It was sloooow going today in the markets. At least, from my vantage point, anyway. The only thing I could find that seemed to have any force behind it was Seagate Technology (NYSE: STX). So, I traded it twice!
This is one of those rare days where I manage to trade both long and short on the same stock on the same day. Feels all “professional” :-)
The first trade was a scalp based on a deformed descending triangle formation. I played it as a scalp since it wasn’t too well-formed, and because it wasn’t near breaking its opening range low. Here’s the 15-min chart showing the shape I was watching:
… and here’s a 3-minute chart of the scalp I took:
I watched for a convincing break of the OR low, to get back in short. It didn’t come, and after two tries I was looking at a double bottom formation. I waited for the price to break above the peak between the two lows. It paused in such a way that I consider this a dummy play. You can see the two dummy candles with a tasteful black oval around them on the chart below. After the trade, I noticed that you could even consider this a box play (just count the two lows, the middle peak, and the breakout point)! Wow, talk about confluence! How could I go wrong?
I got out at my 2R point, because it seemed like “enough”… oddly enough, as a box play, 20.70 would have been the correct target. Maybe I was subconsciously aware of it… yeah… right… :-)
I would have linked to my Twitter chatter on the trades, as I have been lately, but twitter seems to be acting weird today. I suspect, as a performance improvement, they have distributed their updates, and lazily merge them across servers. As a result, recent updates seem to fade in and out of existence, until every server has found out about them. That’s my theory, anyway, but regardless of the cause, it’s annoying! So, I can’t see some of my entries at the moment.
As I write this, we are entering the last hour of trading with the Q’s only in their 40% range compared to their average volume. Where’s the freaking volume?? It’s been making it hard to find prospects lately.
| Stocks Mentioned In This Article | |
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| Stock | Links |
| STX |  |  |  |
April 10th, 2007 at 1:14 pm
This is how a Pro plays STX, while my post shows how a Zero plays it.
Great trade, Richard! Since I traded the same stock and screwed it up, I’m very interested in the details of your setups:
1. On the scalp, what was the target? I guess you were watching the T&S to see when it stalled. I was too, but I didn’t read anything significant, which means I missed the important information.
2. On the box, on the 4th bounce it’s an active box setup, correct? If so, then it was active right before your dummy consolidation. The target is the box width of 0.20, so that makes it $21.70 as you say.
I just can’t read these in real time! I can see it after the fact, but in real time I don’t know if it’s a double bottom or a consolidation or what. I guess if I’m in a trade during a sideways action, it could really go either way, and I need to get out during those times. I guess I should only be in a stock when it is moving. Any thoughts?
April 10th, 2007 at 1:34 pm
(1) just wanted to ride the move. You can see on my scalp chart that the following 3 minute candle went absolutely nowhere. It did drop further after that, but it wouldn’t be a scalp if I were going to wait through consolidation.
You were in a trade where you were willing to let it retest your entry point, so you would need a bigger reason to get out than I did… if I were you, I’d have gotten out when it failed to break the OR low for the third time.
(2) If it goes 25% of the way back into the box after the fourth touch, then you can supposedly play a breakout in either direction. To me, it’s a very similar concept to the “mirror image” formation that Oscar is so wild about. Yep, that would be the target.
I think you have to have an idea in your head about what the stock is doing, and then your brain will take care of identifying the patterns you would want to see. I expected STX to turn around, so of course I saw a double bottom, a dummy play, and a box play all pointing up. If I were thinking short, I’d have seen the patterns along with signs that they didn’t matter :-) it’s so subjective, we all just see what we want to see, in the end…
I’ve been spending more and more time just watching the bid/ask/last blink, and trying to find chart patterns once the bid/ask pattern has me interested. weird, but it’s been working out ok.
April 11th, 2007 at 5:45 pm
When I watch the T&S, I see swings all around, up to my levels and away from them. I see big trades and small trades. I see trades going off at the ask repeatedly, as the ask retreats down with the bid, and vice versa. But none of it tells me anything yet. I wish I knew what to look for, as I could then pick it out myself. I learn best by seeing an example, and that can be tough to find in trading. That’s why Trader X and Jamie’s blogs are so beneficial to me–there are great examples there every day.