Info@EliteSwingTraders.Com
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Good morning EST, getting an early start here because here because the markets are either going to provide us with a b wave higher followed by a c wave decline or this is the start to the move up to 2150. Obviously it's important to figure out which it is a soon as possible and react accordingly but at the moment I'm only down a few pennies on my TVIX play and VIX did break 13.55. I think it's also important to note that XIV held support at 35.20 so right now we have mixed signals. Overall I'm getting a feeling that I'll end up stopping out of TVIX I'm not gonna do it because of a feeling. If I get a confirmation signal I'll post my intentions.
I figured I'd start by talking about what I use to do when I first started trading. Frankly I didn't do much because I didn't have anything that even resembled sound trade management so I'd just be wasting your time. However let me just say it took me a lot longer than it should have to realize how important it was to properly manage my trades.
We've all been there, make $500 on a trade and give back $600. Make 5 good trades and one bad one that wipes out the profit from the 5 good ones. I could go on and on but I think we know what I'm saying here, this is just one of those things you have to learn on your own but learn you will.
I do however want to talk about losses for some of our newer traders because this is so important and we all know how hard it can be to hit the damn button at times.
So this is losses 101 by SK.
A loss is a loss is a loss is a loss.
Anyone that knows me or has traded with me for any length of time will tell you that I absolutely hate to take losses or give back profits. That's right, once it's in your account if you give it back it's a loss. So is giving back winnings a loss? Absolutely.... How many times have you heard "you don't take a loss until you sell"? Maybe it was something like "it's no big deal, it's only a paper loss". How about "just continue to hold, it'll come back". Or my personal favorite "you're playing with house money, let it ride".
I'm here to tell you that's all BULLSH*T.
Once it's gone there's no telling if it's coming back and once you have it giving it back is no different than losing it from the start. The best way to avoid a loss, paper or otherwise, is to not let yourself get into a situation where you have to rationalize why you decided to let yourself get into the situation in the first place. When it's time you have to hit the sell button and learn to be happy with your decision.
OK enough about selling, let's talk about buying.
I thought about how I was going to explain my techniques and strategy for risk management/capital preservation (RM/CP) because if you're not familiar with the way I trade it could come across as pretty confusing. Some of this stuff is inherently technical and trying to oversimplify it would defeat the purpose so if I cover something anyone doesn't understand please speak up. I'm actually thinking about doing a few short videos that explain the entire trade process but for now let's just give this a shot.
Guys I didn't forget about the scaling/entries/exits, I just got busy and then got called away right before the close. I'll have something in the morning but I'm gonna update my charts first.
JOEZ +85%
If XIV breaks 35.20 it could lose $2 rather quickly.
Yes /ES, 2080
JOEZ +65%, LOL
Look for about 2080 next.
So right now I have a 1.66 avg and I'm either gonna make money here or I'm gonna stop out.
3rd and final buy on TVIX.
Gold looks ready to move
Watch for gold to make a move over $1200 here
I'm still holding TVIX, waiting for one more high over 25.07 on VXX to confirm 5 up. Once we get that I'll post my next buy point.
I'm here what's up?
WPCS on watch
Coal is looking good here as well.
We could see a pullback to 2093-2094 and another push up to 2100-2103 before we see the next leg lower. If we're going higher the next time we move over 2100 we won't come back down. Either way this bounce was planned and we knew it was coming yesterday so there's no reason to get excited either way until we have confirmation of direction. I agree that telling direction here is a difficult task. That's the reason I was hoping for direct follow through to the downside. At least that way we could get long and be confident we were headed higher. It doesn't take long for the markets to roll over as we learned in the last hour or trading yesterday.
It's possible, not ruling it out but also not changing my perspective until I have evidence that's what's gonna happen.
WLL?
So theres our 2097
GDX looks like it's started a Wave 2 pullback. Going to buy NUGT back at the bottom of this retrace.
Out of NUGT for now.
GEVO is up on news this morning but remember earnings are on Thursday
So here's the bounce I was talking about but I'm guessing the housing data is weak which will be blamed for what's about to happen next. Just a guess of course.
Just lucky is all. I tell ya if we break down below 2090 there's not a lot of support until the 2070's
We should c a bounce here to maybe 2097 before we continue lower.
Manufacturing data in a few mins and new home sales at 10 am
Good luck today, I'll post some comments on scaling in and out as the day goes on.
Looking for VXX to move back over $26
So far so good.
Maybe but there's a few other counts working. We could go higher but have to break that top TL for any of the others to come into play. So for mow that's our target.
Gaps and Gap Analysis
Have you ever wondered what causes gaps in price charts and what they mean? Well, you've come to the right place. Just in case, a gap is an area on a price chart in which there were no trades. Normally this occurs between the close of the market on one day and the next day's open. Lot's of things can cause this, such as an earnings report coming out after the stock market has closed for the day. If the earnings were significantly higher than expected, many investors might place buy orders for the next day. This could result in the price opening higher than the previous day's close. If the trading that day continues to trade above that point, a gap will exist in the price chart. Gaps can offer evidence that something important has happened to the fundamentals or the psychology of the crowd that accompanies this market movement. Before we get into the different types of gaps, here is a chart showing a gap so you will know what we are talking about.
Gaps appear more frequently on daily charts, where every day is an opportunity to create an opening gap. Gaps on weekly or monthly charts are fairly rare: the gap would have to occur between Friday's close and Monday's open for weekly charts and between the last day of the month's close and the first day of the next month's for the monthly charts. Gaps can be subdivided into four basic categories: Common, Breakaway, Runaway, and Exhaustion.
