Wednesday, April 15, 2009

April 15, 2009 Wednesday Trade 4 Long 2 Contracts Stopped Out -2.25 Points

This setup was a bullish Gartley (it is basically a pattern where you have one big push up, two pullback waves back to the 61.8 or 78.6 Fibonacci retracement of the first big wave, then the upmove continues from there) fade the extremes, reversion to the mean trade. The setup idea was sound, but the entry was too soon to get in after a broken trendline support level (e.g. going long too near resistance) without very good volume confirmation to get in to the trade, therefore I was stopped out.

Trade 4 (Long 2 Contracts Stopped Out -2.25 points):
Trade 4 Screenshot

Following is a screengrab I did showing a better entry for the same setup idea and why it is better. Basically waiting for 3 minute bid/ask indicator to show several bars where buyers are control (green part of bar on top showing more big trades at ask), allowed you to take the same setup idea with a stop 2 ticks below 834 that would not have been hit (even though there was a pretty scary down bar after the volume confirmed):
Better long entry point screenshot

Note: Trade idea OK but entry too soon after a trendline break, so fighting really strong resistance in addition to not waiting for at least one 3 minute bar showing buyers in control. The price needed time to correct sideways and get away from that up-sloping resistance level where there are still tons of people selling.

This will be my last trade of the day. It has been a very tough options expiration week for me I think I will take the rest of the week off.