Bad entries/exits?

[[email protected] 4]

I was wondering if you could take a quick peek at the below chart and let me know your thoughts on my trade (described below).

 

 

OK, so here's the deal. I entered the trade by buying 200 shares (of IART) @ $61.92 @ 10:21:35 AM (EST) - that's represented by the first blue arrow (the upward pointing one).

 

Then I exited in 3 steps, represented by the next 3 downward pointing arrows:

 

1. I sold 100 shares @ $62.08 @ 10:23:07 AM

 

2. I sold 50 shares @ 62.35 @ 10:29:43 AM

 

3. I sold the last 50 shares @ 62.55 @ 10:31:43 AM

 

A little about the charts: The chart on top is a 1-minute chart, the one on bottom is a 5-minute chart. The blue line is the 9EMA, the red line is the 20EMA, the cyan line is the VWAP, the 2 horizontal yellow lines/levels are the opening 30-minute high and low for the day.

 

Were these bad entries/exits? Is this any kind of specific strategy/pattern (just a constant slow move up)? What things did I do wrong (besides get in too late, and get out too early)? What did I do right (if anything)?

 

Thanks!

[Dima 10]

It looks like a pretty decent trend trade, though one that could have gone much better for  you. Entry looks fine, so good job, but I think that by taking half of your profit so soon, you took away most of your profit potential for only a $16 reward. If you had held onto that until $62.50, you'd have had a $100 trade. In general, for trend trades, if I don't have a specific target in mind, I'll try to force myself not to take profit until a 5-min candle that loses the moving average it was trending or makes a new 5-min low; either thing happening tends to signal that selling pressure is starting to pick up.

 

It's also worth paying attention to how much you're risking in dollars on a trade. If your stop loss would have seen you lose $50, only looking to make $60 on a trade is not a good exercise of risk vs. reward; you'll need those $100 winners to offset the $50 losers that just as likely to happen and still have you end profitable. (That way, even if you're only 50-50 in picking the right moves, you'll still end up profitable, though not taking profits early is easier said than done.)

[Robbie Williams 12]

I agree with Dima. I find it hard to find a 2:1 profit ratio. Say your stop loss is 20 cents and you buy 100 shares. That means that you'll lose $20 if you get stopped out. You'd need your profit target then to be at least 40 cents to make $40 and a 2:1 ratio. So if you take half your shares off the table as soon as the stock has moved 20 cents you haven't allowed a 2:1 profit ratio to occur.

 

I find it difficult to wait until a technical confirmation to take profit and am conscious lying trying to take profit once that profit ratio is reached as I found out by journalling my trades over a 3 month period. I found that because I would take a third or half of my shares off the table early, my losses turned out to be as large as my winners.

[Carlos M. 232]

I think Robbie and Dima nailed it.

 

This is a great entry and there was no sign of the stock being weak and the bottom chart shows that. On the 1 min chart just regular pull backs but none that broke passed the moving average, so you could've have held it. But overall great trade, key is a good entry once you have it, it allows you to survive normal pull backs on a trend trade like this one.

 

Carlos

[Robert H 455]

I'm going to play devil's advocate here.

 

Considering that it had not tested the 9 EMA on 5-minute chart, the best entry would have been a pullback on the 1-min chart. One of the prior red candles where it touched or closed below the 9 EMA. This way you aren't chasing the trend and exposing yourself to a normal pullback that puts you in the red immediately.

 

Finding a good entry on a trend trade is tough because the risk/reward is difficult to define without a clear target and stop loss. I agree with Dima here. What was your stop loss before going into the trade?

 

The stock continued to make higher-highs and high-lows and had all green candles on the 5-minute chart. You could have held the last bit longer. Either to break-even, a new 5-min low, or a test of the 9 EMA on 5-minute chart.

 

Normally my trend trades start out as an ORB/ABCD, and I let the last bit of shares run until it tests my break-even. If I see a stock trending, I don't want to enter after the fact because the slow grind for pennies isn't worth the risk in my opinion.

 

It was a good trade nonetheless! Cheers.

[[email protected] 4]

Thank you all for taking the time to check out my post, and leave me all the feedback. I appreciate it!