AZN (when profits get away)

Here is a trade where the target (38.2 fib extension above the high) was not reached. Price pulled back and the position was stopped out near breakeven.

Current trading methods

I am currently trading a method between day trading and swing trading utilizing strategies found on Trader X's site. His basic methodology can be found here.

Here is an actual trade that I took:

I have switched to 15-minute bars due to the frequent whipsaws found on shorter time frames. It seems with 15-minute bars real moves (that continue in one direction for the entire session) take place more often. The stocks that I want to trade must provide volatility and volume, price per share is not really a barrier.

First thing before each day's open, I check Briefing's "Gapping up, Gapping down" lists to scout out a list of potential stocks to trade each day. This number can range from about 10-12 during normal periods up to 25+ during earnings season. Each one is put onto its own 15-min chart with 4 per workspace on my Tradestation charting software.

To find potential entries, several conditions are sought out:

1. Most commonly is a consolidation area in the upper half of the OR (opening range) bar. The entry will be on a break of the opening range bar. The more hammer candlesticks in the consolidation the better. Hammer candlesticks look something like this:

Hammer candlesticks form when a stock moves significantly lower after its open, but rallies to close well above the intrabar low. This candlestick shows strength since the bears attempted to push the stock lower, but were met with an overwhelming amount of buying.

2. Other times stocks will gap one way, continue moving in gap direction, consolidate (with some hammers), and then begin a reversal.

My trades that follow will demonstrate the above mentioned rules as well as build upon them. The successful trader must change as the markets change.

Previous trading experiences/styles

Prior to this post, I fluctuated between daytrading and swing trading. Alternating whenever one method would continuously lose money.

I have been through each style enough times to know my strengths and weaknesses.

With daytrading I was not able to keep up with the fast paced action, which would cause me to chase (usually catching short term tops) and selling out of panic (just as the stock was about to turn). I have put on huge size 1k shares+ and had price go viciously and rapidly against me. My jaw would drop the floor and I would sit there like a deer in the headlights as my account was getting decimated. Then it would take a little while to shake out of it and finally exit the trade. Had to learn what kind of monsters I was dealing with. Understanding the beasts are a vital part of the game. (Think AAPL or GOOG...these mofos will eat your lunch real fuckin fast)

The key strength was that I was never afraid to pull the trigger. I admit that my reasons for getting into many trades were often times flawed, but nonetheless I was not afraid to take shots.

With swing trading (trades lasting from days to weeks) I was much more comfortable putting on small sized positions and having the time to work out and set stops (yesterday's low or an intraday low). Swing trading gave me many a whip saw as I played breakouts that would later retrace and force me out.

One of the downsides to watching each and every tick was that I would exit the trade after tiny runups and miss large moves to the upside. I definitely have developed patience to sit through uncomfortable times and catch larger moves. The thing I learned from swing trading is that one must have a system to scale out. A trader must take profits when they are given to him/her. A small portion can be left to catch further upside, but with stops usually at breakeven.

Much has been learned through continuous trial and error and only forward progress will be acceptable from this day forward.

My background

My fascination with the markets began in my sophomore year of college, which coincided perfectly with the now famous Tech Bubble. I had 10k that I received from my grandparents for graduation and proceeded to put all of it into INTC on a tip from my uncle. A few months later, I was sitting on 30k. I felt like I was on top of the world, but I was about to learn the lesson of a lifetime. Easy come, easy go...

Ever since that time I have been hooked on the markets.

I have chosen technical analysis as my weapon of choice. This is because there are tons of genius Harvard fund managers and analysts that can run numbers like nobody else, but who can't even beat the S&P on a year to year basis. Technical analysis and intuition are powerful weapons when handled correctly. I currently find myself in the beginning stages of mastering this type of trading.

From July 05 to April 06, I worked as a private trader spending my days trading from home. The comforts of home was one of many things that drew my attention away from trading. These also included having a lot of free time to meet up with friends, go surfing, hang with the girlfriend, etc. By the end my focus had evaporated along with most of my trading account (had lost about 30k in that short period of time).

This stage could be best summed up as an emotional roller coaster going "from the heights of euphoria to the depths of despair."

Now I am working at a full time job where I can trade periodically throughout the day.

My trading account will be going towards my wedding which is coming up towards the end of this coming year.