I'm glad I'm late really as we've rallied on a weak lead in that the US hardly moved after a big fall and we had already rallied strongly yesterday from mid morning. I'm trying hard to look at each day on its merits but I think I would have been a bit skewed to the bearish side.
My initial thoughts:
Bhp - rallied for 3 bars off a low open. 4th bar just completed is an inside bar, could go either way although it is in a little downtrend.
Fmg - had a volatile afternoon yesterday. Further clarification this morning about potential investment interest has helped the stock to firm. So far it's topped out at 332 just below y'days high of 334. Again, this could go either way. New highs are on the cards but there's enough room to go short for the 3rd wave of a pull back.
Lgl - Gold is still running and the stock has reported a reasonable profit but it's created a tight range just below y'day's high of 364. Looks bullish.
Ncm - Pulling back off a strong open but it doesn't look extended enough to try the quick reversal trade. Wait and see.
Rio - Similar story to ncm but looks most likely to have another go at 5200 and could get through this time. 5140 now after peaking at 5192.
Sto - Strong open, solid report, condensing into a tight range. Bullish but there may also be room for a short trade after having gapped up.
Wow - Still in a very tight range. Small buying opportunity at 2771.
Wpl - Continued strength after yesterday's bullish reversal. Looking for a buying opportunity after a few tight bars here but may also be a small shorting opportunity.
No trades yet!
12.14 That didn't last long...short bhp at 3018 - break was at 3023 and short fmg at 318 - second time at this break point. Positions sizes smaller than normal as I don't want to fall into the trap of doing too much too soon.
12.25 Sto and wpl are looking ready to run again.
12.30 Covered bhp at 3034. Keeping the stop very tight early so as not to dig a hole. Bhp now starting to look red hot. I was already thinking that bhp opened very well and is making a reverse head and shoulders pattern. Buy signal at 3036.
12.34 Long bhp at 3039 and cut and reverse fmg at 324.
Wpl has given a buy signal but it's still very thin.
Would buy more bhp at 3050 on real confirmation as it's not far away.
Out of fmg at 323 - realised that as it's starting to consolidate it would be better to be out. Decent enough sell signal at 316, would offer more certainty and still enough room to support at 290ish for a trade.
Long wpl at 3388 - hope hesitation won't be costly.
12.50 Short lgl at 354. Lower high and a break through 357. Chart looks good enough but could fall to low 340's. Sell on fact?
1.23 Sitting on my positions as the spi consolidates.
Turns out the reversal trade would have worked in ncm as it has weakened sharply. Perhaps there'll be an opportunity to trade it later. Hopefully, lgl which has rallied then slipped since I entered the trade, will follow suit.
Long sto at 1455.
Here's a test as to whether the really good trades stand out.
bhp - think it could run hard this afternoon.
lgl - confident it will fall
sto - seems certain to rally
wpl - confirming break, I'm positive but not super confident.
rio - reasonable good chance of rallying again.
1.33 Long rio at 5145.
1.35 Added to lgl short at 353 as it breaks yesterday's low.
1.46 Now long fmg at 327 as similarly to y'day it starts to gather steam after a shallow correction. Not entirely convinced but the upside is large if it cracks on.
Also added to bhp at 3044 at a clear buy signal on the last 4 bars with a stronger signal at 3049.
1.51 Finished the second tranche of bhp at 3050.
1.55 A lot of positions on now. bhp, fmg, rio, sto and wpl long with lgl short.
I feel a bit nervy but the challenge is to trade each on its merits and detach yourself from the outcome.
Once again I did too many trades early and chopped in and out losing money. Now that there are some much better signals the challenge is to stay with them.
The only punty trade I have on is fmg.
2.07 Out of fmg at 325 as it ran to 330 but couldn't go on.
2.16 Stopped out of sto at 1448. Stopped out of wpl at 3391.
Short fmg at 322 on potential lower high. I know I'm flogging a dead horse.
2.33 Fmg cut at 322. Went to 319 and rallying with spi.
2.46 Stopped out of bhp at 3027.
Now long rio, and close to stopping out there, and short lgl which is going my way.
The market made a minor new high about an hour ago and now looks like falling away.
I want to be awake to new opportunities here.
2.50 Shorted fmg at 315. 5th time I've been in this today but the first decent signal.
3.01 Bought more rio at 5205 just because it's a new high and I'm trying to train myself to take the obvious signals rather than try the sneaky entries all the time.
3.21 Bought back half lgl at 352, a bit impatient and half fmg at 304. Futures still very choppy. I could see sto giving me another buy signal (I think I'd need to see 1462) for a late day run.
3.37 Stopped out of both rio trades at 5172.
3.39 Short small wpl at 3375 after break at 3380. There is a shorting opportunity in ncm but the wpl trade is a better signal so I'm willing to take it.
3.56 Bought back two thirds of wpl on a quick move my way. I'm fine with this as it's a very quick in and out trade.
Bought a touch more fmg at 287.
Will close out balance of shorts in fmg, lgl and wpl on the match.
4.10 Slightly negative match with lgl jumping back to 353.
Overall, break even on the day. 14 trades, 5 winners, 6 losers and 3 scratch.
I didn't make yesterday's error of running my stops and I think that's why I ended square. I did make every-day-so-far's error of doing too many trades. I wouldn't necessarily say that there were any dumb trades but I think I need to be clearer on what's an acceptable trade. When I did get trades to go my way I was definitely more patient.
3 trades in bhp.
Trade 1, I shorted at 3018 on the 5th bar looking for a resumption of the down trend. However, the rally had overlapped previous lows so not great.
Trade 2, I realised there was strength, got carried away and leapt into a bullish trade. Eventually I got a signal to confirm.
Trade 3, this was a high quality signal with a new high for the day and 2 supporting higher lows. It failed and I cut - no regrets.
Fmg was a bit of a fiasco, with 5 marginal trades and one good one. Trade 1 was the best of the marginal trades. There were two matching candles at a lower high, first white then black, often a good sign for a turning point. Was a bit unlucky with the cut here.Trades 2 and 3 were silly knee jerk trades.Trade 4 was better but with the stock still in a range, not great.Trade 5 was an easy trade and went well. If I hadn't been in a hole after the first 4 trades then I could have gone harder at this.
In wpl, below, I took 2 trades. The first trade was a buy at 3388. I was caught between 2 stools here. I didn't rush to take the pre-emptive trade at 3381 nor wait for confirmation at 3398. My cut was ok. I took the second trade towards the close, shorting at 3376. There is another example of a matching pair of candles, followed by a small bearish bar and then weakness. I guess I could have gone earlier at 3396 which is the break of the small 3rd bar but since the stronger signal was not much lower at 3380 it was worth waiting.
What have I learnt today. That you just have to be machine-like with your stops; that I need to be more choosy about my trades. As far as the pre-emptive signals go, I think I'll avoid traders trick entries unless there's enough room for a failed rally to still make some money and I should favour a bar or two with very small range at the bottom. It's still worth looking at the reversal trade in a running stock, there can be terrific momentum and I should keep an eye out for a range break of a yin/yang pair of candles.
Looking back at Sunday's post, I mentioned this set up regarding a bullish reversal in rio but didn't spot the characteristic candlestick pattern.
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