Trader-X...views from a distorted mind.

2012-01-23T06:39:00.000-05:00

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Blog update

2012-01-22T13:58:00.004-05:00

In my "State of the blog" post I mentioned Michael would be making some guest posts. However, Michael decided not to move forward citing some reasonable concerns:

"I appreciate the opportunity but as I tried to distill my methodology into a post, I realized there was just too much subjectivity. The last thing I want to do is put something out there only to have people try to trade it and lose money, which is a feeling that you touched on in a post a while back. I have documented rules, but I've come to realize that those rules make up about 40% of what I do in a trade, with the other 60% being experience, instinct, and how I analyze price action. That's just too hard to document in a post."

There was more from Michael, but I understand his perspective. He did say he was going to try and work on it more, and may want to make a few posts in February.

On another note, I was humbled to get a mention from Brian Lund on his site. He referenced my post "Chasing Success", and how it changed his trading life. Here is a small excerpt:

"Remember, this was in pre-StockTwits days, and up until that point I had never heard somebody talk so plainly and in such a common sense way about trading. It was as if a lightning bolt struck me and shocked my out of my sinning ways.

It took a while to completely sink in and I had a number of stumbles along the way, but it was the beginning of the transformation of my trading life. I began to take a “trade less, make more” approach and narrowed the types of trading setups I took to just a handful."

Read his entire post here, and many thanks to him for the kind words!

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State of the blog - 2012

2012-01-07T12:17:00.003-05:00

Happy New Year everyone!

I am not sure what the blog holds for 2012 - as of now, I am not motivated to post much. I have a routine down where I trade in the mornings and tend to a few other ventures the rest of the day, and blogging is not a priority. That may change as the year progresses or my mood changes.

The blog will always be here - there is over six years of archives and comments that I believe make up some of the best trading information on the Internet (I admit I am somewhat biased!). I would like to continue with fresh content, and Todd made some guest posts in December. Unfortunately, we had some technical issues getting him access to the blog, and the time he picked to guest post (ie, holiday time) meant that blogging got bumped for family time (understandably so). Todd wants to give it another go in February or March, and I welcome him back. Judging by the comments, it seems he had a good setup and methodology. And many of you posted similar charts and setups in comments over his last few posts.

Reader Michael expressed interest in making some guest posts in January, so we are going to give it another go. His setup is a little different from the "traditional X trading" (he focuses on reversion to the mean and doesn't really use Fibonacci), so I thought it would be a nice change of pace for readers. He will make a post or two next week, and I would like to see him make a few posts a week in January.

Good luck to everyone in 2012!

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Happy New Year!

2011-12-31T19:25:00.002-05:00

"A Long December"
- Counting Crows

A long December and there's reason to believe
Maybe this year will be better than the last.
I can't remember the last thing that you said as you were leaving,
But now the days go by so fast.

And it's one more day up in the canyons,
And it's one more night in Hollywood.
If you think that I could be forgiven...I wish you would.

The smell of hospitals in winter
And the feeling that it's all a lot of oysters, but no pearls.
All at once you look across a crowded room
To see the way that light attaches to a girl.

And it's one more day up in the canyons,
And it's one more night in Hollywood.
If you think you might come to California...I think you should.

Drove up to the Hillside Manor sometime after 2AM
And talked a little while about the year.
I guess the winter makes you laugh a little slower,
Makes you talk a little lower about the things you could not show her.

And it’s been a long December and there’s reason to believe
Maybe this year will be better than the last.
I can’t remember all the times I tried to tell myself
To hold on to these moments as they pass.

And it’s one more day up in the canyon,
And it’s one more night in Hollywood.
Man it’s been so long since I’ve seen the ocean.....well I guess I should.

All the best in 2012.

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More from Todd

2011-12-20T16:55:00.005-05:00

First, there is a lot of question and answer in the comments of the previous few posts, and a few additional trades and discussions as well. Also, I think I have a few unanswered questions that I will try to get to in the next day.

Today I traded GS. It stalled out at the opening range high, and I sold for a small profit. It is interesting to note that it rallied to the Fibonacci extension later in the day, so if you had more patience than me it would have been a nice winner. But I do better getting out at the first sign of trouble, so I'll take the few dollars I made.

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Todd's VCI trade

2011-12-14T08:44:00.002-05:00

This is the trade I referenced in the previous post. The entry was a break of the trigger bar's low (marked).

