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Please critique my trade
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Please critique my trade

  #11 (permalink)
Trading Apprentice
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bobwest View Post
A couple of things:

I've marked up your chart a bit, to show what stood out for me:

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You wrote that, in the past, when price closed above the EMA it kept on going up. Here, price either is in a serious pullback or a downtrend, and the EMA has started down. Unless you have tested a signal under these conditions and found it to work, this may not be the point to be a buyer. Price can certainly poke above a moving average and then head back down, as it did.

So this was a pretty high-risk trade, really.

Now, I am aware that price may well just turn around and go up tomorrow, making everything I've said look wrong , but trying to bottom-pick is still an iffy proposition.

It's important to test your methods -- including the "Lessons" you have listed -- under many different conditions to get a better handle on what works and when.

A last point, about using a stop limit next time as your stop loss, to avoid slippage. Every single time you use any kind of market order you face the chance of slippage -- but every single time you use any kind of limit order you face the chance of not getting filled AT ALL. Your limit order goes into a queue, and you wait your turn to get matched to an order on the other side. If the available orders on the other side get matched up before they get to you, then price can go on and leave you behind, unfilled.

So you should not use a stop limit to get you out. You have no guarantee that it will, in fact, get you out and stop your loss. No kidding.

Good luck. Best advice: more testing, be aware of context. A good trade in one context may not be good in another.

Bob.

Thanks for taking the time to go over this with me. I'm going to head your advice and only use a stop instead of a stop limit.

The previous night I had set a buy stop above the previous day's high. However, the next day the news about the Crimea came out and the market dropped 200 points or so. Do you think I should have waited until the next morning to make my decision? As you said "A good trade in one context may not be good in another".

"Trying to bottom pick is an iffy proposition": So what SHOULD I be trying to do? You said this was a quite risky trade. How would you have taken a lot of the risk off the table?

Thanks



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  #12 (permalink)
1.Fibs 2.??? 3.Profit
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I don't see price closing above the EMA. It pierced it struggling to go higher but failed.

It went below it with force, moved back up, could not go through, then went down.

To go long I would have waited for a candle to go completely above the EMA then pull back to retest it and bounce like it did in the previous arrows. I see the EMA as support/resistance, when price went below it, it became resistance which it never convincingly broke. A little pierce above it is not enough to go long. It tried to go higher for 3 candles and could not, to me that increases the odds for another push down.
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  #13 (permalink)
Market Wizard
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boundless View Post
"Trying to bottom pick is an iffy proposition": So what SHOULD I be trying to do? You said this was a quite risky trade. How would you have taken a lot of the risk off the table?

Hi, I'm not trying so much to focus on one particular trade, as to, basically, bring up the same point @kevindog was making about looking at many cases to see how your trade ideas would likely work out in the long run.

Here's a fairly long-term daily chart of BIB:

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You're right about BIB being in a long-term bull market, and each time price pulled back, it recovered and moved up. It also moved above the EMA, which, of course, it would have to do. So that part of the context was good.

In some cases, it looks like your rule would have worked, too.

However, many of the important pullbacks had at least a bar or two where, arguably, it poked above the EMA and then would have had the same outcome: your stop being hit and some more time being spent in decline. Sometimes it meandered in a trading range for awhile, and of course, at some point it is going to really go down.

My read of the context here was that price was in at least a short-term downtrend, and the long-term perspective makes it look like your rule was not, in itself, enough to change that conclusion.

Everyone's trading is really an individual matter, so everyone has to find what works for them given their perspective on the market and their risk tolerance. Long-term testing under many different conditions will help with that.

Finally, my point about bottom-picking being iffy is, simply, that it really is. Looking at this longer-term chart, you wouldn't have needed to hit the bottoms of each upmove to really clean up; some people would have been content to just let the bull carry them upward without going in and out; others would have been real happy jumping into the upswings after the pullbacks; and maybe somebody else could have nailed the upswings as they just began. Nailing them early, and accurately, is obviously going to have higher profit potential, but is going to be harder, and that is the risk.

I hope this long reply hasn't rambled too much, and that it is of some help to you. You will have noticed that I have not tried to tell you how you should have made that trade, or what your trade criteria ultimately should be. That is, of course, completely deliberate on my part.

I am trying to tell you that your own testing, and being aware of what is likely to work in different situations based on that testing, can help you find what will work for you.

Good luck.

Bob.

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  #14 (permalink)
Market Wizard
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By the way, another good thing you could do is get an Elite membership on futures.io (formerly BMT).

The depth of experience is amazing, people are willing to help, and almost all the most interesting threads/posts are in the Elite section. Certainly worth the money and then some.

Just another thought....

Bob.

(Unpaid endorsement.)

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  #15 (permalink)
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@boundless: your basic strategy is neither based on a sound philosophy of what the market is doing and why, nor on any positive expectation from theory, empirical testing, or at the very least personal observation and experience. your approach is anything but reason based and is highly assumptive and biased. you have chosen to trade random and arbitrary price action with a random and arbitrary tool that is derived from the price of the security you are trading, and you expect it to give you a forward looking view of the market. you're trading a leveraged etf with built in slippage based on the biotech index and you don't have any relative reference points of strength or weakness to the broader markets, especially the $comp. you might as well be flipping a coin.

