Jeff,

Thanks for the list.

COL and HNI fit my rules. I plan on trading them if I can find the right entry points.

thanks
strat

Jeff,

You seem rather sedate lately, if it's the Warriors, no matter what happens you should be proud of them. Otherwise, hang in there, we all greatly appreciate what you're doing here and at Investools!

All,

Did you see the opening price action of AVB, whoa, if that keeps up, I'll be out later today!

Happy trading!!! :-)

Needed another PUT trade and ASEI was on my radar so entered today, thanks. TSO stopped out today as it broke through my support. I guess I am asking that why question that will not help me trade. Jeff (and Eric) that was important for me to hear as I have issues with why.

Bob,

The real 'why' question is why you consider TSO to have broken through support. For starters, it's only a cup of coffee into the trading day. Also, considering it was downgraded, it's holding up rather nicely and it's at a long-term trendline.

Hey, don't feel badly. I got stopped out of TSO, too. It was a short-term trade. Had to take the kids to school and wasn't able to watch the market and adjust stops. Oh, well. It has been a good trade. I'll keep an eye on it.

Randall and Michelle

I agree, Brett. I'm in TSO too. Right now it's recovering pretty nicely. Not screaming higher (yet) like I wish but not breaking down either. Patience seems to be the theme on the blog lately and I am definitely in the "learning to be patient" boat.

STR, BNI, ABT and LEAP are helping to make the day bright for me.

I also just closed the short leg of my first ever vertical spread. Sold a May call vertical on XHB a few weeks ago and today bought back the short leg for $0.05. That was fun.

For me stops suck. I used to use them until I got stopped out of some stocks that I had no business getting out of.

I try to ignore Intra day price action and focus on closing numbers (last hour of trading day). I used to panic if I was not at my computer for the opening bell.

That 8:35 AM post was by me.
Ladd

FYI, I tried to download a picture and join this blog thing, but was unsuccessful...will keep on trying.
Ladd

Ladd,
I have to agree with you. Stops have gotten me out of a lot of trades that I had no intention on getting out of. I need more practice where to put them. Last week it made me get in and out of stocks more than I normally do. The problem is I have three small kids and can't be at the computer all the time, so I have to have something in place to protect my account. Any suggestions, traders on how to avoid this?

Randall and Michelle (Michelle posting)

Ladd,
Shrinking my picture helped download to the community. I am not sure if that helps?

Jeff,
Thanks for the great watch list. Look forward to the video. MLM looks like it is bouncing off support.

Randall and Michelle

Speaking of stops, I'm no expert but that is an issue I struggled with a lot and I made a change and it's working much better.

I only use automatic stop orders as an "emergency" feature now. That is, I use the stock price, and I put them very far away from any support / resistance level I've identified. I have no intention of ever getting triggered out by a stop unless something catastrophic like 2/27 happens.

If I'm at my computer during the day, I don't even use stops at all for options trades. I only set them as described above if I will be away for the day, again, only to protect against a catastrophic emergency.

The biggest thing for me was just learning to deal with the fact that on options, there will be times when I lose a big percentage of the premium. I also wait until the end of the day to decide and on rare occassions that means I take a much bigger loss than I might have at the beginning of the day. But from what I can tell, nine times out of 10, you're better off waiting. By the way, this is something I learned from others here on this blog so it's not something I thought up myself.

The biggest change (so far) in my trading has been letting things move more. Drawing those lines with a big, fat marker and making sure the stock clearly blows past them before taking the exit. This means that I have to figure my risk based on an estimation of losing a little more than I would lose if I triggered out right at the line. So, allow for more risk, size the position accordingly and then don't sweat the intraday moves. Easier said than done, right. Yeah, I'm looking at this now thinking that I wish I could actually follow the advice I'm giving every time.

Anyway, that's my two cents.

Tim,

Thanks. That helps. I don't think I give my stocks enough room to move.

Brett,
Yep, you were right about TSO. Looks like I had my stop too tight. Oh, well, another lesson learned.

Jeff,
Unless CME is flagging (laughter), you may be right on your short position in CME. This blog is teaching me a lot. Thanks you guys.

Randall and Michelle

CME is definitely flagging getting ready for a 60 point move up. Oh wait, that was the chart I saw in a nightmare last night :). Swing low sweet CME (sound of music in the background).

GOOG looks like it is breaking out of a descending triangle. I would like more volume but it could be a $29 move There is serious support at 450 that it will have to break through to complete the move.

breakout on SLB today... been waiting for that one for a while. Also waiting for another b/o with PCAR. Up quite a bit and looking forward to more.

As for stops. I too use them for emergencies only. TOS has a nice feature called "touches twice" which allows for a touch of the stop, but doesn't take you out unless it goes through the stop or bounces on it a couple of times. So far, so good.

Boeing (BA) is up sharply with decent volume on news of being awarded a DoD contract...been waiting for it to pop for a while too.

Could be a nice breakout.

