Interesting video related to Trading

At 3:40 he explains exactly how I attempt to approach the markets. Even if you only make money on half of the trades you take, as long as your using proper risk management to let your winners run and to cut your losers fast, then probability will be on your side. If you make 100 trades and every time you lose you only lose $10 and every time you win you make $20, even if you only have a 50% winning ratio, then the chances of you losing money at the end are 1 in 2300! Also funny to see how hesitant the people in the video are to take on any risk at all lol trading is definitely not for everyone 

Running a scan and finding a worthy setup

Night Scan

Finviz.com is what I use for scanning stocks for the next day. Their service is free and you can even create an account to save your scanner filters so you don't have to manually change them every time. I use 6 filters, which you can see in yellow in the pic below. But the two main things I'm looking at are circled in red and those are:

Stocks making a new 52 week-high
-These are of interest because the stocks are hitting the highest price they've hit all year. Meaning that no one who bought this in the past 365 days, and is still holding it, is down money on it. So one of two things will most likely happen here. The stock is guna  keep going higher because new buyers are guna step in and people who already own shares wont have an incentive to sell since they're already in the green. Or there is guna be profit taking causing a sell off and price is guna fade. Simple supply and demand rules. As a trader, I'm not trying to predict exactly which way price is headed. My job is to make a plan for all possible scenarios that could take place and then react to price action.

Stocks with relative volume over 1
-Relative volume over 1 means that they are trading an amount of shares that is at least as much as their average daily volume. These are stocks that are "in play" and that have a more than the usual amount of transactions taking place. The more volume usually means the more volatile a stock will be, giving you better opportunities for a trade.

After running the above scan on Wednesday night 10/28, I came up with a few results. The ticker $NHTC caught my attention the most because of its low float of 7 million shares (meaning a low amount of shares available for trading. Lower float = takes less volume to move its price) and because of its long term resistance at $45, which you can see in the daily chart below.

After liking the daily chart, I pulled up the intraday chart from Wednesday. $45 acted as resistance on this time frame as well, tapping it twice throughout the day, but never breaking through it. Its also important to note that on Wednesday the stock opened at around $38 and even after it ran all the way to $45 and faded off that point a little bit, it still had a pretty strong close at around $44 right at the VWAP. So knowing that it still had strength after  bouncing off that key level of resistance twice made me think that maybe there isn't going be a sell off and that the stock could def go higher. So I went into the next day a little bullish biased. but still prepared to short the stock off $45 if it happens to be that it cant break through it.

Below is the 5 minute intraday chart for the whole week. After scouting this stock on wednesday night, it setup perfectly on thursday morning. Right at the open you can see the stock is showing strength and blows past that $45 key level of resistance on the first few candles. Once it consolidates for a few minutes and $45 turned into support, it gave me a great low-risk entry opportunity. 

And then finally below is the daily chart after it made the move I was looking for. $NHTC was a perfect example of a clean setup right off the scan. These kind of plays have been the only ones I really feel comfortable trading since all the August/September volatility that happened, so its important I write about them to fully understand how they develop and hopefully become more discipline to sticking strictly to them. 

8/17-8/21 Week Recap

Monday 8/17: Once $AVEO failed to hold premarket levels above 2.50 I started eyeing it for a short. A perfect entry would have been in the 2.40s-2.50s with a stop in the .60s, but I hesitated and got filled at 2.38. Covered all at 2.10 and then another attempt once it made a new LOD, which got stopped  out right away. I should have exited in partials and just let 1/2 run with a stop at breakeven. 

Tuesday 8/18: When $SUNE was showing weakness around $15 I got in short at 14.93 with a hard stop at 15.05. It popped up and stopped me out by a cent which pissed me off, but thats the price you gota pay for setting hard stops. Once I get more robotic and able to cut losses on my own Ill stop using them, but for now, I have let way too many losses get bigger than they should have been. I got short right back in at 14.95 once 15.06 confirmed as resistance. Covered all shares at 14.75. After the washout around 10:45am it bounce up and now 14.50s were acting as resistance, once again trying to use whole and half dollar marks as guides. Shorted 200 shrs at 14.48 and then added 200 more shrs at 14.44. I covered in partials here at 14.19 and 14.12.

 

$OMER was just a pissed poor executed trade. I was looking for the break over the HOD, which ended up coming an hr later. This stock had a wide range so it blew past my .20 cent stop I usually use. I didnt even have time to set the order, and then I accidentally added instead of selling and ended up with 400 shrs that I got rid of quickly in a panic. Should have only thrown 100 shrs at a stock thats moving around so much and should have been looking to buy near support in the 23.30s. I need to work on my longs. I've def feel more comfortable and have more success shorting. 

