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MaoXian -- Trading for Dummies -12

Superconductor Technologies, 30-minute Chart
Questions:
1) Why would you be paying attention to this stock on Friday, November 14?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock on Friday, November 14?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?
Answers:
1) Because it was unusually active, and very volatile.
2) Up. You’d be looking long.
3) Long at 6.02 on a buy stop above the 11:30 down bar.
4) Initial Protective Stop: 5.90. (max. 1.99%)
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could sell half, carry half, or just close it all at once.
SCON was a straightforward long play. 4000 shares was a decent size to buy given the initial risk of around 2%. The stock closed at $6.41 for a gain of 6.48% from entry… reward to risk at better than 3:1.
Everybody knows the four cardinal rules of trading, but so few people follow them:
Trade with the trend
Cut losses short
Let profits run
Manage risk
Intraday sentiment started the day flattish to down then broke quite hard in the afternoon with a burst of selling. This helped the PRSF position out but was detrimental to the SCON long.

MaoXian -- Trading for Dummies -11

Novell, 30-minute Chart
Questions:
1) Why would you be paying attention to this stock on Wednesday, November 12?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock on Wednesday, November 12?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?
Answers:
1) Because it was unusually active, and very volatile.
2) Up. You’d be looking long.
3) Long at 8.35 on a buy stop above the 11:30 down bar.
4) Initial Protective Stop: 8.22. (max. 1.56%)
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could sell half, carry half, or just close it all at once.
……….
NOVL was unusually active (it did 29,000+ trades on the day) and gave a very nice, narrow range down bar to execute against, with initial risk at only 1.56%. 4000 shares was a nice drop-in-an-ocean-of-liquidity position size. The stock closed at $8.97 giving a gain of 7.43% from entry for a reward to risk ratio of around 4.75 : 1.
The trouble that some folks have is that they’re always thinking in terms of “2B tops” and worried about getting trapped or picked off, which makes them unable to enter strongly trending markets. Catching big trending days (like yesterday) is where you make the big money. Trying to scalp 2 points a day by gaming the little traps in the S&P futures is going to make you old, tired, and cynical really fast.
The broad market moved up strongly as my intraday sentiment chart indicates (see below), so I was looking long obviously. Anyone who was looking short hasn’t learned the lesson Jim Croce taught when he wrote the popular song, You Don’t Mess Around With The Trend:
‘You don’t tug on Superman’s cape
You don’t spit into the wend
You don’t pull the mask off the old Lone Ranger
And you don’t mess around with the trend’

MaoXian -- Trading for Dummies -10

Akamai Technologies, 30-minute Chart
Questions:
1) Why would you be paying attention to this stock on Thursday, October 30?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock on Thursday, October 30?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?
Answers:
1) Because it was unusually active, and very volatile.
2) Up. You’d be looking long.
3) Long at 7.76 on a buy stop above the 11:00 inside bar.
4) Initial Protective Stop: 7.58. (max. 2.32%)
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could sell half, carry half, or just close it all at once.
AKAM was extremely active doing about 38,000 trades on the day, so you couldn’t miss it. The stock closed at $8.03 giving a gain of about 3.5% from entry. The initial risk of 2.32% would give a fairly unsatisfactory reward to risk ratio of 1.5 : 1, but AKAM was flying so fast it would have been prudent to move the initial stop up to $7.69 very quickly, which would have resulted in a much sweeter ratio (4:1).
Remember that once you know what to watch for, the real trick is learning good money management, and most people get bogged down looking for some “system” when they should really be thinking about how to manage risk.
Screen capture of my intraday Watch List:

MaoXian -- Trading for Dummies -9

Finisar, 30-minute Chart
Questions:
1) Why would you be paying attention to this stock on Wednesday, September 17?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock on Wednesday, September 17?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?
Answers:
1) Because it was unusually active, and very volatile.
2) Up. You’d be looking long.
3) Long at 2.46 on a buy stop above the 11:30 bar.
4) Initial Protective Stop: 2.38. (max 3.25%)
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could sell half, carry half, or just close it all at once.

MaoXian -- Trading for Dummies -8

Apollo Group, 30-minute Chart
Questions:
1) Why would you be paying attention to this stock on Thursday, August 28?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock on Thursday, August 28?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?
Answers:
1) Because it was unusually active, and very volatile … (APOL became a top unusual suspect on 8/27.)
2) Up. You’d be looking long.
3) Long at 62.09 on a buy stop above the 11:00 bar.
4) Tighter: 61.86. Looser: 61.81.
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could sell half, carry half, or just close it all at once.
Cat:
Trading for Dummies Time: 6:00 pm (utc+8) Comments (0)

MaoXian -- Trading for Dummies -7

Flamel Technologies, 30-minute Chart
Questions:
1) Why would you be paying attention to this stock on Wednesday, August 27?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock on Wednesday, August 27?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?
Answers:
1) Because it was unusually active, and very volatile.
2) Up. You’d be looking long.
3) Long at 26.81 on a buy stop above the 11:00 bar.
4) Tighter: 26.62. Looser: 26.43.
5) Right after you enter the position or lunchtime, whichever comes first.
6) Stopped out on 3:00 bar.