AAPL Scalp and FCEL Swing, 7 Feb 2007

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

I took a quick trade in Apple Inc. (NASDAQ: AAPL) as I saw it approaching the high of Monday, 5 Feb:

At about noon, it took off, blowing through $85 and moving on up. My entry was pretty late for the move, which left me a very wide stop, but luckily It had enough momentum to get above $86. I had a target of $89 for a swing trade, but thought I would probably end up getting out today sometime.

I put boxes on the chart in white to show my stop strategy. At 1R profit, I moved the stop to breakeven. I never got a chance to move the stop to 1R, as it broke through my 1R to 2R box floor and closed below the 5-ema. That should have been my exit signal, but I wanted to hold on a bit longer hoping for a profit. Hope was justified since I was not hoping for a loss to turn around, but a profit to expand! I tried to only increase my stop to $85.70, but mistakenly put in a market order instead, filling me at $85.92. That mistake ended up getting me about 0.4R more on the trade, since the stop would have been hit later on. So hooray for a mistake in my favor! I seem to be taking a lot of trades that initially go my way lately, and I should be using tighter stops and larger position sizes because of it, as well as taking profits sooner. I need some scalping lessons from Richard! Also interesting is that the move powered up until it hit one of the S/R levels. S/R and Fibs are some of the only technicals that seem to consistently “work” in my experience.

Trade Summary:
AAPL Long 16 Shares
Entry: $85.45, Stop: $84.80, Target: $89.00
R: $10.40, Exit: $85.92
P/L: 0.72R, or $7.52

I also closed a swing trade in FuelCell Energy, Inc. (NASDAQ: FCEL). I bought it Jan 29 as a swing version of a Muddy 10/60 with a very wide stop. Here’s the daily chart:

And an hourly intraday chart:

This FCEL trade was just a seat of the pants thing. I had no real plan, just another inter-day trade for something to do while waiting for my daytrades to recharge (dumb, I know). I raised my stop today as the daily chart looked tired, and it got hit.

The funny thing is, my P/L for this trade using ~ $73 was almost as big as my AAPL trade using ~$1360! Maybe with Zecco I should be swing trading 5 or so little stock positions at a time instead of a big lump daytrade every few days. This is the direction my thinking is taking me anyway. I know I’ve said much of this before, but repeating it to myself (and you) over and over might get it into my skull. :)

Trade Summary:
FCEL Long 11 Shares
Entry: $6.71, Stop: $5.83, Target: $9.90
R: $9.68, Exit: $7.20
P/L: 0.56R, or $5.39

All in all, I’ve taken 22 positions with Zecco, and I’m near net profitability, which is exciting for me! (I was a net loser with my old brokerage, for many reasons–commissions, inexperience, discipline, etc.) I’ve moved up from losing to breaking even, and with more work and luck I can move on to profitability! Here’s some stats from my spreadsheet–22 positions from Dec 17, 2006 to Today:

Net P&L: ($3.80)
Win Rate: 52.4% Loss Rate: 47.6%
Avg Win: 0.74 Avg Loss: (0.73)

Expectancy: 0.04 R
Profit Factor: 1.12

If I take out my first boneheaded trade, my P/L is actually $15.73. My biggest loser is -1.13 R, biggest winner 2.01 R, but remember that not all R’s are created equal. Back in the day, I had some 6 and 7 R losers, so that part of my trading has tightened up quite a bit. I’m now risking about 1% or less of my equity on each trade, and my losses about balance my wins. I need to further tighten up the losses and either increase my win rate or increase my average win to get to the next level.

I share all of this so that you will subscribe to my valuable investment services! ;) Really, I write P/L and share my stupid little details to show the path of the novice trader that I am following. This is my small payback for the many great teachers out there who have shared so much valuable knowledge and experience, and if I ever acquire any, I hope to pass that along as well.

Stocks Mentioned In This Article
Stock	Links
AAPL	| |
FCEL	| |

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