Getting 'in the zone' before you start trading really does help you prepare for the market open. My winning trades today consisted of trades on Bank of America and Exxon. Let's go through these.
Trade 1 - Bank of America
The entry on the chart reflects the opening 2 minute candle. I was looking pre market at this trade because I had noticed that on close of the market of the previous day there had been a large number of candles that were trading within a relatively tight range.
My rules tell me that I can't take profits until I hit 5R and I am not to move my stop loss at this point. You can see that at 5R I took 50% profits, which was actually close to the highest price reached for the day. In line with my rules, after taking profits I am to put my stop loss to break even. I ultimately got stopped out at this location.
You could argue that I could have just taken all of the profits when I took profits but my trading style is to collect on the way up and allow the opportunity to catch a strong trend. I still ended with 2.6R on this trade. I am now at the stage where I don't feel emotion when the price pulls back and stops me out and this is showing discipline.
Trade 2 - Exxon
The second trade of the day was a trade on Exxon using my Fab 4 strategy.
For my Fab 4 strategy, when the market is relatively tight at market close the day before I draw a box around 4 data points:
high of the last 1 hour of previous day trading
low of the last 1 hour of previous day trading
20 period simple moving average (green line)
200 period simple moving average (red line)
What I am looking for on market open is strength in price that clears the high or low of the fab 4 box. Based on market structure I am looking for a bias. In this case I did have a bullish bias and I was looking to enter a trade where an elephant bar forms outside of the fab 4 box and my trade plan is to enter on close of that candle.
I entered just after close of the opening candle and placed my stop loss below the low of that candle. With regards to stop loss, under my rules I am not allowed to move it until either I take profits or I am stopped out. When the trade goes in your direction and you start making profits, it is important that you resist the urge to move your stop loss to lock in a small profit or to make the trade have a break even worst case scenario. In this trade, you can see from the chart if I had moved my stop loss up to break even, when price pulled back I would have been stopped out. Again, discipline is key.
Price continued to move up and reached 5R. In the last trade I had taken 50% of the position off the table. In this trade, because I liked the fact that the price action moved up in a much smoother manner than the Bank of America trade I decided to only take 33% of my position off the table.
The market at time of writing this has closed and I have held my remaining position. Providing there is not a crazy move down on market open on Monday, my worst case scenario is that I will be stopped out. I will update the final profit on this position in future days.
My trading results for the day reflect the Bank of America 50% profit and stop out along with the partial profits from taking 33% of my position off the table. I am not going to be retiring by having these value wins but I appreciate this is a journey and I am planning to just go through the process and allow my trade sizes to increase in line with my rules for risk per trade as my account value rises.
Trade Clearly!
Comentarios