Move the Markets

Guest Post: ExEngineer Trade: BTU, 1/04/2007

Posted on January 4th, 2007
Written by Prospectus
Posted in: N/A (old archives)

This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com

Here’s a trade I took today in Peabody Energy Corporation (NYSE: BTU). It was a Prophet.net scan gap down. I chose it because it was the first of the ones I was watching to move. It’s a Trader-X style short, looking for a breakdown of the opening range low and heading for the fib extension below. I set up the fibs and picked my entry on the 30 minute chart, and I watched it for a close above the 5-EMA for my exit, or the end of the day:

I also watched on the 100-tick chart below, which shows the gory detail of the 30 minute chart, as well as my trade tactics:

Short 37 shares @ $36.84, Initial Stop $37.28, R=$16.28, Target $35.60
Initial Risk/Reward ~ 2.9 (I don’t like to take a trade unless this ratio is above 2)
Cover @ $36.66, P/L=0.41R or $6.66 (is it an omen?)

I give this one a B-. I jumped in as soon as it broke the OR low, instead of waiting for a candle to close below the low. You can see how bad I screwed up the entry on the tick chart. Also, there was a single tick that made it above my initial stop, but Zecco didn’t jack me and my stop did not execute (whew!). With that good luck, I watched the $37 level for a long time (right below the white “max volume” bar), and it eventually broke down. I moved my stop to breakeven when I was up about 1R, and waited for the fib that never came. In the end, I covered as it broke through resistance. I actually tried to cover about $0.10 lower, but Zecco bit me this time–Their web-based trading screen times out and you have to enter two passwords and set up your order again. But once I sent the order it was filled immediately.

I’ve had 4 wins in a row now! I’m trying not to let me head get too big as I count all the loot. :-P I used to be so frustrated with my trading, and I thought the biggest problem was me. Since Zecco, it seems to have been my undercapitalization in the face of 2% of account equity commissions that were my failing point. We’ll see if that trend continues, but it’s very encouraging for my eventual full-time trading debut (fully capitalized, of course)! Before then, I really need to document the trading plans, systems and rules that are mostly in my head, learned mostly from the great bloggers out there, many of which are on Richard’s “Blogs I Read”.

BTW, I really need a new handle. I really suck at making up names, as you can see. Any suggestions will be considered!

Comments

© 2010 Richard Todd. I am not a financial advisor, and nothing on the site should be considered investment advice or actionable recommendations. I'm just an individual, saying what I think, and sharing my experiences.