As mentioned via twitter, I made a 0.5R trade on Qualcomm Inc. (Nasdaq: QCOM) a few minutes ago. This was (to me, anyway) a pretty standard-looking dummy setup. A gap up, a drop, and a turnaround on an inside NR3 candle just as the 5MA is catching up to the price. The top of the dummy candle was 41.45, but I waited for it to clear round number 41.50 before getting in. That’s safer. Since the markets were still trading within yesterday’s range, and we were having what appears to be a negative day, I was extra interested in “safe.”
Because of that, and because I expected a bit of a pop through the round number, I decided I’d rather scalp it. Since I was entering a few cents above the dummy candle, I put my stop at the top of the dummy candle, instead of the bottom like I normally would. I jumped out for twice that risk, or 10 cents. In my StockTickr journal, I’ll record it as 0.5 R, because I made about the same money as half my typical risk amount for a full-fledged trade. That’s how I always record scalps… otherwise I’d be reporting 40 to 50 R some months, even though I didn’t make near that much money. Scalps are like that, since you try to only risk 1 or 2 cents to get 10 or 20.
Of course, my fears were a bit too extreme, as QCOM did run up further, and would have made a decent full-fledged trade. Oh, well…
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| QCOM |  |  |  |
March 13th, 2007 at 12:26 pm
But doesn’t that take away the point of calling it R? Why not just report trades in terms of % or $? I understand where you’re coming from, but if you really want to look at it in terms of R, you should probably report it accurately. Otherwise your reports will be off.
Maybe it would be better to have two journals - one for scalp trades and one for regular.
March 13th, 2007 at 12:34 pm
Well, reporting the actual R on the scalps makes my expectancy fluctuate wildly with how much I happened to scalp that month. The way I see it, that’s a worse problem. Stocktickr lets me track them separately via the tags I put on the trades. Maybe you are right, and that’s the best thing to do, but I do like having one number to look at. hmmm….
March 13th, 2007 at 12:53 pm
Ok, you’ve convinced me. I think stocktickr makes it easy enough that I can report on all the setups I use, separately. So, I’ll do that starting in March. I’ve been meaning to start tracking the expectancy of all the setups I use, anyway. box play, dummy play, breakouts, and scalps. Now is as good a time as any.
March 13th, 2007 at 2:48 pm
[...] as part of this independent reporting, and per this discussion in the comments of the blog, I’m going to start journalling R results for scalps against my actual intended risk. [...]