Saturday, June 6, 2015

I'm Ready! Or Not!

Going into Monday I was focused on remembering one main thing; do not change a thing.  Stick to what got me here.  This is just another day in the markets.  In reality, everything was different.  I'm looking at 4 monitors with my TOS platform and charts, my laptop w/Das Pro on it for order executions, and another laptop and monitor with chat and all my social media running on it. I only got to use this setup a couple of times since I put it together earlier in the year.  It was easier to look at the charts without flipping from one screen to the next to see my charts like I did at work, but at times it was overwhelming.  But, I was comfortable and happy, and ready to take on the markets.  My first trade was an out of the park HR, which is probably what threw me off.

To begin with, I didn't want to change what time I got up and what time I did my watchlists so I still get up at 6am and I am at the gym by 6:30.  I work out and take a shower at the gym and I'm back home fresh and ready to go by 8, about the same time I would be getting to work.  I'll go through and make my watchlists, (which I will go over in detail later in this blog), brew my coffee, and wait for Ross to come to work.

So to start my Monday out I was looking at trading the Gap and Go, a strategy that I haven't traded before.  I would watch Ross execute these trades every day, but I was at work with slow internet and an unreliable wed-based trading platform.  But now I was home, had my Das Pro, had my hot keys set up, and I was ready to trade the Gap and Go.  I vetted the gappers like I normally do.  But the one I picked to trade wasn't the same one that Ross picked, so I was on my own.  IMGN put in a pre-market high on 11.48 and it was consolidating around that level about 10 minutes prior to open so I knew that if it pushed 11.50 it would run up pretty quick, hence the Gap and Go.  The bell rang and I immediately saw buyers coming in so I entered into a position.  My share size is small enough to where I get very little, if any, slippage so I market in and out.  I marketed my order and didn't get filled until $11.755. When I got in the ticker it was going parabolic and ran $2.60 in 4 minutes.  I got greedy and didn't take profits when I should have but I still ended up with a decent profit.

$1,098 profit IMGN Long Stock by AverageJoeTradr

I wish I can say it got better but after the first 30 minutes on Monday through Thursday, I traded like a complete idiot.  Forgot about my rules, and I was trading unfamiliar patterns and trying to make something happen because it was so slow. I completely abandoned what got me here. The bad part about it was that I knew it but couldn't do anything about it.  I was really beginning to worry and think I made a mistake.  But, I went back through my blogs and read my rules and reviewed the ones on my setups and was ready to start fresh on Thursday.  Turns out that is exactly what I needed.  I went from all losing trades on Wednesday to all winning trades on Thursday.

What happened to me this week is the main reason I write my blog, I need to leave myself a map just in case I get lost.  I was able to quickly identify what I was doing wrong and refocus on what I needed to be doing.  I actually wrote it with the expectation that hardly anyone would see it, but the fact that it has helped and inspired so many is just more motivation to me to keep documenting my journey; failures as well as successes.

I realized that I can make money with simple strategies and that they are adaptable to the changing markets.  Sure some days I won't make as much but the profit potential is still there and it it scale-able which will allow me to increase my position size as my account grows.  This in turn can produce larger profits.  I just have to trade in my comfort zone.  My daily goal this month is $500 a day, which is more than enough to keep the job away.  But, I do not focus on that during the trading day, or at least the first 3/4 of the day.  I only focus on finding the best setups and trading them correctly.  If you do that, you will hit your goals.  If you are doing that and not hitting your goals, the answer is not to trade more, it's increasing your position size on the strategies that are successful.

I try to keep this in mind every day

The mistakes I made this week:

1.  Trying to force trades to hit my daily goal
2.  Trading with too much size trying to make a larger profit
3.  Not trading my setups and trying to trade on "feel"
4.  Not having a complete plan before I entered a trade
5.  Not sticking to my R/R plan

So really, I broke rules 1, 3, 6, and 7.

Here's some other pictures I have taped to my desk

So once I read my blogs and taped these pictures to my monitor I was on my way to getting back on track.  I credit my ability to get back on track so quickly to these pictures that Nate @ InverstorsLive sends out and Ross @  Daytrade Warrior teachings.

This is how I start my day:

I wake up a 6AM, wash up, grab my protein drink, water, gym bag and daughter, then head out to the gym.  I get my muscles heated up in the sauna for 10 minutes then jump on a cardio machine.  They all have TV's so I watch CNBC while I'm on it.  Now Monday, Wednesday, and Friday I only do cardio for about 15 minutes because I work out with the weights those days.  On Tuesdays and Thursdays I stay with just cardio.  My workout is finished about 7:30, I take a shower and my daughter and I head home.  I am energized and refreshed which I believe gives me the best opportunity to do well.  Ok, I know you didn't want to hear all of that so now to the good stuff.

