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Newbie seeks new Porsche via day trading. See what happens.
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Newbie seeks new Porsche via day trading. See what happens.

  #221 (permalink)
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a review of Resistance/support

I thought I would give you an exercise in thinking about resistance/support.

think of it as the price rising and falling as a battle between buyer and seller....the buyer wins when the price is driven down as he gets the stock cheaper....the seller wins when the price rises as he is getting more for his shares when they sell.

I am going to show intra-day charts for 3 stocks that are interest to you....SEAS, WPCS and RSH

I want you to study each chart and answer the following questions.

1. Who is currently winning the battle between buyer and seller???

2. According to the most relevant resistance/support lines (the ones immediately above/below the last price)....is the stock in a bearish or bullish pattern? Why do you have this opinion?

3. If you decide a support will fail...where is the next support? (I don't know can be a valid answer)...if you feel a resistance may be breached...where is the next resistance?

4. Where do you think the price will be in the first hour or 2 of the next day? Why? Can you predict where the price might be by the end of trading tomorrow? Why?

I will give the answers to what I see in each of these charts in text attachments that you can open later. If you are smart, I feel silly for saying this because your intelligence is not in question here, You won't open the answer attachment for each chart before you have answered the questions for the chart. Try to write down your answers first....ok?

here we go with the charts

WPCS


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SEAS


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RSH


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good luck......BTW...If RSH stays below $1, I would not discuss this stock anymore. @Big Mike does not like discussions of stocks under $1.00 here as they are usually manipulated....Just a comment, since I won't discuss it beyond this message as it is an interesting chart to guage R/S.

Attached Files
Register to download File Type: txt WPCS answers.txt (2.0 KB, 7 views)
Register to download File Type: txt SEAS answers.txt (2.1 KB, 4 views)
Register to download File Type: txt RSH answers.txt (1.7 KB, 4 views)
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  #222 (permalink)
Trading for Fun
Melbourne FL, USA
 
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I had to read the answers and follow them in order to make enough sense of what I was seeing to understand it,
so I won't pretend to have generated answers to those three charts on my own. No faking it.


As I was earlier today, I'm faced with the same options I had earlier: Hang on and ride out what may be a bumpy ride to the bottom, or what may eventually give me a profit. Or get out from under this, take my lumps, and apply the learning experience with a well defined dollar value to my future trading.

And I don't have an answer yet.


The truth is that I'm just not sure I'd have even found some of the support and resistance lines that you indicated. It's not like every wrinkle in the graph can be a support or resistance, exactly...is it?


Actually, all I can say about tomorrow is this: I'm hoping for just enough of a dead cat bounce to get me out with REDUCED losses.



It is starting to sink in on me that there's way more deph to this pool than my toes can detect. I'm standing on the first step, so to speak.

But I'm willing to learn how to swim again.

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  #223 (permalink)
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Carrerain4 View Post
I had to read the answers and follow them in order to make enough sense of what I was seeing to understand it,
so I won't pretend to have generated answers to those three charts on my own. No faking it.


As I was earlier today, I'm faced with the same options I had earlier: Hang on and ride out what may be a bumpy ride to the bottom, or what may eventually give me a profit. Or get out from under this, take my lumps, and apply the learning experience with a well defined dollar value to my future trading.

And I don't have an answer yet.


The truth is that I'm just not sure I'd have even found some of the support and resistance lines that you indicated. It's not like every wrinkle in the graph can be a support or resistance, exactly...is it?

It is starting to sink in on me that there's way more depth to this pool than my toes can detect. I'm standing on the first step, so to speak.

But I'm willing to learn how to swim again.

I think most here would agree that I have tried to make this as simple as possible. But having said that I have taken the best part of 2 decades to get where I am today so you can cut yourself some slack.

Just read and re-read the answers while looking at those charts. See how close my predictions are...then re-read them again or give up on charting all together. But you need something more than gut feeling to be successful, I hope you realize that.

I am not sure you remember a little old German lady that used to be on the Johnny Carson show in the late 70's-early 80's...her name was Dr. Ruth. She had a great piece of advice regarding her profession. It was "Practice!... Practice!! ...Practice!!!". I think this applies to anything worthwhile learning, don't you .

I won't torture you any more, unless you have any questions....just shout.

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  #224 (permalink)
Trading for Fun
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This is not torture, this is good educational experience and I enjoy your instruction. I should be paying you for this!


