Trinity

This entry has 3 observations.

1) Morning haze.

Waking up and turning on your trade monitor at 7am in the morning can be hazardous. Impaired vision and sitting in darkness can really affect how you see things. This morning, i totally misread an article on Marketwatch only to gasp at myself after i returned from brushing my teeth and turning on the lights.

Lesson: Turn it on sure, but MAKE NO DICISIONS until you’re fully awake with the lights on. Or 15 minutes after you’ve ‘started your engine’.

2) Pyramiding blues

Pyramiding blues again. USB is going in my favour. Great! However, i’m still having trouble trying to figure out a way to pyramid the position.

It closed the 3/3 at about 12.50ish in my favour, but opened 4/3 gapping upward at 13.37 past my opening price of 13.15. So, if i add another position now (11.30), my stop would still be above my initial position, turning my total risk into an unreasonable level.
Moving my stop closer doesn’t really seem like a smart technical move either, as i won’t be making a decision based on technical analysis, but purely from my own position’s perspective.

(on a separate and brighter note, as i write this, the SPX is up close to 5%, but both the stocks i was eyeing are down; USB and JPM)

3) Morphing trades

As per the previous posts, i’m in a short position with USB, entered at 13.15. Looking at this chart, i noticed that i feel like morphing this trade into another one.

CAUTION

Look at the descending triangle that seems to be forming on the extreme right. I’m wondering if it’ll breakout

on the downside.

However, regardless whether it does or not, my original trade objective does not encompass this. Now, i’m a believer that trading is like a sport, where great skill honed through repeated practice lets you react and change your play on a dime. So, when i believe this is possible, the question becomes, am i that skilled a sportsman yet?

It’s still too soon. Only after 1 year of consistent gains will i let myself do this.

USB - feelings

As i wrote about Pyramiding, i notice the feeling i have that i really want to add to this position because it's moving in my favor.

Is this the sign of greed? or instinct that's telling me to move in for the kill. If i recall right, George Soros once said that if you're right, you can never be right enough.

I won't be adding to this position today however. Looking at the risk levels and where my new stop would be, it would create a total risk that's too high.

Pyramiding beta 1.1

One thing i've yet to perfect is the art of pyramiding my position. Case in point, my USB position that's still currently on. My initial risk was about 75 cents, not enough to make a full dollar R, but doubling up would mean risking more than my initial R.

Because of this, i want to seriously consider pyramiding positions like this, (and it can be used for other profitable trades as well).

One method i'm considering is this. Being in this time zone, i can catch the final hour of trade easily. Perhaps if i see that towards the close, it will close below the previous day's low (because i'm short), i can add a position.

Conditions:
- the candle being formed is in my favor
- the close is in my favor
- the new total risk levels shouldn't exceed my initial R

But, how do you determine the 2nd entry price?... or should i just issue a market order?

Missing a piece

Only after reading the news after the market closed did i realize that i overlooked a significant fact. After gazing so strongly at the November lows, noting that it's also an 11 year low, i totally missed the simple 'round number'.

The SPX closed right at the brim of the 700 mark. It briefly pierced it, but nevertheless, the line held. Only time will tell if this mark will remain a significant support.

I'm in a position with USB, shorted at 13.15, with a target price of around 10.

Chasing prices

Rather frequently, this happens to me.

I spy a trade that i want to get in on. I'm convinced that i definitely want to be in it, but the prices are slightly off my 'target' entry. What i do is i put down a position and wait.

On a day like this however, where a significant event is occurring (plumbing new lows), i'm hesitating to enter at a lower price, but my conscience tells me i'm a little fool cause i'm being penny wise pound foolish.

Breakouts

I'm looking at the S&P chart, both daily and weekly and this is what i see.















This is the daily action, and from the looks of it, it'll crack the november lows, bringing the close (in 30 minutes) to about 11 year lows.

Look at the oversold RSI. Part of me says that shorting something in this market might not be too wise because of a bounceback. However, i believe it's negated due to the breaking of the new lows. As mentioned in the previous post, the decline should continue from today for the next couple of days, to eventually rally to test the new resistance created after this.

March begins

S&P seems to have broken the november lows last week. Europe and Asia are deep in the red today before the market opens. My projection is for it to extend losses for at least a couple of days before rallying back to the new resistance.

In line with this, there's a good trade setup for USB. Currently trading at 14.31, it's sitting right on a resistance line, as well as the 21dEMA. With the negative backdrop in the broader market, led by bad financial news, i'm betting on buyer resolve to fade and for the recent lows around 10 to be retested.