First Trade Problem

I finally pulled the trigger on my first trade using the 15 min scalping system with some interesting happenings.  I'm concentrating more on observing my own behaviour with each trade and understand the motivation behind my actions.  

Looking at the chart below the set up was exactly what i was hoping for. That is a buy signal at the low of the day and right at predefined support.  Entering that trade was made with very little hesitation.  Although whenever I place a trade it always crosses my mind it the trade will go against me which is a normal reaction but i found comfort in that I define my loss not the market.

The broken line is the intraday support and resistance line I discovered after I placed the trade at 210.90 so I had space for a decent 20-25% gain so long as I stuck with the plan.  That plan was to hold if and when the SPYhit 210.90.  Sell half the position and wait and see if a breakout ensued.  What did I do?  Sold the whole position after it hit 210.90 (@1pm) and dropped back for a 11% gain.  That bothered me because I didn't stick to my plan (which cost me an additional 10%).  I think it was my fear of trading a new system for the first time and felt the need to prove myself right no matter how small the gain.  But I felt more like a failure not following the rules.  I'm hoping I get better at that as I continue to trade the system.

Here are the trades.

BOUGHT 5 SPY Mar06'15 210.5 CALL @AMEX @ 0.95 
SOLD 5 SPY Mar06'15 210.5 CALL @AMEX @ 1.05 

Weekend Update

Here is the recap of the week with a 15 min chart of the SPY with all the signal highlights below.  We had 6 buy signals and 1 sell signal.  Defining support and resistance up in these areas can only result in areas of minor significance until they become significant if you follow me.  

I've provided the highs and lows in both percentages and dollar (cents) amounts from the entry point of the trade signal until the end of the sames day since we do not hold overnight.  The stop loss rule I'm using is a close below the low of the confirmation candlestick (the second arrow).   The profit target can vary but I personal only take trades with a potential of at least.25% movement or about 50 cents.

DATE	CLOSE	SIGNAL	MAX HIGH (%)	MIN LOW (%)	MAX HIGH ($)	MIN LOW($)
2015-02-27 14:45:00	210.91	BUY	0.071%	-0.128%	$      0.15	-$     0.27
2015-02-27 09:45:00	211.07	BUY	0.242%	-0.204%	$      0.51	-$     0.43
2015-02-26 10:00:00	211.13	BUY	0.275%	-0.227%	$      0.58	-$     0.48
2015-02-25 14:45:00	211.56	BUY	0.071%	-0.161%	$      0.15	-$     0.34
2015-02-25 09:45:00	211.52	BUY	0.340%	-0.142%	$      0.72	-$     0.30
2015-02-24 11:15:00	211.8	SELL	0.118%	-0.326%	$      0.25	-$     0.69
2015-02-23 09:45:00	210.76	BUY	0.214%	-0.119%	$      0.45	-$     0.25

Day 2

So yesterday's buy at support had very little movement up.  The stop loss was hit right below the minor support line of 211.2.  Price started making its way to the 10 day moving average at 210.62 early on when we got another buy signal (red highlighted circle) which made for a decent 50 cent scalp only to see price come back to test the 10 day moving average again.  That was pretty much it for the day.  Just as a side note I don't usually hold positions overnight useless I see a strong trend day that could bleed into the next day.  There will always be opportunity every day so no need to expose myself to overnight risk.  

Its been awhile!

Its been a little over a year since my last post.  After reviewing my previous posts I realized that I was just saying the same thing over and over again an began to annoy myself.  My ability to define support and resistance areas using Point and Figure charts is awesome if I do say so myself. However, buying and selling resistance was always tricky because I always wondered would a that support or resistance area break the minute I execute the trade. So I decided to read books on the psychology of trading.  Specifically the expectations of traders at major price inflection points.  That knowledge allowed me to develop a system of trading that I believe has potential so long as one adheres to the rules.  This is a short term SPY trading system using a 15 min chart and the signals that I've developed using thinkScript.  I'll use this forum to post the chart daily and keep myself honest as to the trades I execute and the success of those trades.

The rules are pretty simply buy at support sell at resistance only when you get a signal.  A valid signal is one where two bar consecutive 15min bar have an arrow in the same direction.  The stop is the low of the 15min bar the trade was execute it.  Simple no?   The key however, is uncovering these significant levels of support and resistance ahead of time.  Below is an example of a 15 min chart for the past two days.

You can see we got a great sell signal (two consecutive down arrows) right at resistance of $211.86 with an exit at $211.20.  Keep in mind that I ideally would like to see the distance between support and resistance of $1 or more.  Since we are hitting new record highs each day these support and resistance lines I would consider to be minor until they become more significant.

Today we saw two buy signals.  The was two far from my support level to execute.  However, the second signal was at support so was playable.

