I will try to review my trades in effort to help you see what I look for when trading. According to my 2009 survey, most people wanted to see a tutorial video on trading strategies. So with that in mind, I will try to educate my readers on different trading strategies in ’09.
Before entering a trade, I always look at a longer term time frame first. Brian, from Alphatrends.net, preaches this all the time, and even has a book on it– go read it.
Now let’s get into what I saw in BIDU today. On the 60 day chart I see an ascending triangle pattern formation, click here if you would like an explanation of this pattern, the ideal entry would be to enter on a break of the trendline around $140 supported by good volume.
Getting antsy to make a trade, with everything flying today, I decided to jump in early in anticipation of the trendline break, mistake #1.
Now that I have an idea of where the stock has been and where it might go, I look for my entry. I switch to the intraday chart with a 5 min setting.
The market starts to rip around 12:30pm, BIDU sets up a bullish flag, indicated by the blue lines above. I figured if the market would rally further, BIDU could rip from the flag, then rip again from the trendline break @ $140. I wanted to be early.
Needless to say, the market remained rangebound and so did my stock. I exited shortly after to flag breakdown.
Mistake #2, I did not give my stock enough room to move. I decided to move my original stop. at today’s low, once the flag broke down– panic. Tim over at slopeofhope.com has a rule to only let a stop exit a trade. I often use this same rule, and had I used it today, I would still be in the trade.
The trade ended up a loss, but provided a bunch of examples of what to look for. For those that know how to trade, sorry for the tutorial, just trying to help out the newbies.
Note: I’ll try to get some tuturial videos, on different trading strategies, in the coming weeks.
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