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  #16 (permalink)
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Hey Man...

if @tigertrader has time for this one, so do I. By the way Gary, I'm going to Florida till April and I do not want any of my futures.io (formerly BMT) friends to worry their already tiny balls off if they notice that I'm not around. So godamnit I'll let someone know beofre I disappear on soriee.

@boundless : your basic strategy is neither based on a sound philosophy of what the market is doing and why,

So and especially if you are going to trade a sector index, take a look at market internals that might give you a handle on what is happening in the bigger picture. Also, make sure you are aware of any fundamentals that are happening at the individual companies that comprise the index

nor on any positive expectation from theory, empirical testing, or at the very least personal observation and experience. so a good thing to do is build a testable idea upon a series or a confluence of non-colinear technical indicators. These could range from broadest to most specific, then a trigger for timing entry

your approach is anything but reason based and is highly assumptive and biased. what you might be looking for initially until you develop a discretionary approach based on lots of experience is an objective or more rules based approach...more mechanical with less bias or "feeling" and NO effing emotion

you have chosen to trade random and arbitrary price action with a random and arbitrary tool that is derived from the price of the security you are trading, and you expect it to give you a forward looking view of the market.You could consider empirical visual items for your chart that create a picture that might be repearable (a pattern)

you're trading a leveraged etf with built in slippage based on the biotech index and you don't have any relative reference points of strength or weakness to the broader markets, especially the $comp.And I think that is subject to the pattern day trading rule...I think part of Reg T. If you are willing to lose $800 a rip you should really consider trading a future. I think NQ or YM might be the place to trade one lots

you might as well be flipping a coin. No shit, if you have expert risk mgmt you can probably pull off the coin flip with the same outcome. Keep in mind if you enter on a coin flip you are almost certainly exiting on one too. Consider the GD risk outcome before you put a trade on. Know when where, how and why you will exit kill the losers little and let the winners grow a great big set of balls

tigertrader does not need a filter, but I thought I'd be the yin to his yan. If you decide to keep throwing 1000 around please consider trading 6E or ES where you can contribute to wldman's kids.

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  #17 (permalink)
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  #18 (permalink)
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boundless View Post
Hey Guys,

A little bit about me. I first tried day trading back in 2006. I got washed out quickly and since then just started saving and investing. That has turned out well for me.

Now here I am again ready to dip my foot in the pool, but multitudes more cautious this time around. Here is my first trade. My goal with this trade was to make a position trade. I haven't decided yet weather I will try day trading again or if I will just stick to swing trading or position trading

Please be brutally honest about my trade. It will help me learn and grow. THANK YOU

SO what was this...a day trade or an attempt to catch a bottom for a swing of a few days...You don't clearly define your trade here.



boundless View Post
-----

March 13, 2014

TRADING: BIB

GOAL: Get in at the bottom of an upswing

STRATEGY: wait for price to pop back up above the 21 EMA after dipping

DETAILS: Buy Stop 152 at 98.51 / stop loss at 93.17

RESULT: Stop loss hit. LOSS $814 (2.1% of account)

STRATEGY FAIL EXPLANATION: Although afterhours hit the 21 EMA, the closing price was not above 21 EMA (on March 12). Also, DOW was not below 21, 30 or 50 EMA

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I don't really understand the relating the action of the DOW...or SPX for that matter to the BIB ETF

there is not a lot of correlation there for me to work with.

Also....you are attempting to catch a falling knife

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the ETF had just broken a support at $99.00....the next support was a $94.00 and it has broken that now...these numbers are based on closing prices. But clearly there is no indication of a turn around.

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This chart is anything but encouraging in March 13....the price is near the lower Bollinger band and falling steadily...the MACD is still falling with a healthy negative slope, the Slow Sto has been steadily falling as well. The BBwidth shows a good possiblity of rising...and that is bad news because with the slow Sto and MACD falling, a rise in the slope of the BBwidth by my research indicates a continued fall of the price of a ETF or stock

A bullish signal would be a rising Slow Sto Plus rising MACD....then a rising BBwidth this is shown on November 22 and again on Jan 7

The problem with your trade IMHO is that you picked a poor prospect to be successful....catching a falling knife usually leads to cut hands.

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  #19 (permalink)
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while i enjoyed @Underexposed 's nostalgic trip down technical analysis memory lane, i would begin my approach to trading bib with a look at the following: time frames are variable

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would also learn the difference between a range day and trend day and its implications to how you trade the market i.e., flow driven vs. value driven

of course, i would rather trade naz futures rather than bib

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  #20 (permalink)
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rmejia View Post
I don't see price closing above the EMA. It pierced it struggling to go higher but failed.

It went below it with force, moved back up, could not go through, then went down.

To go long I would have waited for a candle to go completely above the EMA then pull back to retest it and bounce like it did in the previous arrows. I see the EMA as support/resistance, when price went below it, it became resistance which it never convincingly broke. A little pierce above it is not enough to go long. It tried to go higher for 3 candles and could not, to me that increases the odds for another push down.
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Great analysis. Now I learned something new and use that in my trading aresenal. Thanks a lot!

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