This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
I took a trade in Valero GP Holdings, LLC (NYSE: VEH). Here’s the chart with comments:
Any comments on the setup selection or a read of the price action during the trade are welcome, please!
As an aside, I opened an account with Zecco, which has solved my undercapitalization problems with their offer of $0 commissions. My maximum risk for this trade was $15, or 2% of my account equity. With my old broker, it would have been $14 commissions, or 1R, just to play the game. Now I can trade and have a chance at profitability! I still use Quotetracker for my charting, with TD Ameritrade providing the data. I’m very impressed with Zecco’s executions and my fills, even on stops! I recommend them if it fits your style and budget.
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| VEH |  |  |  |
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
December 19th, 2006 at 2:16 pm
Does zecco have a limit on the number of trades you can make a month, or are you free to just trade at will?
December 19th, 2006 at 2:34 pm
Zecco gives you 40 trades free per month, with up to 10 of those in a single day. So 10 trades per day for 4 days eats up the freebies, or 1 round trip per day for 20 days. If you trade more than that it’s only $3.50 per trade. It’s almost Jesse Livermore’s Bucket Shop all over again!
December 19th, 2006 at 3:05 pm
That’s interesting about zecco allowing 40 trades a month. I fit in that profile, usually!
I would love to hear what other traders think about the stop management on this trade. To me, it’s an example of a “high-stress” trade. It gave you about 1R on the first candle, and then went red, then more than 1R, then red, and shortly after stopping you out on a crazy dip, it gave 2R before dropping again.
With my tastes, if I get 1R on the first candle, I have a strong urge to just take it. I’d at least accept no less than breakeven after that. On this trade, that would mean I’d have broken even. Let’s say I waited longer… my next clue I’d want to exit is when it failed to push through 23. I don’t think I’d have the nerve to stick with a trade into the red again after it fell away from a round number.
December 19th, 2006 at 3:38 pm
Thank you for linking our start-up blog. I appreciate Move the Markets and will keep coming.
I have Quotetracker and I used to get quotes free from Scottrade - not anymore. Can you tell me about TD Ameritrade (prices and conditions, etc.)?
December 19th, 2006 at 5:50 pm
@Antonio:
I used to use Scottrade inside of QT too. I have some firewall issues, and Scottrade stopped working for me. I couldn’t use MB Trading, either. :( But TD Ameritrade routes communications through port 80 (HTTP), so it should make it through most firewalls. Works for me!
TD Ameritrade has $9.95 trades, unlimited size. There are no inactivity fees. They have a lot of powerful tools available to account holders, and if you have an account funded with $2000 you get the full version of Quotetracker free. TD Ameritrade also supports integrated trading within QT and has full streaming data integration. Check out their website and read all about it.
December 19th, 2006 at 6:08 pm
@Richard:
The only reason I wasn’t ultra-stressed on this trade was that my R value was $5. :P Small change, but at this point being profitable at all is what I’m trying to achieve. The small amount of money involved helps me “Zen” a bit more.
As far as this trade goes, I was swinging for the 138% fences, trying to bag a +2R trade. It was definitely crazy in real time! I resisted bailing out several times, and I eventually raised the stop to make sure I didn’t let a win turn into a loss. I was encouraged to stick with it due to it never closing below the OR high. I’ve also been stopped out so many times just to watch trades go higher as I had anticipated. I’m more likely to stick with them due to that experience. Richard, is “+1R and out” one of your trading rules?
December 19th, 2006 at 10:36 pm
It’s not a rule… it depends on how it’s acting, and how big 1R is, as a percent of the stock price, and on and on. But, once I have 1R, I have a hard time letting it go red. I’d probably get out break-even in worst case after having 1R paper profits.
December 20th, 2006 at 3:18 am
ExEng,
I would be inclined to move my stop to break even, like Richard, after >R1 profit. Although in this case I probably would have been stopped out as I raised my stop to bottom of 6th bar low after it printed. That being said, I would have expected a lot of back-fill on this play as 2 candles, after the opening candle, made a new HOD with tails up, foreshadowing choppy action ahead. Not quite as “clean” of a chart as I like. I too swing for the fences, as I know a high percentage of trades that do break out and close with a green candle, do make it to the 138% fib. That is basically how I make my moola, and cover for my many, hopefully small, losses. If I started to take profits at R1, I wouldn’t make a dime. But that is how I trade and the character traits of my trades. Also, I protect losses, but not profits. There has to be a really obvious pivot for me to move my stop above break-even.
On trading such a small amount, I don’t feel that should matter much. I am trying to train myself to trade the chart, and to think in terms of R. Staying in the game by preserving our capital as we are learning is the key. As I drew my acount down when I started trading, I risked a smaller and smaller amount, until I showed progress. Then I incrementally increased my risk. Stay in the game at all (small) cost ;).
December 20th, 2006 at 7:39 am
Thank you, Ex-Engineer for your prompt answer.
But I got in touch with TD Ameritrade and they don’t allow me to open and account (I live in Portugal…).
So, I don’t know what to do. Maybe pay for Money.Net services or other streaming quotes provider…
December 20th, 2006 at 7:54 am
@Antonio: Look at http://www.quotetracker.com/qsources.shtml and see if there is something you can use there. Good luck!
January 3rd, 2007 at 7:13 pm
[...] I was going to swing trade this one, but I ratcheted my stop down an ‘R’ at a time when it seemed prudent to protect profits as shown on the chart. I got the idea after reading comments from Richard a few weeks back. I ended up getting “stopped out” for 2R, or $30.00 exactly, account up 3.8%. Yay me! [...]