My new motto: “Technical Analysis is a relative strength of my trading; Trade Management is the area I need to focus on most to improve my results“….to frame things positively in a solution-based manner as Dr. Brett suggests in his post last night. My guesses, or if I want to give myself some credit, my analysis of where a stock is heading continues to be decently higher than just flipping a coin. Acting on this analysis in a timely manner, and managing my entries and exits is the ongoing challenge – and I’ve decided to put more energy in that arena and not as much attention to perfecting my chart reading. I have some ideas to formally add a section to my trading plan called “Trade Management” (this is beyond Risk Control, though related). The first step today was I traded without my confirmation window charts, which made my tech analysis very simple – “naked trading” with just a three-minute candlestick chart, green lines for the opening range (drawn by my software) and red lines for the whole number price thresholds (that I manually draw).
I started out the morning groggy more than usually, though I went to bed early last night to hopefully feel more refreshed, but sometimes as extra hour of sleep makes you feel more tired. Then this was the first day with both the kids and wife home, so had to juggle that distraction. And to make things worse, my internet connection was acting up and I finally had to connect my laptop via a wire when I couldn’t get my wireless running after I at least got some type of connection going. So after getting things operational – I was very HESITANT and did not pull the trigger on several stocks that were breaking out. I finally made one trade and closed things down for the day after a small winner to start the week off right.
Today’s Watchlist: HSIC, EL, MEE and CHL – all four made nice ORH breakouts today. Also TCK, ADBE, and CYOU.
Todays’s Trades:
| Stock | Shares | Gross |
Fee | Net | Set-up |
| CYOU | 200 | +$32 |
-$3.34 | $28.66 | ORL Breakdown |
I entered CYOU at $34.51. The ORL was just above at $34.63 and it was coming up for another test (and what I thought would block price going up across) of this former support now acting as resistance. Also, on my screener, I still have RSI(2) and ADX (7,7) values listed, though I do not chart these indicators. I noticed RSI was extremely high (e.g. overbought) on this price pop but the ADX was somewhat low (e.g. weakness in price trend) – which indicated a divergence to me at this critical price level.
Three minutes later, the stock moved .30 cents in my favor. I moved my stop order to break even. The stock spiked .15 cents from there so I manually exited half at $34.30. The stock quickly dropped again, and I moved the stop for the rest of the position to $34.41, which got filled three candles later.
Of course, the stock plunged soon after, and didn’t even hesitate at $34.00 (my price target) dropping all the way to $33.75ish. Moving my initial order to breakeven after a .30 cent price change is following my plan as letting a winner turn into a loser is a key part of my risk management strategy. Covering half of my position with a .21 profit is technically against my rules, but is acceptable violation. But not letting the rest of my position at least play out when I had a profit locked in seems is a great sin (: in my book! I had a breakeven stop order in for the rest of the position – just leave it there to play out buster. I will post an annotated EOD chart tonight.
UPDATE: Here’s the final chart for CYOU. With a stock like this, my price target is $34.00, a half buck from my entry. After the stock moves .30 cents, moving my stop to breakeven is the first stage to properly managing this trade. Exiting half of my position when it hits $34.00 and moving the stop to like $34.15 for the remaining 100 shares is the next phase. Doing this would of garnered $85 profit or so. After the slight revovery of the price of the stock, later in the afternoon, reentering a short position after the breakdown of the $34.40 consolidation range would of been a nice place to get back in on this one.
