CAH

There was a lot of interest in Monday's setup. CAH provided a similar opportunity, though it had (IMO) much more risk because of the wide-range bars and upper tails.

But the entry bar was an inside bar that closed strong, and was nestled in the tail of the previous bar (an X observation that he wrote about often).

Regarding "Comments" - I have not had time to answer all of them, and I apologize. But please keep making them as I (and hopefully all of us) enjoy the interaction. I will try to go through them this weekend and answer questions addressed to me.

PBR - 012808

I like this setup - a gap that provides nice white space and then reverses to take out the previous day's range.

PBR gapped down and then rallied. It took out the highest close from the day before (white line), and R2 (blue line). I entered where indicated, and closed half my position at R3 (yellow line) and held the other half until the end of the day.



Thanks for all of the comments on my "Trading Platform" post - I am trialing several options this week and will let everyone know what I decide to do. If you have additional comments, don't hesitate to post!

Trading Platform

I just found out from my broker that the RealTick platform fee is increasing by over 25% next month. I usually don't pay a platform fee, as my trading volume is large enough that my broker rebates the cost - but they also informed me that the threshhold for getting that rebate is increasing too. So the bottom-line is I may be looking at an added expense.

I like RealTick, I have been using it for years, and it does everything I want. But, I thought I would use this news as an opportunity to evaluate what everyone else is using. If you are using a direct-access broker, I would like to hear from you. Please leave a comment regarding your platform and broker, and your thoughts on the functionality and reliability. All comments are appreciated!

edit - I should clarify...RT is what I use for charting, and it is integrated to my broker. I am looking for feedback on what you guys are using for your real-time charting, as well as feedback on your broker. But I am most interested in the charting - the functionality, flexibility, toolset, et cetera. Thanks!

AG - 012308

AG gapped down, bounced off S1 (green line), and formed a swing low (white line).

After a brief rally, price fell back through the swing low and S1, and I entered on a break of the weak candle as it pulled away from the 5MA. I covered at S2 (yellow line).

The sky is falling...

Or that is what I hear, at least.

I did not trade yesterday, but expect to find some good trading opportunities today. Did anyone hit any homeruns Monday?

On another note, I was sad to hear about Heath Ledger passing away. I was really looking forward to his role as The Joker in the upcoming Batman. Only 28 years old.

R.I.P.

Some answers...

Here are some of the most oft asked questions of me since I began blogging:

Q.) How many trades do you make a day?
A.) Usually 4-6.

Q.) Do you go in with a bias every day (if it will be up/down)?
A.) Absolutely not. I rarely look at the overall market...I just take the setups that appear daily whether they are short or long.

Q.) How do you prepare your watchlist?
A.) I don't want to re-create the wheel. See Trader-X's posts here.

Q.) What are your favorite Xbox games?
A.) Right now I am really into Halo, Call of Duty 4, Mortal Kombat, and Beautiful Katamari.

K.I.S.S.

There were many short opportunities Thursday and Friday, but I wanted to focus on a long that followed the K.I.S.S. philosophy. I find several of these every week - setups that don't require a lot of thought, a lot of lines, or a lot of strategy.

AKAM gapped up and printed a wide-range first bar. The second bar was narrow-range, and "nestled" in the first bar's upper 1/3. More importantly for me, it closed above the swing high of the previous day (note the white horizontal line drawn through the highest close from the day before). It also closed just below R2 (blue horizontal line), which was somewhat negative. But the close above the white line and support from a rising 5MA offset that, and I entered on a break of the second bar high.

I was looking for a move to R3 (yellow horizontal line), and I closed the position four bars later when it hit that level. Overall it was a quick, clean 3% move.

WCG - 011508

WCG gapped above R2 and the previous day's range. It continued to rally through the morning, and around 11:30 formed a swing high and began to pullback. The decline found support at the 34MA, and WCG formed a nice base and began to rally back towards the morning high.

Just after 2:30, price crossed the morning swing high (denoted by the white line). The entry was a strong green bar that closed above that level, and had support from a rising 5MA (it did have a small upper tail which was bothersome, but overall it was a bullish candle). The next three bars were expansion bars that rallied substantially higher, but they began showing signs of weakness and leaving long upper tails. The exit was on the third bar's close, as the tail was almost half the candle's range (very bearish, especially combined with the tails on the previous two bars).

If you look at the chart below, I overlayed Fibonacci lines in the classic X style - from the previous day's close to the opening range (OR) high. You can see that the entry coincides with a move above the Fibonacci extension, which usually provides the "climate" for such an explosive run.

BitTorrent-mania

In 2008, I started experimenting with the whole BitTorrent thing. First I had to grapple with the ethical concerns - do I really feel bad about downloading movies and music without paying? Sure, there are laws...but in my opinion, they are ridiculous. However the ethical question still remains - am I stealing? In my mind, I don't think I am. Look, I pay Netflix less than $20/month and get all the movies I want to watch, and then some...so how much am I really taking out of the pockets of the movie people?

I am also someone who likes to own movies - if I really like it I will buy it. That goes for what I watch via BitTorrent - if I like it, I will buy it for my library. I downloaded "Charlie Wilson's War" and thought it was brilliant - when it is released on DVD, I will buy a copy.

So I come down on the side of not feeling guilty about downloading. You may differ, and I respect your opinion. But there is also a part of me that gets that rush like George being a bootlegger in that episode of Seinfeld.

So I have my newly acquired Xbox, and I am downloading movies and converting them to .MP4s, transferring them to a memory stick, and plugging that into the USB port. It is an excellent setup, and I am really enjoying the Xbox for more than just games.

There is no real meaning to this post - I am just kind of ranting. Feel free to comment on the legality, ethics, or just your own setup for downloading and watching...as well as any tips, tricks, et cetera.

U-turn

Readers of Trader-X will remember this setup. Look at the chart below - the close of the first bar corresponds with the S2 pivot point (the yellow horizontal line on the chart). After rallying off the open, EGLE rolls over and falls back through that level ten bars later. Could you find a nice candle entry in the next four bars?

A simple setup - ITMN

First, thank you to everyone for all of your support and comments - much appreciated!

In comments, Rory wrote the following:

"Nice! I assume the first chart is just showing the swing high. I notice you draw the white line through the close, not the high. Is that standard for you?

The second chart shows the Fib overlay. If you entered where the black arrow is, which is a nice narrow-range bar above the white line, then your target was probably the 138% extension. Nice percentage gainer. I am looking forward to more charts on this blog."

Rory was spot-on. To answer the question, when I am drawing my horizontal lines based on swing points, I draw them through the highest close, not the high itself (or lowest close, not the low itself).

The lines at the bottom - which really don't come into play on this chart - are pivot point lines (R2, R1, PP, S1, S2). The first chart shows a white horizontal line drawn through the first swing high. The second chart shows red Fibonacci lines plotted over the morning's low to high.

Once price took out the earlier swing high, I was looking for a set-up to enter. The bar I marked as my entry was narrow range (NR3), opened at its low and closed at its high (strong candle), and had support from a rising 5MA. I closed half my position at the Fibonacci extension (five bars after entry), and held the other half until the close.

PS - good quote (and good advice) from The T.A.D. Principle Blog this morning.

Welcome to 2008!

The New Year officially begins today - for me at least.

The past few weeks have been a flurry of movies, Xbox, and family. Stay tuned for some charts and [hopefully] good conversation.

PS - check out Charlie Wilson's War - brilliant!