Don't be afraid to jump in any time! Please!



I will be trying to apply this information and try to read some various selected stocks and make notes of where I THINK they will go based on that analysis, and then see where they really go.

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  #225 (permalink)
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I will be around....if I can help just holler and hopefully I can be of aid to you.

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  #226 (permalink)
Trading for Fun
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Futures Experience: Beginner
Platform: TC2000
Favorite Futures: stocks
 
Posts: 117 since Jul 2014
Thanks: 11 given, 49 received

I want your opinion on GoPro at the present time. Symbol GPRO

I have formulated an opinion on it based on the chart for Friday at market close, but won't post my opinion on it
until I get another, more experienced opinion.

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  #227 (permalink)
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Carrerain4 View Post
I want your opinion on GoPro at the present time. Symbol GPRO

I have formulated an opinion on it based on the chart for Friday at market close, but won't post my opinion on it
until I get another, more experienced opinion.

no it does not work like that...I recall you saying you would post your results for WPCS and you have conveniently forgotten it mention them


Quoting 
Short answer: This is apparently a swing trade. I bought in but my price wasn't met today. I believe that'll happen in the next day or couple of days.

I'll give numbers when it's over and done.

Even if they turn out to be embarrassingly bad for me.

No sense in lying, is there?

I am not here to simply provide stock tips to you....You keeping your thought process to yourself is fine but saying you will give your opinion is like saying you are prepared to either take my suggestion and claim it concurs with yours or you will differ and point out why I would be wrong.

Sorry, I am prepared to offer comments as are others I am sure on your approach if they are welcome. I went into detail to illustrate how charting can help with decisions....but I will not do such for every stock.

If you want to discuss charts that is fine. but I won't be evaluating companies individually except to answer a charting question for you.

There are places on futures.io (formerly BMT) where you can discuss individual stocks and in fact there is a thread set up just for that purpose

https://futures.io/stocks-etfs-trading/31723-gpro-gopro-inc.html

It is there that you can discuss this company and exchange views with anyone interested in Gopro

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  #228 (permalink)
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Fair enough. But the reason I'm asking is that I'm trying to figure out where support and resistance are on it. The chart for Friday seems to be dominated by (roughly) 25 cent moves about every seven minutes for most of the day. If I were to look at any given hour's worth of the day chart, and try to infer support and resistance from that section, I would get different results than if I were to figure support and resistance on a scale of a week, and that would be different yet again if I drew it based on a scale of a month or back to the IPO.

I understand that lines drawn across peak values indicate resistance, while lines drawn across bottom values indicate support. But which timeframe is relevant? Or perhaps I should ask, which timeframe is relevant to someone who does not intend to make a long term investment?



It's the time period that is relevant to support and resistance that I'm not understanding. Draw it over different time scales and you will often get different levels.

As for my current position in WPCS, I've made no changes to it. I'm still holding with a target price that gives me minimal profit. I would rather wait and see than lock in a loss by selling out now. Accepting the possibility that it could indeed go lower and it might NEVER come back up to profitable levels for me. Risk accepted.

I will say, though, that once I get out of WPCS, whether I break even, take a loss, or reap a profit, this is the last time I'm going to mess with that stock. From now on I don't want anything to do with stocks that are seriously overperforming or showing unusual trading volume relative to the company's actual financial statements and activities. Having a clear understanding of the performance of the company behind the stock is clearly a good exercise in risk management.


And there comes another question: If we accept the idea that WPCS is being manipulated by one or more market makers, what sort of money do you figure they're throwing around in order to make those big moves?

That ties in to something I don't yet understand, either: What determines what amount of buying or selling activity is required to move a given security's price by a penny or a dollar? Hundreds of shares? Thousands? Just a few, in the case of BRKA? (Currently over 200,000 per share)

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  #229 (permalink)
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Carrerain4 View Post
Fair enough. But the reason I'm asking is that I'm trying to figure out where support and resistance are on it. The chart for Friday seems to be dominated by (roughly) 25 cent moves about every seven minutes for most of the day. If I were to look at any given hour's worth of the day chart, and try to infer support and resistance from that section, I would get different results than if I were to figure support and resistance on a scale of a week, and that would be different yet again if I drew it based on a scale of a month or back to the IPO.