I get home, fire up my trading station, cut on CNBC, grind and brew some coffee, and start looking for some gappers.  The first thing I do is go to  This give me the tickers that have gapped up or down from their previous close.  I used to use Equityfeed for this but since I am doing this as a business now, if I don't need it I'm not paying for it.  I tested this prior to me dropping Equityfeed and it didn't miss a beat, and it is continuing to do well.  All I have to do is refresh the page every 10 minutes to get updates to the list. I vet these the same way I did in the past:

Now the blog post has the Equityfeed filters but I use the same vetting parameters.  The only difference is I check the volume and news on TOS instead of Equityfeed.  Once they are vetted I put them in my watchlist, I have a separate one for gap ups and gap downs, and I wait for Ross to come to work an put his screen share up.  This is usually around 8:45.  I also have a Benzinga newsletter that I get every morning and I read it at this time.  I sometimes find the tickers they mention on my watchlist which will move that ticker further up on my list.  After his scans are up I just look as his gapper scan for updates because it has the volume, float, and the other technicals I like to use right there.  Now the reason I look at gap downs is because some recover and run out of the gates similar to a gap and go we see from the ones that gap up premarket.  I do check the news on these but I do not fall in love with it.  I will usually post what I'm watching on Twitter.  How I usually trade the gappers is explained here:

I do plan to start shorting the gappers that go the other way on my 15 minute opening range breakdown strategy as well as trading more Gap and Go's with Ross since I am home.  I will keep the gappers on watch until 11:00.  Then my main focus will be on reversals.

My reversal strategy is simple.  My first choice is to catch bottom reversals but I have been studying top reversals as well.  The top reversal setup is just the opposite of the bottom reversal setup.  I have a scanner for both that feeds live to a watchlist on my TOS platform.  I am also learning how to use more of the tools in my TOS platform.  My only complaints so far is that it will not scan premarket.  Here are my scan setups for my reversals;

These are simple scans that have given me good results.  All of the tickers that hit are not good setups so I just follow my setup parameters to identify the ones I plan a possible trade for.  This blog shows some examples but I have modified what I look for based on the changing market conditions.  My modified explanation is below.

Here's what I look for: When the ticker bottoms and makes the first new low after at least five red 5 minute candles, I note the RSI, the volume, and the candlestick that made the new low.  Sometimes it will have a doji or a small green candle that did not make a new high compared to the previous candle and it would make you think it's trying to reverse.  I try not to fall for this.  I will want it to print a candle to make a new high relative to the candle prior to the one that made a new low.  If the RSI is above 25 and the volume is still flat, I look at this as a short opp and will take it if Level 2 shows more sellers in line than buyers. I will wait until it tries to bottom again where I would get another doji or small green candle that may make me think it's starting to reverse. I look at the RSI and volume again.  If it is lower than the previous RSI but not below 15 and volume is still flat, then I will still think short.  If the RSI is higher than when I noted it previously and the selling volume has gradually picked up, then I will look to exit my short position because I expect the reversal to come soon. (I know it sounds backwards but I have studied my charts from the past month on these and that is what I have seen and it has worked every time I have tried it.)  But, the bottom line is that I will let the chart and price action tell me what it wants to do.

I have my setups and parameters to try and give me and edge but the fact remains that the market is always in control.  I have to have at least five red 5-minute candles in the row before I consider the setup.  The RSI has to be below 20. My planned entry needs to be at least .50 away from the VWAP.  The VWAP is my first profit target on a reversal so there has to have enough of a potential move for the trade to make sense.  Meaning if I have a .20 stop on LOD and only a .25 potential move to the VWAP, the R/R is not good enough to take the trade.  I like my stop to be on LOD for all my reversal trades.  This does change based on setup conditions though. Before I enter I have to have a 5 minute candle to make a new high compared to the previous candle, and the next candle has to open higher than the close of the candle that made the new high.  That's my trigger to enter. It's conservative but it keeps me from making too many mistakes.  I am looking at a 2 minute setup but I feel more comfortable with the 5.

Also, one of the key factors in me entering a bottom reversal trade is where the SPY is trading. If it's trading below the VWAP or showing signs of significant weakness, I will be very skeptical about taking the trade.  Everything else would have to be perfect and if I do take the trade I will treat it as a scalp.  In all of my research of the trades I have 80% of the time instead of reversing the ticker will stop fading and consolidate or give a small move to the up side and then consolidate.  Like anything else, this market indicator is subject to change but it has worked well for me the last few months.  When I do trade and the SPY is trading below the VWAP or is weak, I will take smaller profits and exit positions quickly if I do not like what I see.  I take small profits and do not give a ticker too much room.

Some examples of my reversal trades are here:

Lastly, I have two other scans that I run all day to give me a feel of what is going on.  I look at these tickers and sometimes recognize an early setup but I do not do much with these now.  I'm just tracking data and comparing it with my reversal scanners.  They track the largest % gainers and losers throughout the day and feed a live watchlist on my platform.

That's all for now.  I will keep you posted as I develop this month and adapt to trading full time.  Have a great week

1 comment:

  1. How to find you on social media Twitter StockTwits ect?