So there you have it.  On average there is at least one to two signals a day so there is plenty of opportunity everyday.  I totally expect plenty of losers but also plenty of winners.  I figure if I just stick to the rules and I'm sure it will work out.

KABOOM

I love it when a plan comes together.  Even more so when that plan involves making a little scratch.  Two (put) trades I want to highlight today, SPY and SLW.  I placed these trades near the close on Tuesday and I'll highlight why and where I think they might be going.  Below is a SPY a daily chart since the beginning of the year.  This is really was a no-brainer risk reward trade.  We have a ton of volume representing overhead resistance highlighted in red and decreasing daily volume on this move up.  In order to break that overhead resistance the market would have to either gap over and above the resistance zone or bust through on very high volume to absorb all that supply.   Instead the market moved higher today on lower volume only to fall apart for the rest of the day.  The next stop on the SPY is 180.69.

The SLW wasn't as obvious but still the risk reward again is very attractive since it was hovering around resistance after a large gap up on Monday.   Below is the daily candlestick chart with the $25.87 support and resistance area taken off a PnF chart.  You can see that the gap up candle rallied right into resistance closing well off the highs.  The next day another attempt to break resistance failed on lower volume.  Again the risk reward is apparent with a stop loss on a close above resistance.  Again today there was another attempt to rally above resistance (I was a bit nervous but patient) only to see it fail and follow the rest of the market down.  The next support is at 24.18 which would make this another great return on my put options.

That's it for today.  Lets see what the market has in store tomorrow.

Thanks for reading.

The Follow Up

To follow up on Wednesday's post regarding SPY and LNKD we can see how price reacted around the support and resistance areas and the associated volume.  What is even more interesting is the crazy twists and turns to shake the weaker hands out.  Trading is definitely a game for the mentally strong (or just the mental).   Lets looks at what LNKD did the next day after are analysis.  It gapped downed at the open so the prudent move here would be to look for a test of broken support. Instead LNKD rallied right back into the trading range within the first 15 minutes of trading tell me this was a shake out.  The rest of the morning and early afternoon was spent trading within the trading range we defined the day before (195.09, 192.36) until 2pm when we saw another break of support on increased volume.   Again we waited for the test which came near the close of the day.  The test was very telling because you can see that we had very heavy volume but price remained in a tight price range unable to break what is now the resistance area of 192.36.   The next day LNKD dropped right from the open and continued its downward trajectory for the rest of the day.  The next stop is $183. 68 as we defined previously.  Another thing too note is the amount of volume that was transacted within the trading range we defined.  That tells us that any legitimate breakout will have some momentum behind it.   I'm not going to  say that it was easy to trade this in real time but having these predefined support and resistance areas along with volume analysis does certainly help you navigate through the twists and turns intraday.

 
The SPY chart below again shows the importance and action around these pre-defined support and resistance areas.  Like LNKD, SPY gapped lower (only 14 cents away from support) before moving higher.  However, as you can see SPY broke and tested all the overhead resistance areas before moving to the next level.  Again I cannot stress the importance of defining these support and resistance areas in advance. Using this in conjunction with volume analysis will result in consistent profits.   In my next post I will look to find another stock along with the SPY to analyze for the next trading day. If there is a stock you would like me to analyze just flip me a note I would be happy to post about it.

Thanks for reading.

Telling the Future

"I predict the stock market will move tomorrow."

Everyone is trying to predict what the market will do.  Well why not you do stand about a 50% of sounding like a market guru if you are right.  Well today's post I'm going to give you the current intraday trading range for the SPY and LNKD (I am looking to trade this one as well) and then the rules of when I would go long or short.  So the point is I'm not predicting the anything.  I'm simply setting up parameters and rules to go long or short should the criteria be met.

Lets start with the SPY.  We are in a trading range between 182.39 and 181.74.  I would wait for a breakout one way or the other confirmed by high volume to validate the breakout.  Typically, after the breakout you might see a test of the broken support or resistance before a continuation of the move in the direction of the breakout.  Where do you exit?  I would at 182.81 on a break of resistance as the next resistance area to access and 180.69 on a break of support.

Below is a chart of LNKD.  I like LNKD for intraday trading simply because it moves. After it broke support of $201.50 (which is tested and continued down) LNKD fell into a trading range between $195.09 and $192.36.  What is interesting to note is the amount of volume transacted at the lower end of the trading range today.  It looks to be accumulation but the prudent thing to do is wait and see and look for volume confirmation of any break out of the trend.   LNKD provides also a great risk/reward on any break intraday with next resistance at $201.5 and support at $183.68.

Lets see how my powers of prediction work out!  Thanks for reading.

192.36, 195.09, 201.5