All Entries in the "Swing Trading" Category
Dealing with Major Price Gaps
November 1, 2012 at 5:53 pm
In this video, we’ll look at major price gaps, the impact they have, what to expect from them and what to focus on once they get filled.
Run time is 3:39.
(Direct video link is here for those interested in embedding it elsewhere to share).
Trade Like a Bandit!
Jeff White
Subscribe to our Stock Pick Service to get our trades.
Let the Market Dictate Which Plays You’re Learning
October 26, 2012 at 3:27 pm
Newer traders quickly learn that there are a multitude of strategies to employ and a variety of timeframes in which to apply them. And then they make a huge mistake: they try to learn them all simultaneously.
Picking up new plays and honing skills takes time. You start out with one strategy and get better at it until you have an understanding of how and when it works best. And then you add another and keep repeating the process.
But few understand where to begin, so let me simplify it for you. Let market conditions dictate which plays you focus on.
Whatever is working in the here and now is the play you need to be working on. In a momentum tape, naturally it’s going to be breakout plays. In a trading range, you work on trading more reversals from key levels of support and resistance. When a steady trend comes along, it’s going to mean the best way to get involved is on pullback plays. And when corrections kick in like the one we’re currently caught in, you learn to trade the short side after failed bounces back to broken (former) support zones.
Don’t try to perfect a dozen plays simultaneously. You’ll feel overwhelmed and get nowhere.
You don’t acquire an entire wardrobe in a day. You build it over time as weather conditions change. With your trading, it’s the same way. Take it one play at a time based on current conditions, and you’ll grow your skill set with greater consistency over time.
Trade Like a Bandit!
Jeff White
Subscribe to our Stock Pick Service to get our trades.
Next Target for $YHOO
October 23, 2012 at 5:35 pm
In this video, we’ll look at the post-earnings pop in Yahoo ($YHOO) and where it may be heading next.
Run time is 3:30.
(Direct video link is here for those interested in embedding it elsewhere to share).
Trade Like a Bandit!
Jeff White
Subscribe to our Stock Pick Service to get our trades.
Find a Way!
October 22, 2012 at 5:36 pm
Years ago as an aspiring professional golfer, I had a conversation with a veteran (PGA) Tour player. I asked him what he thought some of the differences were between a guy like him and the guys on the next level down. Both might go out and shoot 65 on a given day, but what was the missing ingredient for the guys below the top level? They had plenty of game, but just couldn’t get to the next level. What set him apart?
His response surprised me with how simple it was. He said that a Tour player would almost always find a way. He’d find a way to hit the fairway on the narrowest hole on the course. He’d find a way to grind out a par after a poor shot. He’d find a way. It was about will, about focus, and attitude – not merely gaining distance or accuracy or putting in more practice.
It translates into trading.
Great traders don’t necessarily find better trades than those who struggle. But they do find a way to limit the damage on their poor positions. They find a way to get involved in a move – on some timeframe. They keep learning even though they have plenty of past successes to reminisce about. They have a will about them, a focus, which prevents their mistakes from becoming catastrophes the way a struggling trader might. Their attitude promotes success, not rationalizations for a shrinking account.
Stop accepting excuses for your underperformance. HFT’s are prevalent in today’s markets, find a way to co-habitate with them (pun intended). Elections happen and cause some uncertainty. Terror threats emerge from time to time. Market volume dries up periodically. Find a way in spite of it. Those who are successful always find a way, no matter the conditions.
Trade Like a Bandit!
Jeff White
Subscribe to our Stock Pick Service to get our trades.
Don’t Ignore Event Risk
October 17, 2012 at 5:50 pm
In this video, we’ll look at a cup and handle pattern which is starting to play out but which may be interrupted due to a key event.
Run time is 3:25.
(Direct video link is here for those interested in embedding it elsewhere to share).
Trade Like a Bandit!
Jeff White
Subscribe to our Stock Pick Service to get our trades.
Misdiagnosed Patterns Can Still Pay (HAR Trade Review)
September 16, 2012 at 3:47 pm
I don’t even know how many charts I’ve read over the years, but there are a couple of commas involved. I’ve been able to identify quite a few patterns and benefit from them, and of course I’ve been wrong a lot too.
What’s funny is that in this game, as long as you’re managing your risk well, you can sometimes be dead wrong on the pattern and still make money. Let me give you an example.
