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!
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| BTU |  |  |  |
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
January 4th, 2007 at 3:55 pm
to me, the place where you covered looks right. Good job!
January 4th, 2007 at 5:51 pm
hey, I was just wondering…how come you shorted 37 shares? Is the account just small, or is it experimental, or for practice? Just wondering. How is Zecco working out for you anyway? decent fills in a orderly manner? hit me up, Cal
January 4th, 2007 at 6:41 pm
ex: nice trade…street walker is available :-)
January 4th, 2007 at 6:43 pm
How about GearDaddy Trading!!
January 5th, 2007 at 4:55 am
ex: u could use Trader-Ex…it might confuse people, but u would be in good company…it takes a ton of courage to call yourself ’street walker’
January 5th, 2007 at 5:30 am
john,
Street Walker is a good idea, but the first things that came to mind (after the obvious LOL) were Random Walk Theory and Walker, Texas Ranger, both of which are indescribably lame. I actually considered “Stock Whore”, but went with my better judgement. Thanks for the ideas and keep ‘em coming!
January 5th, 2007 at 5:42 am
@Cal,
37 shares is all I could do to risk no more than 2% of my equity, which is under 1k. I’m a trading n00b and want to learn with small change before I play big. Zecco lets me do that. So far they are working out great for me, but I would only recommend them if you are on a shoestring like me or doing a lot of little buys that would make transacion costs rise. Their interface is stuck in 1998, though it’s wearing Web2.0 clothing, but executions, fills, availability of shares to short have all been really good.
January 5th, 2007 at 6:01 am
“Butterboy” doesn’t appear to be in use, anymore… :-)
January 5th, 2007 at 8:52 am
ex: good call
richard: lol
January 5th, 2007 at 10:09 am
Hi ExEngineer,
Your new handle would depend on what your values are.
If you’re interested in a reminder of where you were coming from, how about X-Geer?
January 5th, 2007 at 11:49 am
Ex,
I agree with your opinion on Chuck Norris, and I thought you might enjoy this site. LOL!
January 5th, 2007 at 5:51 pm
“Chuck Norris doesn’t short stock–he simply stares it down” ;-)
Thanks for the ideas, everybody. I thought of a couple more–please let me know if they are lame/taken/both:
“SmallCap” or “MicroCap” (from my undercapitalization)
“Shorty” (I have a built in bear bias that I fight against at times)
“Longandwrong” (I’ve always liked that phrase, though it sucks to be there)
“PnL” (Profit/Loss… I’m reaching now, aren’t I?)
January 6th, 2007 at 7:23 am
ex: longandwrong is cool…shorty is slang for a chick…i wouldn’t use that unless it applies…of course u could pay tribute and go with Too Short
if u went with smallcap or microcap, at least u could change the name to midcap and hopefully large cap soon