My final post of the day is an observation that I came across, and I wanted to Blog it for future reference for myself.
When the 5th bar completed, I noticed a somewhat Bullish Engulfing pattern. Since I'm not too sure about those upper and lower shadows, I didn't take a move to go Long. Instead, I made sure that I re-visit this set-up after the market closes for a review.
It appears that had I went Long at the beginning of the 6th bar, I'll only be 'happy' for about 30 minutes or less. Because if the 8th bar low doesn't trigger my Protective Stop, the 9th bar certainly would. And even if those shadows weren't there, my goal would have been shooting for the next Fib. Ext., which it never made it. However, I should still be able to end with a small gain. But I'm still glad that I didn't make this move, even when I was only Paper Trading.
To my readers out there, let me know how you see this setup. Are there other clear warning signs, that I didn't see, that were telling me to "forget about it"?
Until next week, have a great weekend!
Saturday, April 14, 2007
20070413 - AZN - 15mins - Observation
Subscribe to:
Post Comments (Atom)
Hi Closet,
ReplyDeleteI looked at your post, and the first thing that came into mind, is that the "dummy" way of trading (a la Trader X), which I think you are trying to follow, is really keyed around the concept of the opening range (OR) of the first 15 min bar. You are looking for candle patterns that are signaling that the OR high, for a long, or low, for a short, may be broken. On an ideal trade, once those levels are broken, and held, momentum takes over, and allows the stock to make a substantial move. The OR is in effect setting the "tolerance" levels for buyers and sellers. A break above the OR (hopefully) means the sellers at that level are gone, and buyers take over. Below the OR low means buyers could not hold the stock up, and sellers have the upper hand. Your bullish engulfing pattern is vaild, but it leaves you only in the middle of the range for the day, and still below the low of the OR (not ideal for a long position).
A bullish engulfing pattern, say in the upper 50% of the OR bar, or breaking above the OR high would be much more powerful, and have a better chance of working. I look at the candle signal as the match that lights the fuse for the move. But you need fuel for the fuse to ignite. The largest amount of fuel is above/below the OR.
All this is of course just in my humble opinion.
ADD Trader
ADD Trader,
ReplyDeleteThank you very much for taking the time to provide your opinion. I value your input, and I will certainly keep this in mind the next time when similar setup appears.