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Todd's setup

2011-12-13T16:54:00.001-05:00

First, thank you to Trader-X for letting me make some guest posts in December. I have often thought of starting my own blog but I also see some of the challenges and headaches it can present, so I'm not sure if I want to undertake the task. Time will tell.

Next, X described my setup as a "u-turn" type setup which is a term that I believe Tom C. originally coined. Here are a few more details about what I trade:

1.) 5-minute charts
2.) 5EMA
3.) I like taking setups that form in the first 90 minutes (preferably, the first hour). If it takes longer to form, the odds of success are lower. This is an old X rule that still holds true. I do occasionally take some trades outside of the first 90 minutes, but my mix is probably 85/15 (first 90 minutes vs. the rest of the day).
4.) I like crisp moves - straight up and straight back down (or vice versa). I plot my Fibonacci lines over the opening move, and look for price to move back through the 61.8% retracement with confirmation from the 5EMA (pushing price up for a long, down for a short).

SLB is a good example from today. Price rallied with the first five bars, and the sixth bar broke the fifth bar's low, so I plotted my Fibonacci lines over the first five bars. The 7-10th bars chopped around the "retracement zone", and the eleventh bar closed below the 61.8% retracement with the 5EMA providing overhead resistance. I entered on a break of the eleventh bar's low, and covered at the Fibonacci extension. I watched the opening range low (set with the first bar of the day) closely - often price will reverse at that point and prompt me to take profits. SLB fell through the low, however, and easily hit the Fibonacci extension.

VCI was another good trade today. I'm having trouble with the chart (I'm trying to adapt them to X's format on this blog) and will try to get it posted soon, but please take a look at it and you will see what I mean. The entry was a break of the sixteenth bar's low.

Let me know your thoughts or questions in comments. Thanks!

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Holiday special

2011-12-12T15:35:00.000-05:00

In the past, TRADEthemove.com has offered a holiday special to Trader-X readers. Other friends and recommended products have followed suit, and they are doing it again this year (click the links to read my review/views on each):

If you purchase TRADEthemove.com between now and the end of December, they will send you a $10 gift card from Amazon.com.

If you purchase "The T.A.D. Principle" between now and the end of December, they will send you a $5 gift card from Amazon.com.

If you purchase MEDITATIONSHIFT between now and the end of December, they will send you a $5 gift card from Amazon.com.

After you receive the material, just respond back with "referred by Trader-X" and they will send the gift card to you via email.

Happy Holidays!

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Guest blogger

2011-12-12T11:29:00.003-05:00

I hope the year is ending in spectacular fashion for everyone. I probably won't be posting again until 2012, but long-time reader Todd contacted me about making a few guest posts, and I think it is a great idea. He is thinking about starting his own blog, and a few weeks of posting here will probably change his mind (just kidding...not really, though!).

Todd specializes in a "u-turn" type setup, and I look forward to seeing some trades and analysis.

Happy Holidays to everyone and best wishes for the New Year!

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Monday, October 24th, 2011

2011-10-24T09:10:00.004-04:00

X is on hiatus, but here is a fresh post should anyone want to post comments or questions for other readers.

- Admin

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R.I.P. Steve Jobs

2011-10-05T20:46:00.000-04:00

And thank you. Not much more needs to be said than that.

Steve Jobs - 1955-2011.

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Monday, September 19th, 2011

2011-09-19T09:49:00.004-04:00

X is on hiatus, but here is a fresh post should anyone want to post comments or questions for other readers.

- Admin

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Taking a hiatus

2011-09-13T09:28:00.001-04:00

I've been back to posting for almost a year now, and I've decided it is time to take a hiatus. I have some additional vacation I am taking before the end of the year, and some personal and business issues I need to address. I may be gone a month, maybe two. Or, I might post something next week. But, I probably won't do any consistent posting for a while.

I know there are a lot of people who share charts, thoughts, and advice in comments, and my site administrator will make a few posts a week in order to provide a forum for continued comments and interaction (should anyone wish to continue).

See you soon!

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X will return next week

2011-09-07T08:44:00.002-04:00

Here is a new post for comments if anyone is so inclined to make any.

Admin

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How bad do you want it?

2011-08-30T09:12:00.003-04:00

Next Monday is a market holiday, so posting will be scarce for me this week as I take some personal time ahead of the three day weekend. I encourage you guys to use this week to maybe not trade as much as usual, and instead study and work on focus and discipline. Just a thought.

