Seven R Day

Yesterday I traded one Gap & Go and two Gap & Traps.

The Gap & Go was ECA. When I decided to buy, (yes, I go long occasionally), it had already made most of a 1 ATR move, but since their earnings announcement was coming up, I decided to "buy the rumor and sell the news". My stop-loss got hit for a 1R loss.

Lesson: "buy the rumor, sell the news" is a rule-of-thumb. It might have made sense if the stock hadn't already made almost a full ATR move for the day, but in retrospect, I need to not try to trade when a full ATR has already been made for the day.

I shorted DD on a Gap & Trap. The setup was good but not great. I got jumpy and moved my stops tighter yet again, and got stopped out for a .37R gain. In retrospect, the jumpiness kept me from incurring a 1R loss, but I have got to be more disciplined about how and when I move my stops.

I shorted AXP as well and made 2.2R. This was my most disciplined trade. I waited until I had a 1R profit in the move, then cancelled my stop-loss and put in a 1/2R trailing stop. I was pleased with my execution on this trade. I picked the setup well, set my stop-loss correctly, and took profits in a disciplined manner.

All told, it was 1.5R day. Since my initial short-term goal is 6R per month, I feel pretty good about that.

Today I decided to try a Parabolic SAR trade. I was looking for one that had the stop-loss set really close to the entry, just so that I could watch how the trade works. I shorted KG at 10.26 with a Stop-Loss indicated at 11.10. This is a trend-following trade, so I'll see how it goes and report.

I shorted PTV on a Gap & Trap and hit my trailing stop for a 1R gain. I shorted GENZ and got jumpy, (again) and got my trailing stop hit for a .67 gain. I got upset with myself and said, "don't do that anymore!" So GENZ still had a decent setup and I jumped in again. I was wrong this time and hit my Stop-Loss for a 1R loss, but I felt better about it because it was a DISCIPLINED trade this time.

The big winner of the day was AAPL. I watched it form a nice continuation flag pattern, was patient as the second bar of the flag confirmed, and entered a short trade just like the book says. It took a while to move in my direction, but I set my stop well, and though the price approached my stop, it never it hit. Once it started in my direction, though, it went like a rocket. I canceled my stop-loss and put in a trailing stop once I had a 1R profit, but the thing just kept going. I didn't get stopped out until I had a 6.4R gain.

I know those don't happen often, but it sure is fun when they do. It's a 7R day!