This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
I wasn’t going to trade today, as I wanted to see how the session went the first day back. But this morning I read Trader Mike, and he said he was fading the gap in the Q’s again. Trader Mike’s read on the action got me looking at going short Apple Computer, Inc. (NASDAQ: AAPL) today. The daily chart shows AAPL bumping the 20-day EMA yesterday.
Here’s the tick chart of my trade (30 ticks per bar):
I saw the price action trending toward the low of the day, below the white “max volume” bar. I went short 15 shares at $85.60, with my stop above the high of the day at $86.60, which put my risk at exactly $15.00. This also was a case of margin buying power put to good use, as my $15 ‘R’ allowed a position size that was worth about 60% more than my equity. I watched carefully as the price waffled around my entry point, but the trade was proven correct and AAPL gave way.
I was going to swing trade this one, but I ratcheted my stop down an ‘R’ at a time to protect profits as shown on the chart (at +2R, I put a stop at +1R, and at +3R I put a +2R stop). 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!
I think I handled this trade pretty well: A- on entry, stop management and B on the exit, and that because I didn’t max out the profit. The bottom of the move would have gotten 3.5R. I later noticed that the low of the day was right at the resistance-turned-support at $81.90. In hindsight, that should have been my target rather than the round $80.00 I chose.
Any comments or critiques are requested, especially exit pointers!
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| AAPL |  |  |  |
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
January 3rd, 2007 at 10:46 pm
Question: do you use 30 tick bars no matter how much volume the stock does? Your charts will get noisier the more prints there are… so an analogy would be that it’s like you always trade 1-min bars on AAPL and 10-min bars on ONSM.
I might have been scared out of the trade when it crossed above the little peak on the white line below 83. And, if not, I’d definitely be out @ 83 once it found support at that line and rallied up again. But, you never know what will happen, and you can’t beat yourself up for not getting out at the bottom of the move. And it’s always easier for people like me to say what they would or wouldn’t do when they are looking at the whole day’s chart!
January 4th, 2007 at 12:26 pm
I use 30 ticks usually, but I’ll bring that up if it looks too noisy to me. Today I used 100 on BTU…