type of setups that i have seen time and time again on the countless trading rooms and live workshops I have attended. I honestly believe that if any of the instructors at Investools had stumbled across any of those trades, they would have taken them. I am not one of the people that uses too many indicators - it is nice to have them working in your favor, but I dont overanalyze them and only enter when they all agree with each other - otherwise I would never be in any trades at all.

I am not sure what to do. I can strip down to nothing but a volume indicator and my own trendlines and I still would have taken each of these trades. Does this happen to anyone else? I might be cursed for stealing cable from my neighbor in college....

Stephen

anybody take a look at rimm. Jeff why did you not see that one, that would have been nice. It will either bounce or continue down.
Nice volume.

what a wild ride on vip.

David S

Gary,

I'm glad those moves worked out for you, but I think you'd be better served having an actual plan for exiting. If WCG bounces off this trendline as it has today and soars to new highs, will you still be satisfied? My exit is set at $89, and with an entire trading day left, it's very possible that the stock will close there.

Here's my point: It's far more important to trade smart than to make money. Over the short term, you might scalp some profits, but the only way to succeed over the long term is to be consistent. I've read about many traders who lose money in a day and consider the day a success because they traded smart.

Brett,

You didn't have to throw back some of my own wisdom at me like that!!!

One quote I use with my sales people all the time is that "Failure that comes from a well conceived plan is far more effective than success in the absence of a plan."

Discipline in option trading is something I do need to work on. I've been scratching and clawing my way back to the pre 2/27 portfolio size that I had. So, yes, I do not regret the exits that I have had which have posted decent gains (albiet not the home runs). Then there are trades like RS and KMP that are 3 figure gains for me.

Thanks for keeping me humble and reminding me that I still suck as a trades! (insert sarchasm!)

Happy trading. Maybe I can use Chris's hammer to help me!

Gary

Gary,

I've taken more lumps than anyone. But if you really want to be the best at something you have to continually work on yourself. Trading pitfalls usually revolve around psychology. It's like blackjack. When you play a betting progression, and your chips pile up in front of you, can you still play the cards and not the money? Can you double down on a huge money hand the same as if you only had 1 chip in front of you? It's the same in trading: Play the chart, not the dollars. If you use proper position sizing, it shouldn't matter.

But if doing what you're doing is giving you the confidence to stay in the market and learn, good for you!

Brett,

I love your comment about trading smart. that's why on my monitor window I turn off the dollar amount and just look at percentages.

Sarah

Bob & Brett,

I am not sure I see the downside that you do on CTSH...at least until it falls below th 82.50. I see a double level of support yesterday horizontal from early December and diagonal from Feb 06 touching the lows since then. Perhaps a channel is forming from mid January break of resistance at that 82.50 level. I agree there was weakness, but were you seeing a channel break of the support level from the early Feb gap or a double top???? Curious to understand your analysis. Thanks for all of your comments. They are thought provoking.

Brett and Gary I appreciate your discussions here and feel like I may be the next Stephen. Before I could get to the computer today WCG stopped out for another loss. So that makes three in two days (JBX and PCAR). I guess the good news is that position sizing was in place and my plan was followed to the letter. Now I need those big gains to offset. POT is about the only one I have that has had great offsetting gains. I wanted to have plenty of room (or so I thought) for WCG to move so my exit was $86.5 more than $2 below my entry. In the first couple of minutes of trading my stop was hit. Brett I think you are right that it will probably bounce and head higher as it is already up $1 from its low of the day. I hate stops but have to use them. Sarah are you turning off $ on TOS and if so how?
Thanks
Bob H.

IIG… yesterday I didn’t have the guts to get in at my own analysis. The Josh Black’s two cents helped me see something different. Quite a few people here on The Blog had the same analysis minus the short interest.

I summoned the guts and was able to get in on my opening limit order.

Thank you Brett! Oh, and Josh Black!

I am just printing out Stephen’s rules and have yet to read any comments. At my initial overview of the S/R bounces, maybe the exits on winners is too much based on percentage gains rather than targets met…

Happy trading on this up on minute, down the next minute day.

John

lois,

you don't see the downside on CTSH?

I see a double top and strong diagonal support broken. I also see a successful retest of that trendline this morning. a close below 85 would further bolster my analysis that the double top is intact.

Now if you'll excuse me, I need to go find some Wellcare Group employees to punch in the face. In fact, if you see someone and they're not punching a Wellcare Group employee in the face, rest assured that's not me.

Brett..



At the end of the day I may be chopping that finger off..we'll see...

Normally I would wait till end of day..and not be so quick to jump out...but with the big price move and the volume (CTSH), my finger was itchy to get me out...

Moronic perhaps, maybe I'll be wearing that hat at the end of the day...

C & C..

My BEAVer tail is dragging today, just as you said.

I'll give it until it reaches my MR. HORIZONTAL support line (probably drawn same as you)...maybe the BEAVer will finally make a move...

Oh wise ones - HELP
I did it again due to that other job and computer problems was not able to get into IIG as I would have liked and am now watching it take off. Am I too late? I have not evaluated per my rules yet and have limited time so wanted your great wisdom first. Thanks so much.
Bob H.

IIG

I missed it as well...

i see a 5pt move from $22 to $27, with maybe some resistance at $25...

It moved too already much for me to get in...

I'll wait for a better entry on another trade...or on this one at a retest..

Bob,

I had resistance on IIG at 22.50 As of this minute its at 24.85 so its 10.5% from new support. It's already moved 2.35 of a $5 target. What do your rules say? Mine wouldn't let me in at this point.

MikeH

Mike...

IIG has made nearly a 20% move in three days.......yesterday's closing hour was the time to get in. I did not have it on my Radar...so here I sit..

Risk reward not good enough for me at this point..I think a bad entry now..

I'll wait for a retest, maybe it will form a flag...

Bob and Mike,
I agree. IIG and LEAP have both leaped big-time and I don't see either of them as an entry point right now. I tried to free up money yesterday to get into IIG before close, but couldn't bet to my computer in time.

Sigh.

Chris and Catherine

USNA made a nice move today, my first good trade in a couple of weeks. I am fairly new at this and am trying to read the chart as to whether this stock will take a breather and continue down, or not. I got out with a nice profit. I'm not attached to the stock, I just don't know if there is something in the chart that should clue me as to which direction it will move. Any comments would be appreciated. And thanks for the mention of IIG yesterday, I got in first thing this morning and I feel all warm and cozy inside now.

Michael