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I feel like I'm always a step behind when breakouts occur. I watch these stocks, see them b/o, but volume is low or it closes at bottom of range, so I don't get in (I have a rule to trade close to day's end). Then it turns around and jumps the next few days and I miss the up move because they get extended.
Any ideas or suggestions that help me get in would be appreciated.
Not that i am as experienced as some others but would say that Patience is paramount. Don't chase. Usually a few quality stocks will be of interest. That is why the 5% from pivot gives some room for entry. I heard others mention not to worry about being left behind, If missed just keep it on a watch for pullback or other entry. I am slowly learning this myself as great stocks will offer multiply entries. Don't let emotions get in way because who missed one, it will be a learning opportunity going forward ( as I write I think this is more to reinforce what I need to do ) You could always try a smaller test position but I find even the recommended pyramiding difficult to do. Maybe this gets toward your question. If you list the stock in question I sure someone else probably traded it and could input on why they found conviction to buy and what they saw in the charts.
So your empirical evidence contradicts your rule. Sounds like you may want to modify your rule, no? If I were you if volume isnt there at the b/o, try coming into it based on price action alone. Use a smaller sized position when doing so if its a thinner name, more volatile issue or if you arent comfortable.. If volume shows up at the end of the day add, if not maybe sell 1/2 or if your small or within your comfort zone see what the next day brings before you do anything.
Actually I watched 2 stocks get away from me: POL and CELG. POL gapped up first day of trading 2013 and CELG closed at top of range and past the 5% rule. I think IBD has a rule for gap ups, even if they are passed the 5% threshold. Do any of you know what that is? I could have gotten into CELG on 7 Jan when I saw that within a few hours of trading the day's volume had hit the 3-month avg. So I think that will be a rule change for me to not wait for the day's close. If the volume is that robust I should just get in.
But overall, I think this choppiness is really wearing me out. I was in CELG late last year, but when the fiscal cliff wasn't resolved and the distribution days started tacking on, I had to close out of some positions due to my portfolio mgmt rules. Unfortunately CELG was one of my weak performers. I hate seeing it get away - especially get away big as it has done this past week.
Hope the choppiness subsides soon but not holding my breath.
Just my worthless take:
I don't know how long you've been trading, but it takes awhile to learn to be dispassionate about the outcome of your trades. As long as the trade is built off of a solid trade plan, you have no control over where it goes once your in. You can only stop the pain or take profits.
Remember that you are going to win some and lose many. Its a numbers game really. Lose the many small and win the few big. Keep that ratio right and you'll do well.
Of most importance you sound as if your burnt out. I would rather miss a rally than burn myself out on the market altogether. The market will always be here, so take a week or two off and come back with some fresh eyes. I actually have a rule that if I have a certain number of losing trades or poorly constructed trades (even if they are winners) strung together I must take time off. I think its one of my best rules.
To comment on your end of day rule, unless you cant trade due to work conditions or you have several billion under management (I think w a high degree of certainty thats not the case here) buy the stock when you get the signal. Just take the trade. I'll state that again as its a key ingredient: JUST TAKE THE TRADE.
As far as CELG getting away from you, let go of lost trades. Go through the trade one last time, make notes where you think you goofed, change rules where need be and be done with it. Forgive yourself. You are going to miss 100's, hell 1,000's of stocks and let go of godzilla sized monsters way too early, so get used to it. It's the nature of things in this game.
As far as gap ups go. broadly speaking my rule of thumb is that the bigger the gap, the more I want to be in. I will size it relative to the price level where I know or at least fairly certain I am wrong. So the larger the gap away from support the smaller the position has to be.
At the end of the day, if you don't absolutely love this game to the point of obsession, put your money into something else. It will simply take all of your money and redistribute it to the guys who do love it.
If you do love it, keep learning and protect your passion about it so that nothing can injure your resolve to succeed.
Best of luck,
Thanks for your words. I am relatively new to trading, just started last year, so I know a lot of this comes with experience. The reason for my trade at the end of day rule is because last year I got into a couple of stocks early as they b/o, but by the end of day, they closed below their trigger. Then my stop would get hit a few days later. I have modified this rule for stocks that have monster volume early.
Unfortunately, I do love this game so much, i can't imagine doing anything else. I've been obsessed with the markets since I was little and worked on wall street and london for quite a few years, but more as a risk manager. I have been trained to be conservative, and sometimes I need to take chances. This is what I'm learning to do now.
It'll take some time but I know I can make it happen.
For folks who can't watch the market all day, I've found a generous use of stop orders to be the best tool. As I review my watch list in the evening, if a stock is nearing a pivot point, I'll enter a stop buy order for the pivot point. I'll let price alone, based on a predetermined point make the buy decision. The next evening I'll review charts and account again to see if the buy order was filled. If it was filled, I'll set my sell stop order. If the volume on the break-out was sub-par, I'll set a very tight stop. Typically that stop price will be at the pivot point or the low in the trading range for the day, depending on the overall price action. If it was a particularly bad break out, I'll just enter a sell at market order. If the volume was good and all the paremeters are in place for a successful breakout, I'll still set the sell stop order but I'll give the stock a little more room to run. I used to set the stop order at 7% below the pivot point but I've found a stock rarely breaks out, dives 7% below the pivot point and then fully recovers to be a profitable trade. My best trades always seem to be the ones the explosively blow through the pivot and never look back. Stan Weinstein's book, "Secrets for Profiting in Bull and Bear Markets" has great information on how to manage your stop orders.
By the way, I'll also use buy stop order to "ladder" my buys (buy an add'l 30% of the position on a 2% increase and another 20% position on on another 2% increase). Every weekend I review each position and decide how much I'd let the stock decline before I'd want to be out of it and set my stop at that price. If/when the market turns against me, my portfolio automatically liquidates and I get moved to cash automatically without trying to make a decision "in the moment".
I'm having the same issue.. appreciate the great advice above.My post-trade analysis indicates that I'm consistently late, because I'm unsure about handling the vol at the BO.
Specifically: How do you handle the first hour of trading? Sometimes I'll see a stock run up like mad at the open or a bit after the open, and as the vol is not available during the first half hour, I'll usually wait (by which time the stock is too high). Some of the leaders have shown iffy vol on BO (KORS 1/28), which has added to my doubts. How can I improve upon this?
Also, if the vol is about 300%-500% about half an hour after the open, do you get in then? Or do you wait until noon or post-lunch to get a better feel for the volume and take the risk that the stock has gotten away by then?
Really appreciate the help,SM
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