Wednesday 8/19: $CRBP was a big gapper that just went straight down after the morning move. Once it crossed the VWAP I got in short with 400 shrs at 3.35. I accidentally double clicked the button and sent two orders so I got filled 800 shrs short at 3.35. Covered half at 3.19 and then had too tight of a stop on the rest and got out at 3.20.

Thursday 8/20: $CLTX. My first entry on this was a result of having no patience. I should have waited for the pop towards 3.20s and used 3.40 as a stop. My second entry wasn't bad, but for some reason I put in a stop order only .05 cents behind my entry which caused me to be stopped out almost immediately. Finally got it right on the third try and got .75 cents /share profit. I was patient and waited for a exit signal which came around 1pm with a big volume spike and lots of buyers around that level so I covered 300 shrs at 2.20. By 2pm the stock was already reversing (not on the chart) and by 3pm it was already above 3.50 and headed towards 4 so turns out I nailed the exit on this one. 

Friday 8/21: I'm embarrassed even putting this up. With the markets tanking and having the worst day in 4 years I should have known to just take off. I only had one profitable trade out of five and I think they were all horrible. The stock wasnt even down trending, notice how the first low at 4.16 was never broken, and even after 11am it stayed above that level so I should have stayed away. I need to stick to what I'm familiar with and quit wasting time, money, and effort trying to force trades.   

8/7/15

I have the greatest luck. My first day of vacation with the family back home in Destin and we get one of these "easy layups" I've been waiting for. These are the kind of plays that build small accounts (or destroy them if caught on the wrong side). But of course I didnt have my computer and couldnt get in on any of the action. I checked stockmarketwatch.com on my phone this morning just to see what the gappers looked like and sure enough $AQXP was the first ticker on there. By 10:30am the stock was already up over 100% and by 12pm it was up over 500%!!! It opened at $2.45 and hit a high of $11.68. Crazy move. Like I've mentioned before in previous posts, if the stock is still trending up by 11am, then theres a good chance it will continue. In this case, it continued for another 400%. This is what a low float stock, combined with a news catalyst, combined with a short squeeze can do. I'm pissed as hell I missed this, but all I can do now is enjoy my vacay with the family and get back to the grind once I go back home. 

(pardon the shitty intraday chart lol but no access to my DAS platform)

8/4/15

$LXRX was up on news yesterday and the stock seemed very strong all day. Today not so much. When the morning move failed to break above yesterday highs of 13.80s I started eyeing it for a short. The plan was to wait for the EMA to cross down over the VWAP and look for lower highs. 13.35 was a key point of interest because it was support for the morning move, so I knew that if that couldn't hold then there was potential for bigger down move. Once it broke below it I entered a small position of 250 shares at 13.30 and set a hard stop at 13.40. I covered at 13.07 for a .23 profit. I should have covered half and let the rest run, but like I said I had a small position so I didnt want to waste commission. Either way I need to focus on trading well and not on profits. When I look at my PnL I tend to get a little anxious and usually get out of my position too early for fear of having it turn against me.

Some important things I need to keep in mind moving foward:

 -Pay attention to where stock is trading at 10-11am, this is usually a good indication of which direction it will continue the rest of the day.
-Pay attention to where the VWAP is at. Be more long biased if trading above/more short biased if trading below.
-Setting hard stops and moving them up as I scale out.
-Pay attention to whether its "day 1" of the move or not, and dont short if it is.

7/23/15

$ITEK is a perfect example of what I blogged about yesterday. This stock had a HUGE move today after the 9EMA(blue line) crosssed over the VWAP(red line). So far, its up pretty much 100% since the crossover. I'm still not back to trading, but if I had been at my desk this morning I would have considered a long position over the premarket high of 8.84 and seeing the EMA and VWAP crossover would have been a good confirmation of the move. 

7/22/15

Recently I've been adding the 9-day EMA (exponential moving average) study to my charts, which is the blue line, and using it in combination with the VWAP (volume weighted average price), which is the red line. I've noticed that in a lot of charts there is usually a strong move up after the 9EMA crosses over the VWAP. However, this does not mean that I should rely on a single indicator to determine an entry. I will use this along with other technical info in conjunction to give me the best chance at a successful trade. 

This stock $EXEL had lighter volume today, I was actually first watching it to short near 6, but one of the rules I try to follow is dont short a stock thats still grinding up above VWAP after 11 am and this is a good example of why. I was too short biased and failed to see the opp for a long position here, first when it dipped near 5.85 and then when it based around 6 again.