Randall & Michelle-

I have 3 small kids as well but when I'm home I have the computer up and running by the kitchen so that I can keep checking on it. It's just become part of my routine to continually check throughout the day when I'm here. I don't like using stops except for "emergencies". I set up my alerts so if I'm away from the monitor I get a little bell and I can then come running and check it out. Take advantage of setting up alerts. I feel like they've helped me become a little less emotional. If the alert hits my trigger I know the next few steps I should be taking. If I'm not going to be home I'll check out the price action of the option itself (the one I bought)and determine where a good place for a stop should be set. You can also set up a contingent order so that your exit is determined by the movement of the stock and not the option.

Hope that helps.

VOLV-another nice move today after their 5 for 1 split...

EEP-still looking nice

I like the looks of ASEI but will wait to see what it does closer to the end of the day.

liz
pasadena, ca

Bob in TN, too funny.


Liz,
Thanks for the tips.



Michelle

Another thing about stops and letting trade have room to move ...

Jeff shared a great quote a few weeks ago on mastertalk and talked about treating each trade like it is just one of the next one hundred trades you will make. This has made a difference to me. Actually, having more trades on at one time has helped me with this.

When I just had a few trades at a time, I would micro manage each one and live and die by how each trade was doing. Once I got more trades going, I had to step back and take the "bigger picture" view of things, and remember that each individual trade isn't really THAT significant in the long run (as long as they are all properly sized).

This really helps me to give things more room to move and not worry about every little tick up or down. It's just one of a hundred trades I'll make in the next few months.

Brett, TSO broke my diagonal support line but not by enough that I would have gotten out if it were not for stops. I use stops on the option using TOS to calculate approx stock price for my stop trigger. Then I make sure this is greater than ATR ($3.5+ for TSO). This makes it difficult to get good R/R and mostly small position sizing like 2-5 contracts. I was not able to be here this morning other to see I got stopped out and read the blog real quick. Now I am back for an couple of hours and off again. That is why I use this stops that I hate. I used to use contingent stops on the stock $ and then sell at market but had some crazy fills that way that and IT coaches suggested that I use stops on the option. Ok, they really told me I was nuts doing contingent orders as it was to risky. With stops like on TSO set $5 below purchase price it seems that I would have plenty of room for intraday movements but have been stopped out of VIP, X and now TSO all I would have stayed in and in fact jumped back in within days. To get a 200% R/R for these types moves I have to find trades that project targets of over $10 which is challenging at best. Good news is that the OTM on MON that Jeff talked about some time back that I thought was going to expire at zero almost made up for the loss in my stopped out TSO - thanks Jeff!

Tim, so you would set your emergency stop say below two levels of support or >3% below support and if so then how do you get your R/R to work unless you have a huge move and a very small position size. I like this concept and would like to try it.

Got tired of looking at the same symbols so found a couple of new stocks today that look interesting.

CY is bouncing up and CKFR is bouncing down. Oscillators favorable on both. MikeH

Tim,

Phenomenal comment.

Jeff

Ha ha, ok I swear I didn't watch Jeff's video before posting on CKFR. MikeH

Mike,
Where is the video? Did I miss the link mentioned?



Randall and Michelle

Regarding Stops, a couple of Fridays ago, I asked a similar question about using Stops, as I typically do not. I was going to be away from my computer most of the week last week and had to do something to protect myself.

I had several comments, some of which I was able to use, one I could not because I don’t have an internet capable hand-held computer to access TOS from anywhere.

I ended up having mixed results...

For some ‘options’ I set an OCO (One Cancels Other) Stops for the downside AND Limit orders for the potential profit I might have and didn’t want to lose.

For some, I set only Stops or Limit orders depending on whether I was risking all or it was too early in the trade to exit no matter what happened.

Ultimately, I set most of my Stops at about 50% of the option value paid or if it had been making money I set it at about 50% of where it was currently at, to allow it to ‘breathe’ and to preserve as much profit as possible.

On the up-side, I used ‘Trailing Stops’, which move up with the option (or stock) price at a pre-determined amount you set, then if it starts coming back down, it will hit that ‘Stop’ and get you out.

I used that successfully on a couple of trades, preserving good profits. On a couple of others, I got out with profits or loses, but otherwise would not have gotten out if I had been able to see the action myself.

To determine the amount of Trailing Stop to set on an Option, I looked at the Intraday Chart action of the Option itself (e.g., BA-HR) over a few days to see historically the range it moved throughout the day. If it didn’t move more than... 0.30¢ from bottom to top in a day, then I set it at 0.30 or maybe a little more or less than that depending on the volatility of that Option.

Basically it was a Craps shoot. I did okay, but had been stopped out of many positions I would not otherwise have exited, got burned on some and if given a choice, would always want to be able to check in on things...if possible.

It was a valuable lesson and if I have to do it again, now I know I can do okay and maybe fine tune it a little more too.

Tim -

Just had to write and say I agree with you on adding more trades. I was doing the same thing (micro-managing). Also, with a few trades you have big up and down days which was hard on my emotions.

Dropping down to 1-2 contracts, and adding more positions has helped my progress immensely.

The market going straight up has also helped.

Jeff

AVB: Look at the latest price action! Almost $4 from top to bottom for the day, bouncing off of resistance.

Hey Brett, is this why we wait till the end of the day to exit?!

Next stop, somewhere south of $120!

DNA- This descending triangle broke through support today. Looks like a $10 opportunity