Here is a motivating video - I don't agree with the "no sleep" philosophy, but the overall message is powerful and should get you charged up.

How Bad Do You Want It from Greyskale Multimedia on Vimeo.

I will check comments periodically for compelling trades to post on the blog. Have a good week!

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It's Friday!

2011-08-26T08:27:00.004-04:00

As mentioned last weekend, I haven't made a lot of posts in the past few weeks due to other priorities monopolizing my time. Readers are making some great comments - I encourage everyone to read them. Recent topics include pivot points, watchlists, some trade analysis, and some tension. I am behind on all the comments myself, and hope to catch up this weekend.

I saw this cartoon and it was funny and sad at the same time. Luckily for my "buy and hold", 401K friends and family, we gained some back this week. Of course, that could all change today!

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TIN - 082311

2011-08-23T18:40:00.002-04:00

The Dow is up 3%, the NASDAQ is up 4%, and one of my best trades of the day is a short. No analysis, I think you guys can figure it out. There was also a nice "beyond the Fibonacci extension" setup that I did not take.

There are some great comments on the previous few posts - if you aren't reading them, you should be.

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Comments worth highlighting

2011-08-21T15:31:00.005-04:00

I didn't have a lot of time to post last week, and this week will probably be the same. But, I'll try to put up some more charts this week. In the meantime, Ken made a few good comments over the last few posts that I thought were worth sharing.

"How do you look at so many different timeframes? I am not trying to be confrontational, but I think your success would go up if you picked one and focused on it. I honestly don't think you can be successful looking at 2, 5, 10, 15, 30, etc. You might get lucky now and then, but I think consistent success is impossible.

I see a lot of you guys posting here, but you aren't really following the Trader-X methods. There is a high number of trades and a lack of real focus on what a good setup is, and when you execute you need to have the ability to monitor your positions and adjust accordingly. Thus, fewer and better trades. If you get down to analyzing a setup and studying the price action and bars like you should, you can't have a watchlist of 200 stocks and trade 5 timeframes. It just doesn't work that way.

Again, I am not trying to be confrontational, but I see you guys doing the same thing over and over and hoping for a different outcome that won't happen. Focus, discipline...it pays off. I have not had an unprofitable week since 2010. I have an unprofitable day every now and then, but never an unprofitable week.

Good luck."

And, on being asked about his trading:

"Grove, I really only trade about three setups. I only look at the 5-minute timeframe, and use a 5EMA. I don't trade exactly like X, but I use the same principles. I focus more on plotting Fib lines over bigger moves which may or may not happen at the opening range. I am looking for a failure through the retracement zone or a nice bounce off of the top of it, with solid support form the 5EMA. I like the 5EMA to be right under price lifting it (or vice versa for a short). I probably put more emphasis on the 5EMA than most readers or X himself.

I have been making solid profits consistently for almost five years, and dabbled in trading for about ten before that but not as a full-time venture.

For me it is about discipline to only take good setups and about focus to only look at a small, defined watchlist and monitor what I am doing closely. And I don't trade a lot, though it is relative. On average I probably make 3 round-trip trades a day. Hope that helps."

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GILD - 081611 (from comments)

2011-08-16T20:55:00.005-04:00

In comments of the last post, t-money asked:

"Trader X,

I was watching GILD today (8/16) on the 5 minute chart and was wondering if this was a setup that you would have considered?

It did not have a gap, but did shoot up over yesterday's high right away in the morning. I was looking to enter on either the 5th or 6th bar, but didn't consider either strong enough to take.

The stock took off immediately after those bars without me. Is this a good candidate, or not convincing enough even though it worked out?

Thanks"

Mike offered up his opinion:

"t-money, I traded GILD today. I trade based on X's textbook setup, of which GILD was perfect as it bounced off the retracement zone and had support from the 5EMA. But, I don't trade gaps exclusively. I scan for stocks that move up or down in the first few bars, and then pullback to the rz. GILD had a nice move up in the first two bars, and a perfect pullback and reversal.

Mike"

As for me, if I looked at non-gappers, I suspect this would have been a setup that I liked for the same reasons Mike pointed out above. Good trade!

note - I indicated the trigger bar that I assume Mike used for his trade, although he didn't specify. Also, I assume he exited at the Fibonacci extension (FE).