I understand that lines drawn across peak values indicate resistance, while lines drawn across bottom values indicate support. But which time frame is relevant? Or perhaps I should ask, which timeframe is relevant to someone who does not intend to make a long term investment?

It's the time period that is relevant to support and resistance that I'm not understanding. Draw it over different time scales and you will often get different levels.

resistance/support lines exist at many levels...there is no magic time frame. You choose the time frame that fits the type of trading you do.

A minute by minute time frame is not useful to any trader other than a intra-day trader...even then the volume traded in a minute might be too small to give a useful chart. Your GoPro stock seems to be ok at this level as it trades typically 8million shares per day and reasonably spread out through the day.

Resistance support levels are in the eye of the beholder. When I look for them in a chart, I use a clear plastic ruler and place it on the monitor screen when I see line formed that it is of interest. It does not have to be perfectly straight...if you use candlestick charts you can sometimes ignore the shadows (thin lines above and below the main body of the candle stick) but sometimes they consistently fall to a certain position and pull back, so you have to use your judgement.

Sometimes you can get a software where you can literally draw the lines on the chart without using a screen shot to do this in a "photoshop" software...no, I don't use such a software...I use my ruler

Daily charts are useful really for swing and longer term traders...weekly charts are useful for them as well. I have seen daytraders use these longer term charts though...since when a resistance or support is broken in these charts, the volatility often changes ...hence more opportunities for day trading.

I don't day trade...I want you do know that...these are just observations I have made watching daytraders over the years.

So in summary...when looking for resistance/support lines you fit it to the type of trading you do....in your case a 5 minute chart is probably the best but if it is really heavily traded maybe a 2 minute would be better...on a thinly traded chart you might use a 10 min or even a 15 min chart.....there is no rule, it depends on what you see in the chart.


Carrerain4 View Post
As for my current position in WPCS, I've made no changes to it. I'm still holding with a target price that gives me minimal profit. I would rather wait and see than lock in a loss by selling out now. Accepting the possibility that it could indeed go lower and it might NEVER come back up to profitable levels for me. Risk accepted.

I will say, though, that once I get out of WPCS, whether I break even, take a loss, or reap a profit, this is the last time I'm going to mess with that stock. From now on I don't want anything to do with stocks that are seriously overperforming or showing unusual trading volume relative to the company's actual financial statements and activities. Having a clear understanding of the performance of the company behind the stock is clearly a good exercise in risk management.

Well at least you are learning something...


Carrerain4 View Post
And there comes another question: If we accept the idea that WPCS is being manipulated by one or more market makers, what sort of money do you figure they're throwing around in order to make those big moves?

Money is not usually "thrown around". Market makers are not usually the instigators in a pump and dump. It is these media rags and people who make their living pumping stocks in chat groups, that are. A company may want their promoted heavily for one reason or another...so they prepare an announcement or series of vague but hinting of great things to come... a potential approval of their drug being FDA approved, a merger with an unknown company, new well about to produce oil, "encouraging" drilling results for minerals.... something like that....there is usually a small thread of truth to the story but not enough for you to verify if you dig further.

I did a major discussion on Pumps and Dumps in my journal here...

https://futures.io/trading-journals/30636-underexposed-canadian-stock-journal-28.html#post427767

As I said, it is not money that is usually thrown around....it is free shares. The media rags and individuals who pump are offered a substantial number of free shares as an incentive to promote the company... when the interest is fever pitch and the share price rises ....then they sell off their free shares to reap their rewards


Carrerain4 View Post
That ties in to something I don't yet understand, either: What determines what amount of buying or selling activity is required to move a given security's price by a penny or a dollar? Hundreds of shares? Thousands? Just a few, in the case of BRKA? (Currently over 200,000 per share)

Perceived value of the shares... if that rises the share price will rise....if it falls the share price will fall....nothing more...nothing less....that applies to all price levels

I have give you all the charting advice I can give on resistance/support...it is not rocket science once you get the hang of it.

the best way for you to learn is for you to take a chart that interests you....draw the R/S lines on it that you can see and I would critique it...

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  #230 (permalink)
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I'm out, and it hurt, but it was a valuable lesson.

The actual numbers are only important to me. But this did manage to erase ALL the gains I've made since I started trading. I am literally back to square one.

I decided that I have to free up funds if I am to have any chance of getting into Alibaba's Friday IPO. By clearing out my positions today, I'll have settled funds available on Friday.

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