End of Day Trading

[gassah]

I'll start this off with a trade in progress. The real-time posting and the add-on position was made on my Yahoo! board the minute of the trades. I'm only going to own three stocks and will hold for the intermediate term if all goes well. I also bought partial positions in RIMM and SOHU which I can get to another time. I'm borrowing the following from a post I made today describing the DGLY situation:

The rise from A to B is clearly strong with wide spreads and heavy volume. More specifically, the breakout bar is more than double the size of the previous bar (A), it opened and closed in the lower and upper quartiles with most of the bar above the top of the high of the trading range. Volume was very high and price continued higher, it followed through.

The reaction, the backup to C looked fine. It stopped at the close of the breakout bar, only retraced 50%, and took out the lows of the previous eight bars probably providing enough of a wash-out to eliminate weak holders. I also look for reactions to hold above previous rally highs but that isn't really applicable here. The bar at C closed off the low and the next two bars didn't seem interested
in the downside so I felt comfortable going long at the arrow.

It goes real dull on very light volume forming an apex from which it rallies up from. The bar at D was a little concerning, a potential upthrust, but I rarely react to the action of one bar preferring to wait for follow through that this didn't provide. I've also seen many bars like this at the beginning of rallies and it could be viewed positively by noting the higher open, high and close. It's also no surprise that supply came out because it was back at the high of B that had heavy selling. The D bar did mess up my plans to add-on earlier than I ended up doing because I was looking for a close above the previous few highs and D raised that high well above the initial purchase price. So much for finessing. On the other hand, if price could negotiate the highs of B and D successfully than it would
probably indicate significant strength and be a good place to add-on anyway.

At this point, with a gain of 18% on the initial entry, I have a stop set at break-even and will look to add the final 1/4 after the last 1/4 becomes profitable, which will probably come with a move above Thursday's high. I have a point and figure (0.25pt) target of 17-18
or around 100% higher so I will give it plenty of room. I'll look for climactic activity in the target vicinity and will also have a trailing stop which I can describe another time.

[DbPhoenix]

	Quote:	gassah
	The bar at D was a little concerning, a potential upthrust, but I rarely react to the action of one bar preferring to wait for follow through that this didn't provide.

I've tried to emphasize the point in my "how to manage a trend day" posts that one must allow price room to retrace, particularly if the trader nailed the entry. So many people panic when price moves against their position by even the most trivial amount. They then grab what little profit they have while price continues on its merry way (I suspect this is why so many beginners turn to scalping).

But that first retrace gives you your line in the sand. Not only does it provide a swing point, it also provides a point to hand a trendline on. And from there, it's just management. Is there anything more relaxing than managing a winning trade?

[gassah]

I exited the RIMM and SOHU trades for a small loss and breakeven. I have a 3-5 day rule for lack of performance.

[DbPhoenix]

Was it due to the 1330 news?

[gassah]

	Quote:	DbPhoenix
	Was it due to the 1330 news?

No. This is the first time I'm trying this rule. As for news, I don't get any except the occasional major headline email. I'm usually blind to what is happening throughout the day except for the major events like the FOMC meetings.

[DbPhoenix]

What I meant was did the drop have to do with the drop in the Naz as a whole or was it due to something specific to these stocks? And will the reason have anything to do with your decision to try again or move on to something else?

[gassah]

	Quote:	DbPhoenix
	What I meant was did the drop have to do with the drop in the Naz as a whole or was it due to something specific to these stocks? And will the reason have anything to do with your decision to try again or move on to something else?

I would say it's the market as a whole that is responsible for them not moving. The stocks don't look bad and I'd be willing to re-enter them if I don't see something else. I think this might be a little confusing for newcomers since I stated I trade for the intermediate term but I'm out after 4-5 days. It has to move within a short period of time otherwise my timing was poor, IMO.

[DbPhoenix]

I think W would approve. He was big on waiting until the stock is "ready". If it ain't ready.....

[gassah]

	Quote:	gassah
	The stocks don't look bad

I want to recant what I said about RIMM. In retrospect, and I had doubts about it when I bought it on 5/14, I wouldn't give it a high rating. I gave some weight to the decent volume for the breakout but I would prefer to see it rally up to the high with better volume. After 4/3 there aren't any above average volume bars except for the b/o day and I wouldn't be surprised to see it re-enter the range.

[gassah]

Exited the DGLY trade for breakeven. I don't regret taking the three longs with early exits. I was fully aware of the market resistance and the way it had risen, along with the excessive bullish sentiment, most notably on TL a couple of days ago, and am fine with the risk taken.