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

I scalped a move in Generex Biotechnology Corporation (NASDAQ: GNBT) today. GNBT and I go way back. I bought it back in ‘05 as a daytrade, and it then became a swing trade and finally a 50% loss on the position. I was dumb then. I also caught some of the move from $2.50 to $3.50 in ‘06. Based on these experiences, I knew it could run if it wanted to. I also knew it could print a very tall shooting star, and probably would today. Former big runners can often run again. This type of setup is extensively followed over at Muddy’s, and they call them out in real time in his chatroom. If I didn’t have PDT restrictions, I’d trade this way more.

GNBT got on my watchlist from my Prophet.net Trader-X style gap scan, though I didn’t notice it since it was way down the list (I sort my watchlist by volume for Trader-X style trades.) It quickly moved up as the volume poured into it (analysts initiated coverage and set a $6.00 price target for 18 months from now) and when I recognized it I jumped in at $1.50, with a $0.10 stop.

I managed the trade from this PnF chart:

After the first swing low at $1.52, I removed my stop and was looking for the move to stall so I could send in a market sell order. Price reached some congestion and began to consolidate at $1.65, which corresponded to strong resistance on the daily chart (grey line):

I was burned on my GOOG trade because I didn’t sell when price reached congestion, and I wasn’t going to repeat my mistake, so I sold at $1.62, which was the right call for me. Without PDT, I would have taken a partial instead, and let the rest ride, with a stop at $1.50 (my entry point). As you can see on the PnF, I could have made about 3R if I had sold the absolute top, and if I had sold a break of the green 45° trendline, I could have made about 2R, near $1.70.

These two charts also give some context, though I didn’t manage the trade from them. The 1 min shows the consolidation that I sold into.

5 min

1 min

So while I didn’t get all of the move, I’m glad I traded it well and came away with a gain.

Trade Grade:

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

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

I had entered a trade yesterday in Apple Inc. (NASDAQ: AAPL) before I wrote my post about GOOG and my thoughts on setup selection. I traded because I wanted to trade, which is a bad idea.

Anyway, here it is:

What can I say. Poor setup, poor stop, target was $120, which doesn’t really jive with the timeframe, just dumb. At least my 1R-based position size was in line with my equity risk tolerance. I guess I proved I can take a bunch of risk and get stopped out at breakeven. I see this as a revenge trade for GOOG yesterday. I did differently today what I should have done to avoid a loss yesterday. Since that’s really what I wanted to do in my heart-of-hearts, I guess this trade is a success in that regard.

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AAPL	| |

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

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

I was really impressed by the Marubozu candle on the daily chart for Google Inc. (NASDAQ: GOOG) on 6/5/07. So much so that I entered at the close for a swing trade:

It went nowhere the next day, and I tightened my stop as it put in a swing low on a volume uptick. This morning, it took off in the middle of the bloodbath, and I had my sights set on $550. GOOG stalled at $525, and I should have exited as I had to be away from the computer for several hours. Instead I left my stop intact and came back to find myself stopped out for about -0.6R (I tightened my stop, remember?)

I should have at least put the stop to breakeven before I left, and that’s my first mistake. Second, I was not sure about my target before I entered–that’s a recurring theme in a lot of my trades. I often have a “target” I pick, but many times it’s just a level on the chart that gives me a “good” risk:reward level. This target usually doesn’t sync with my stop choice, or else it would get hit more often. My trades hardly ever hit their targets, while my losses often hit -1R, which kills my expectancy.

This made me realize (not for the first time) that my trades are mixing up timeframes. Maybe my target can eventually be hit, but not in combination with the stop I select. Usually my trades go my way (within the confines of the stop I choose), but that stop is not wide enough to allow the trade to hit my target, and eventually I get stopped out at breakeven or a loss. This results in an artificially high reward:risk analysis of the trade. I hope this makes sense!

What I really realized is that I need to have an idea of what kind of move I am trying to capture before I frame the trade. My usual way is to try to find a good low-risk trade entry, and then I pick a target that seems sensible that will give me a favorable R:R. That’s all wrong for me! I need to have a defined plan for the type of move I am trying to capture, based on the timeframe I have chosen, and then look for a low risk entry into that move. It’s completely backwards to the way I have been trading, but I think it’s the right way to go about it. I’ll write up a few setup plans that are geared this way before I enter my next trade, and see how it works.

Any comments are welcomed!

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GOOG	| |

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

I’ve invited Zoomie to post his trades here if he should ever feel like it. Anyone else out there not otherwise blogging their trades, feel free to contact me if you’d like to get your trades posted on a blog that plenty of people read. And if we can’t find one of those, we can just post them here at MtM… :-)

Zoomie had a good week, and his trading style is somewhat different than mine, so it’s neat to have the contrast here. He won 25% of the time, but still came out winning 7 times his risk across 12 trades. Good job! He wanted to give Trader-X a shout-out for having such a great blog. He goes through X’s trades daily, as do I.

Here are the charts, with Zoomie’s annotations (click to enlarge). Feel free to comment or ask questions.

October 9th
DGX
CMG
GOOG
October 10th
AVZ
October 11th
SOV
October 12th
BMC
CKR
SIGM
October 13th
FCX
GOOG
RF
SNDK