This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
I took a swing trade in HANS last friday. I’ve held it for almost a week, but it felt more like a year.
(UPDATE: Inserted a properly linked image below)
1. Why did I take this trade?
I bought Hansen Natural Corp (HANS) @37.14. The reason I bought it was due to several factors: Nearby support @36.75 was established, HANS was in a short term trading range as indicated by the two blue bars in the chart. I had reason to believe that there was a high probability that it would at least tag the 38 level again. This was my initial thesis for the trade, anything else (like a true breakout above 38.5) would have been a bonus.
2. What was the initial stop?
Initial stop was just below support @36.74. Because it was originally in a trading range, there was no need to move up the stops, ie. the next stop loss level would have been 38.20-ish.
3. Why did you exit where you did?
The HCPG newsletter highlighted the fact that HANS tried to break above 38.40 and failed. I had already noted that the 38.25-38.30-ish level was a key decision point. Well, that breakout failure was the biggest warning sign for me to get out.
4. Is there anything you would do differently?
With swing trading, there is always a trade off between how much profits are you willing to give up in order to realize even more profits. I could have sold as soon as it tagged 38, but there was always the potential that HANS could have a real breakout.
When HANS failed to break above 38.40 yesterday, I later realized that it formed a triple top. Had I realized this earlier and focused more on the 38.3-38.4 level, I could have sold sooner and lock in more profits.
Note that the story on HANS is not over by any means, and I will be watching it for another swing trade opportunity.
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
January 25th, 2007 at 10:47 am
There’s no link to a larger version of the first chart, and I want to see it!
January 25th, 2007 at 12:28 pm
Hi Prospectus,
It should be fixed now, I just wasn’t familiar enough w/ the WP editor.
January 25th, 2007 at 3:36 pm
Thanks! I did the same thing when I started using WP.
I noticed the volume by price on the side. Did you use that in your analysis and what did it tell you?
January 25th, 2007 at 7:31 pm
Yeah, usually, the vol by price is better applied to the daily chart to help identify where the commitment of the buyers and sellers lie. I’ve never seen volume by price on an intraday chart, so I thought it might be interesting to try it on the 10d chart to see if it told me anything. It did highlight the fact that there are some sellers at around the 38 level, and some commitment of buyers at around the 37.25 level. However, I’m not sure if I would identify those as support/resistance levels. Just information on the side to keep handy.