A few weeks ago, I noticed HAR as a stock which had cleared an important area ($42 in early August) and then had settled into a rest phase. I drew my trend lines and recognized a wedge, which was also a pennant after the advance in price. I set up a buy for $46 to get long on a return of strength.
Here’s a look at the chart of HAR when I set up the trade:
That buy triggered the next day, but the stock couldn’t get going. It actually churned for the next 6 sessions, including a test on day 5 of my stop, holding just a short distance above it to keep me in the trade. That dip was a test of support, but I was leery because I considered this to be a failure of the pattern and I expected to be taken out of the trade for a small loss.
Here’s the HAR chart at that point in the trade, and I began to realize the pattern was now a large channel and still intact:
This gave me a bit more confidence in the trade when the next day price lifted to create a little breathing room to my stop. It showed a bit more follow through, then held for a few days before hitting Target 1 on Thursday for a 5.2% profit.
Here’s a look at HAR after the return of strength:
This gave me an opportunity to lock in some gains and tighten my stop for remaining shares, which I did. Then on Friday, the stock rallied again, but hesitated $0.14 shy of Target 2, which was set at $49.60. Rather than hope for an extra few cents while risking more than $2 (my stop had been moved to $47), I booked the 7.4% winner and notified Bandits of my adjusted exit.
Here’s a look at HAR as it currently stands:
This stock may still hit Target 2, but with it being up now over 9% in the past 7 sessions, it’s due for a rest and it has approached a congestion zone from late spring.
When you’re setting up a trade, you evaluate the price action. But that evaluation doesn’t stop once you’re in. You have to keep asking questions of whether the risk/reward is worth staying in the position. This one had come to a point where stretching for a tiny bit more wasn’t worth the risk, so I took the solid profit with a smile. After all, my initial diagnosis of the setup was wrong, but I was still able to book a nice gain.
Trade Like a Bandit!
Jeff White
Subscribe to our Stock Pick Service to get our trades.
A Few Lessons From AMGN (Trade Review)
September 14, 2012 at 2:38 pm
If you’re looking for excitement, this isn’t a post for you.
This is a recap of a trade which actually yielded nothing – but there were some good lessons tied to it. Plus, I certainly wouldn’t be bragging about a breakeven trade.
The Setup
Let’s go back to August 12th, the day I originally listed AMGN for a swing trade buy. The stock had outperformed the NAZ since June 11th with a 22% gain (vs. the NAZ up 7.5%). It clearly had momentum and had been able to put in some well-deserved rest for two weeks. I noticed the descending trend line from the high, and set up a buy upon a break of that trend line at $83.00 and shared it with subscribers.
Here’s a look at the chart of AMGN when I set up the trade:
That buy triggered on Aug. 14th, and over the next few weeks the stock grinded higher but never really gathered momentum. Three times it posted a new 52-week high, only to immediately hesitate afterward.
Adjustments
Having sat in AMGN for a few weeks with limited progress, I tightened my stop loss from $80 (initial stop) to $82 on Sept. 3 in order to reduce risk. The stock had just completed a multi-day pullback and it was appropriate to tighten up after strength returned. I tightened it again to $83 a week later after the stock had tagged the prior high to the penny, only to reverse lower. This looked ominous, so I tightened to my breakeven.
The AMGN chart with my stop adjustments along the way:
This gave the stock a little wiggle room to keep me in the trade should it turn back up, but it eliminated my effective risk in the trade. A stop out wouldn’t pay me a thing, but for a trade which never took off, neither would it cost me anything.
The Exit
I was taken out of the AMGN position at $83 on Wednesday, and since then the stock has broken down further with a solid breach of the multi-week uptrend line. Where it goes from here, I don’t know, but I sure don’t view this action as bullish so I’m out.
Here’s a look at AMGN as it currently stands:
On some trades, breakeven isn’t bad. You enter a great setup, you give it room, you stay patient, and it just doesn’t ever get going. This was one of those.
Hopefully by looking back at this trade, it’ll help you manage your next position better when it acts sluggish. If you’re seeing modest rewards but after ample time you’re really not getting paid, tighten up. Odds are, if it turns lower you’ll be glad you did.
Trade Like a Bandit!
Jeff White
Subscribe to our Stock Pick Service to get our trades.