Common Gaps
Sometimes referred to as a trading gap or an area gap, the common gap is usually uneventful. In fact, they can be caused by a stock going ex-dividend when the trading volume is low. These gaps are common (get it?) and usually get filled fairly quickly. ”Getting filled” means that the price action at a later time (few days to a few weeks) usually retraces at the least to the last day before the gap. This is also known as closing the gap. Here is a chart of two common gaps that have been filled. Notice that after the gap the prices have come down to at least the beginning of the gap? That is called closing or filling the gap.
A common gap usually appears in a trading range or congestion area, and reinforces the apparent lack of interest in the stock at that time. Many times this is further exacerbated by low trading volume. Being aware of these types of gaps is good, but doubtful that they will produce a trading opportunities.
Breakaway Gaps
Breakaway gaps are the exciting ones. They occur when the price action is breaking out of their trading range or congestion area. To understand gaps, one has to understand the nature of congestion areas in the market. A congestion area is just a price range in which the market has traded for some period of time, usually a few weeks or so. The area near the top of the congestion area is usually resistance when approached from below. Likewise, the area near the bottom of the congestion area is support when approached from above. To break out of these areas requires market enthusiasm and, either, many more buyers than sellers for upside breakouts or more sellers than buyers for downside breakouts.
Volume will (should) pick up significantly, for not only the increased enthusiasm, but many are holding positions on the wrong side of the breakout and need to cover or sell them. It is better if the volume does not happen until the gap occurs. This means that the new change in market direction has a chance of continuing. The point of breakout now becomes the new support (if an upside breakout) or resistance (if a downside breakout). Don't fall into the trap of thinking this type of gap, if associated with good volume, will be filled soon. It might take a long time. Go with the fact that a new trend in the direction of the stock has taken place, and trade accordingly. Notice in the chart below how prices spent over 2 months without going lower than about 41. When they did, it was with increased volume and a downward breakaway gap.
A good confirmation for trading gaps is if they are associated with classic chart patterns. For example, if an ascending triangle suddenly has a breakout gap to the upside, this can be a much better trade than a breakaway gap without a good chart pattern associated with it. The chart below shows the normally bullish ascending triangle (flat top and rising, lower trend line) with a breakaway gap to the upside, as you would expect with an ascending triangle.
Runaway Gaps
Runaway gaps are also called measuring gaps, and are best described as gaps that are caused by increased interest in the stock. For runaway gaps to the upside, it usually represents traders who did not get in during the initial move of the up trend and while waiting for a retracement in price, decided it was not going to happen. Increased buying interest happens all of a sudden, and the price gaps above the previous day's close. This type of runaway gap represents an almost panic state in traders. Also, a good uptrend can have runaway gaps caused by significant news events that cause new interest in the stock. In the chart below, note the significant increase in volume during and after the runaway gap.
Runaway gaps can also happen in downtrends. This usually represents increased liquidation of that stock by traders and buyers who are standing on the sidelines. These can become very serious as those who are holding onto the stock will eventually panic and sell – but sell to whom? The price has to continue to drop and gap down to find buyers. Not a good situation.
The term measuring gap is also used for runaway gaps. This is an interpretation that is hard to find examples for, but it is a way of helping one decide how much longer a trend will last. The theory is that the measuring gap will occur in the middle of, or half way through, the move.
Sometimes, the futures market will have runaway gaps that are caused by trading limits imposed by the exchanges. Getting caught on the wrong side of the trend when you have these limit moves in futures can be horrifying. The good news is that you can also be on the right side of them. These are not common occurrences in the futures market despite all the wrong information being touted by those who do not understand it, and are only repeating something they read from an uninformed reporter.
Exhaustion Gaps
Exhaustion gaps are those that happen near the end of a good up- or downtrend. They are many times the first signal of the end of that move. They are identified by high volume and large price difference between the previous day's close and the new opening price. They can easily be mistaken for runaway gaps if one does not notice the exceptionally high volume.
It is almost a state of panic if the gap appears during a long down move where pessimism has set in. Selling all positions to liquidate holdings in the market is not uncommon. Exhaustion gaps are quickly filled as prices reverse their trend. Likewise, if they happen during a bull move, some bullish euphoria overcomes trades, and buyers cannot get enough of that stock. The prices gap up with huge volume; then, there is great profit taking and the demand for the stock totally dries up. Prices drop, and a significant change in trend occurs. Exhaustion gaps are probably the easiest to trade and profit from. In the chart, notice that there was one more day of trading to the upside before the stock plunged. The high volume was the giveaway that this was going to be, either, an exhaustion gap or a runaway gap. Because of the size of the gap and the near doubling of volume, an exhaustion gap was in the making here.
Conclusion
There is an old saying that the market abhors a vacuum and all gaps will be filled. While this may have some merit for common and exhaustion gaps, holding positions waiting for breakout or runaway gaps to be filled can be devastating to your portfolio. Likewise, waiting to get on-board a trend by waiting for prices to fill a gap can cause you to miss the big move. Gaps are a significant technical development in price action and chart analysis, and should not be ignored. Japanese candlestick analysis is filled with patterns that rely on gaps to fulfill their objectives.
Well let me answer the the money question first. Now this is strictly trading because my investment accounts are handled much differently. First let me say this, risk management and capital preservation should be the most important tenant of trading for even the most experienced traders. I understand that to some this can seem like a barrier at times but I truly believe that in order to be a successful trader it come down to how much you lose not how much you make. Making money is easy, stopping yourself from losing it is exponentially harder. So with that I'm gonna start a series of post that should help you guys understand how I manage risk and decide how much of my trading capital I risk on any given trade.
If anyone is interested I'd like to share some pointers about scaling into and out of positions. Not gonna waste my time if I have no takers so let me know.