THE FACEBOOK (Mea Culpa/A Lesson Learned)

It was with tremendous excitement that I greeted the Option Addict to the fold here at iBC.  He planted the seeds for my delving into volume pocket analysis and I respect his work in technical analysis and options trading tremendously.  With that in mind the stocks that he was interested in, I am usually interested in.

The Facebook caught my fancy from one of his weekly watchlist videos and I decided that this would be the trade I would “follow” him on.

You can probably figure out where this is going.

Objectively, I look at the $FB chart and I see nothing that would lead me to get long the stock, even before this most unfortunate turn of events.  This was pure gambling based on the analysis of someone other than myself.

Look, I can deal with losses on trades that I initiate, but when I ignore my own analysis and ideas and follow along with someone else, I deserve to have my face punched in.  And that is exactly what happened.

The lesson, as always: come up with your own fucking ideas.  You know when to buy and, most importantly, when to sell.  I went into this trade blinded by the outstanding performance of another trader, fueled by greed and I got served.

Lesson learned.

Now I feel better.  Thanks.

-EM

Breakouts You Say? Well…Kind Of

Esteemed reader “Testicules” and I had a bit of back-and-forth in the comments on this post which concluded with him saying the following:

“I’m not a break-out Trader Myself, suppose I should have realized what you were looking for, thanks for clearing that up”

I was going to continue the conversation there, but (as is known to happen) my thoughts were running on…so I figured that writing a response via a post would be a better means for explanation.

The watchlist that I have started to develop here on my blog has certain price levels associated with each stock that I’m keeping track of.  I am using those price levels as a gauge.  How is the stock behaving if/when those levels are hit?

Traditional breakout trading would suggest going long on a break above those levels…and I may very well do that in some cases, but I’m more interested in observing how price and momentum are affected by the move above those predetermined levels.

Keep in mind that these levels are not arbitrary.

They are researched and determined by taking a long term (10 year) view of the volume profile of each stock.  With each stock currently residing in an area where volume has (on a historical basis) been “congested”.

The price levels I am monitoring serve as points where volume has been significantly reduced (historically).  Less historical volume means less resistance.  Less resistance with strong bullish momentum is what I’m searching for.

These are not short term trades where I’m looking to scalp a couple percentage points out of a stock.  I want to slowly build positions in stocks with high(er) probability moves and the potential for significant returns.

Initially, you can see that I’m taking on small positions, just dipping my toes into the water.  I’m in no hurry with these…if things go according to plan, there will be plenty of time for profit in the future.

-EM

THE FACEBOOK (Mea Culpa/A Lesson Learned)

It was with tremendous excitement that I greeted the Option Addict to the fold here at iBC.  He planted the seeds for my delving into volume pocket analysis and I respect his work in technical analysis and options trading tremendously.  With that in mind the stocks that he was interested in, I am usually interested in.

The Facebook caught my fancy from one of his weekly watchlist videos and I decided that this would be the trade I would “follow” him on.

You can probably figure out where this is going.

Objectively, I look at the $FB chart and I see nothing that would lead me to get long the stock, even before this most unfortunate turn of events.  This was pure gambling based on the analysis of someone other than myself.

Look, I can deal with losses on trades that I initiate, but when I ignore my own analysis and ideas and follow along with someone else, I deserve to have my face punched in.  And that is exactly what happened.

The lesson, as always: come up with your own fucking ideas.  You know when to buy and, most importantly, when to sell.  I went into this trade blinded by the outstanding performance of another trader, fueled by greed and I got served.

Lesson learned.

Now I feel better.  Thanks.

-EM

Breakouts You Say? Well…Kind Of

Esteemed reader “Testicules” and I had a bit of back-and-forth in the comments on this post which concluded with him saying the following:

“I’m not a break-out Trader Myself, suppose I should have realized what you were looking for, thanks for clearing that up”

I was going to continue the conversation there, but (as is known to happen) my thoughts were running on…so I figured that writing a response via a post would be a better means for explanation.

The watchlist that I have started to develop here on my blog has certain price levels associated with each stock that I’m keeping track of.  I am using those price levels as a gauge.  How is the stock behaving if/when those levels are hit?

Traditional breakout trading would suggest going long on a break above those levels…and I may very well do that in some cases, but I’m more interested in observing how price and momentum are affected by the move above those predetermined levels.

Keep in mind that these levels are not arbitrary.

They are researched and determined by taking a long term (10 year) view of the volume profile of each stock.  With each stock currently residing in an area where volume has (on a historical basis) been “congested”.

The price levels I am monitoring serve as points where volume has been significantly reduced (historically).  Less historical volume means less resistance.  Less resistance with strong bullish momentum is what I’m searching for.

These are not short term trades where I’m looking to scalp a couple percentage points out of a stock.  I want to slowly build positions in stocks with high(er) probability moves and the potential for significant returns.

Initially, you can see that I’m taking on small positions, just dipping my toes into the water.  I’m in no hurry with these…if things go according to plan, there will be plenty of time for profit in the future.

-EM

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