[thalestrader]

Originally Posted by imorgan »

Does slippage become an issue for many of your trades.

Two stock trades this morning - sorry for the late post, as these charts are after the fact and not at all real time, so I am posting here in the stock trader's thread instead of the real time chart reading thread.

imorgan had asked about slippage. Today, my buy stop for GENZ was 54.59, my fill was 54.64. That is about as bad as it typically gets, and it doesn't get that wide often.

My sell stop for CNX was 33.31, and I was filled at 33.31 on the penny. This has been my experience on most of my trades, especially if there is sufficient liquidity and the market on the stock is not all that "fast."

Best Wishes,

Thales

[thalestrader]

Originally Posted by thalestrader »

My sell stop for CNX was 33.31

Stopped out with a +25 penny profit. I wish I had seen that reversal coming and reversed my position, but at least I had the trailing stop to lock in some profit.

[1320trader]

Do you pay attention to the futures price action closely when placing your trades?

[thalestrader]

Originally Posted by 1320trader »

Do you pay attention to the futures price action closely when placing your trades?

I watch the ES but not constantly nor closely unless I see a real strong trade opportunity setting up, and then only if I am not already in several stock trades. I keep the cash DOW and Nasdaq COMP quote in my trading window. I monitor the market, but I do not decide to tkae a trade based upon the general market.

I will not let a weak general market keep me from taking a long trade.

I not allow a strong general market to keep me from a particular short trade.

I do watch the IBD 100, which by definition, are the real market leaders. As goes the IBD 100, then typically, so goes the general market.

Also, when IBD Big Picture says the market is in a confirmed rally, I find that the majority of my trades are long trades.

When the IBD Big Picture says rally under pressure, my trades tend to be more balanced between long and short.

And when IBD Big Picture says market is in correction (i.e. bear swing) the majority of my trades tend to be short.

This is not because IBD says so, i.e. I do not make a conscious decision to focus on long trades, or a mix long and short, or short trades because of what IBD says. But, it does happen that that is how my trades fall, and IBD has a very accurate way of determining the immediate character of the market.

If you have been tracking my trades since I've been posting here, you will see that for a while, most if not all of my trades were long, and most were profitable. I was on a real run.

Then, about two weeks ago, I was still taking mosty long trades, but my results were not as strong - more losers than during the positive run, and few larger profits. I started to add some more short trades.

Right now, I am about 50/50 long and short.

If the downside picks up momentum, then I will likely shift to almost all short trades (as I was doing almost October 2008 until about 2/3'rds of the way through March.

In other words, in my opinion, what the market is doing today or on any particular day is not nearly as important as what the intermediate (weeks to months) trend in the market is doing. If the market is in bull swing, then even on a down day I will find some strong long trades.

If the market is in a bear swing, then even on a strong up day, my best trades will still likely be short trades.

Best Wishes,

Thales

[thalestrader]

Originally Posted by thalestrader »

You conjecture that such confidence comes from much practice drawing trendlines and determining if you were right.

But how will you judge whether you were correct or not?

The implication is that upon having drawn a trendline or otherwise having identified a support or resistance level, you would then paper trade around that information. If that trade would have been profitable, you would then conclude that you drew that line correctly. Conversely, if that trade would have lost, you would conclude that you did not draw that trendline properly. You would learn nothing of value from such an excercise. After all, trading based upon support and resistance is not a holy grail that will assure only profitable trades.

For example, here is a trendline drawn on a 5 minute chart of BP. Buy point was 47.11-.15 depending upon slippage (I was filled at .12 with a .11 buy stop). You can see here that price has broken above the trendline, and has now returned for a retest.

I do not know if price will then continue higher, and if so, by how much. I am long at 47.12 with a stop loss at 46.96. If price trades above 47.18, which was the high before the throwback, then my stop loss will be raised to a penny beow the low of this throwback. If price does not continue higher and instead reverses lower, I have my stop loss.

The correctnes of that trendline does not depend upon the outcome of this trade.

Win or lose, this is an excellent trade.

Best Wishes,

Thales

[thalestrader]

And here is why you always trade with a stop loss in the market: I was long LM from soon after the open, and at one point I was up nearly 2 dollars (about a 1.70 or so). My stop loss was just beneath a recent pulback low, when the bottom fell out of the stock. My 1.70 profit was reduced to a mere 36 pennies when I got filled on my stop loss.

Now, the question is, do I short it using a sell stop at 23.85, or do I let it be?

[Dinerotrader]

I see your point. Let me explain more of what I am thinking so you can help me out.

In my mind having a correct trendline would mean you have an advantage in using the trendline to bet on a trend. If a trendline was incorrect, your odds would be the same as betting at any random point on the chart. There probably is a case to be made about using random entries and having an amazing trade management strategy to be profitable (the TheRumpledOne's somewhat simple method is the closest I have seen to randome entry method) but I think you would agree that drawing appropriate trendlines should give you an advantage over random entry selection. If this is the case and appropriate trendlines do give you an advantage, I would seem to me that inappropriate trendlines would not give you an advantage.

My guess as to your response to this would be that drawing appropriate trendlines is so easy that you have to be ignorant if you cannot draw horizantal lines at highs and lows. Your charts you posted shows a declining trendline that I haven't seen used very much and can be more of a grey area for how it needs to be drawn. After going through Al Brooks work I hope that I can get a good handle on those.

Those are a few of my thoughts.

[Dinerotrader]

Did you end up shorting LM? I took a guess where I might have shorted it and annotated the chart a little.