Over the years you've been posting, you have made mention of the clock and its importance in your trading. Your attention to it has intrigued me and I have tried ever since coming on board here to put it in the same context as you do. It's hard to do because we aren't actually seeing your trades in real time. Would you explore the importance of the clock as it relates to movement and momentum? It clearly has patterns you've seen and represents a part of your edge. I'm curious if i'm seeing it in its proper light. Thanks much.
Forgot to add this... when you have a stock such as VECO on your watchlist, do you use some sort of alert to let you know it is a mover? If so, what are the parameters that trigger the alert, if you don't mind sharing?
-Blue Collar Trader
I trade using only a 5 minute chart. I have noticed that if a stock is trending strongly and then stalls a makes a pullback for instance, its better to take the long profits, short the pullback and then wait for a new 5 minute candle to re enter a long postion and set a stop just under the previous candle low. Timing is crucial , I watch the clock closely and every situation is different but using this technique has made me shedloads of money over the years. Risk is very low because if it turns and hits my stops then I’m out only a couple of pennies. If it works then I have a huge jump on the traders who wait. I might add quickly to my position since it is already a winning trade.
VXX this morning provided a textbook example.
Currently it is a sellers market (VXX moves opposite the market) so keep in mind that drives all my decisions.
Previously I sold the VXX long using this same technique at the 10:30 am candle, taking profits and am short this red candle which feels to me like a fake out. I’ll take it anyway but keeping in mind that the big money at the moment is VXX long.
So I wait until the red candle 5 minutes are finishing, cover the short and go long. It immediately starts rising again as the fake out sellers have no power against the buyers of VXX and the market sentiments in general.
Sell it after $1 run, taking profits and do it all over again.
At the same time I traded FAZ and earlier GG , EGO and they all did the same movements. The 10:30 candle on GG EGO were textbook examples as well.
For my alerts I only set it to show new highs or lows nothing more.
First chart is VXX entry,second chart is exit.
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5 comments:
i used this exact method, which i learned from you, today with V. it broke highs around 10:30, then made an ugly red candle at 10:45. i bought V as soon as the new 5 minute candle started (10:50) with a stop below the previous candle, and it worked out great. i think patience is the key here. just let the bar unfold. great question BCT.
Scott many thanks for the insight. Watching the clock has been very helpful. I also notice that many time the initial trust of a 5 min. candle seems to wane and drift the opposite direction until it is close to closing when it 'magically' regains its primary direction and returns to those prices or even further. I have closed many a trade too early mid candle when I allow the fear or greed of the price action get to me. Peace
whats the difference (GG) between the 1030 candles and the 1150,1155,12,and 1205 candles? why no continuation after
those?
Lesson of the day: Re-set your PC clock every day before trading. Today my pc clock was off by 15 seconds - and I think it had major repercussions.
@ Matthew - I have noticed the exact same thing.
@FNG: Awesome - very informative post Scott. Silly perfect execution. You are my hero. Great stuff.
A question for you - I am having a tough time with stocks that fizzle - I get the direction right and see positive movement for the first few minutes, only to see the candle retrace and stop me out. I talk myself into being patient only to get burned. My question is - do you find this happening in your trades? If not - how do you avoid it? What do you try to you watch for intra-candle? Speed/strength of departure?
I have noticed that I don't have much of a problem with big fast movers - they move immediately away and stay away from my entry - if I have a good entry; in fact it seems easy. But - getting the initial direction, and then talking myself into letting it go as it fizzles and comes back, got me hammered today.
One more question if you don't mind - are the majority of your entries on or right around the 5 minute candle change?
Thanks!
http://daytradingfool.blogspot.com/
DTF- Many things can be ascertained by how the candles move and also when they move. Immediately after a new 5 minute candle if the move is strong I think that there is better momentum than if it started lazy. If it is slow and steady it gives you a clue to be patient. Keep in mind that the markets can do anything at any time so all we are trying to do is play the direction most probable. If we get stopped, we get stopped. Maybe trade it the other direction.
Every trade is different, there is no hard and fast rule on getting in just before or just after a new candle starts. It's an art and not a science you know. After a couple of years you will develop excellent ticker sense..Don't try and run before you can walk. There is always an over abundance of opportunities.
K55-GG had at least one more good opportunity in the reverse direction and then it just fizzled out a bit.
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