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Promoted from comments

2011-08-14T16:40:00.004-04:00

In response to my NWS post, Ken asked the following question:

"Nice rationale X. I took a similar sub-par setup with ERTS. It didn't quite make it to the extension, but I closed it at a profit. Would you rate this the same as NWS, or worse/better?"

Here is Ken't ERTS chart, and my response to his question:

"Ken, ERTS was very similar to NWS. The biggest difference I see was the size of the gap - NWS was a bigger gap, and outside the previous day's range. ERTS was a little smaller and inside the previous day's range. So, I might give it a C+ whereas I gave NWS a B-.

On the bright side, you made money and price never stopped you out (I am assuming your stop was the low of the hammer bar (fifth bar)). It reached the initial target of the opening range high (ORH), so the setup in a sense still worked."

Throughout the years, I have harped on watching the opening range high/low for resistance as price is moving back in that direction after a pullback. I haven't mentioned it lately, but ERTS provides an opportunity to revisit why it is important. Ken exited with a profit because he paid attention to that level, and while everyone wants their setup to move to the Fibonacci extension (or beyond), sometimes price stalls out...especially when the setup is somewhat "inferior" to begin with (ie, a setup that receives a grade of "C" vs. an "A"!).

The ability to pay close attention after you enter a trade (ie, monitor your positions) is one reason I try to focus on taking fewer high-quality setups versus more mediocre setups; the end result is a higher win rate and the ability to make money even when a setup doesn't reach the target.

On another note, I have read a lot of comments lately about people having too many options to choose from, or too many stocks on their watchlist. This can be easily remedied - sort your watchlist by current volume and focus on the top 10 or 20 at the most. By focusing on fewer stocks, you will be less overwhelmed and (hopefully) be able to make better quality decisions.

I hope everyone is geared up for another crazy week - be safe!

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Watching the markets

2011-08-13T09:00:00.001-04:00

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NWS - 081111

2011-08-11T19:48:00.004-04:00

I would give this setup a "B-" because of a few factors:

1.) The long upper tail on the second bar.
2.) The pullback broke below the 50% retracement.

Having said that, I liked the fact that the move up and pullback were orderly, I liked the offsetting bars (bars five and six) that immediately brought price back above the 50% retracement, and I liked the support from the rising 5EMA. I entered on a break of the seventh bar's high (fully acknowledging the increased risk of a "B-" setup) - I chose this entry as opposed to a break of the sixth bar's high because it was more bullish for price to close back above the retracement zone (RZ).

The force was with me, and I exited the position less than an hour later at the Fibonacci extension (FE).

It has been a wild and volatile week, and I am anxious to see how it ends up tomorrow.

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GG - 080811

2011-08-08T13:56:00.003-04:00

Mike commented on trading gold stocks today, and several of you chimed in with similar trades (see comments on the previous post). I traded GG and several similar setups as well. While I disagree with "going into the trading day with a bias", I can't argue with the results. Well done!

"I went in with a Tom C. "u-turn" bias and it paid off with gold stocks. GG was my big winner - entered at $47.45 (break of 10:45 bar, 5-minute chart) and exited at the fib extension just above $48. Entered again on a break of the 11:20 bar at $48.31 which to me was a perfect "beyond the fib extension" setup, sold at $49. NEM and several other gold stocks offered similar setups. I am taking the rest of the day off!"

"FYI, 5-minute charts on the previous comment and Fibs plotted over the first 6 bars on GG. Using the 5EMA for extra support, and GG's first setup happened above the 61.8% retracement of the morning's high to low (as it formed the "u-turn")."

Here is Mike's GG chart with the two entries marked (the exit for the first entry was the Fibonacci extension, the exit for the second entry was the black dashed line).

I'm done for the day - be careful out there!

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Who is to blame?

2011-08-07T10:41:00.000-04:00

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Just in...and you thought today was volatile

2011-08-05T20:27:00.003-04:00

The United States lost its top-notch AAA credit rating from Standard & Poor's on Friday, in a dramatic reversal of fortune for the world's largest economy.

S&P cut the long-term U.S. credit rating by one notch to AA-plus on concerns about growing budget deficits.

U.S. Treasuries, once undisputedly seen as the safest investment in the world, are now rated lower than bonds issued by countries such as the UK, Germany, France or Canada.

The outlook on the new U.S. credit rating is negative, S&P said in a statement, a sign that another downgrade is possible in the next 12 to 18 months.

source

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