Having Your CAKE And Eating It

First a two-biter. BG was a bit of a wild ride, dropping precipitously before climbing all the way back and then some. The first trade was an exit on target. When it set up for another go, complete with confirming momentum, there was no reason not to have another go, and indeed the second bite (complete with another obvious exit target) proved even more profitable than the first.

Sure, there was plenty more on the table, but as I’ve written numerous times, my strategy is all about taking the easy middle bit than trying to pick tops and bottoms. Two simple, low-risk trades produced a four-figure profit between them. I’ll take that every day over the stress of trying to run a trade to the very extreme, thanks.

Next up, the Cheesecake Factory. I don’t mind admitting that for the longest time I believed that place was a made-up establishment existing only in the world of The Big Bang Theory! Turns out it’s real, and tradeable, too.

I also don’t mind admitting that I was a little more wary of this trade going in because the setup was not perfect. There was a good easy target though, and I knew I could get out with a 2-3 cent loss maximum, so it was worth the risk. Well worth it, as it turns out.

$67 / Minute Daytrading Nasdaq

Trades – Tuesday 19th February 2019

After the long weekend with the markets closed on Monday, here was a nice trade to get the week rolling. Textbook entry, clear enough exit, and $1.35 banked per share, for a nice quick profit of $1,350 trading just 1000 shares. Obviously that could easily be doubled by sizing up. That works out about $67 per minute spent in the trade, which whilst not the most profitable trade posted on this blog, is nonetheless a nice bonus after the day off.

Here’s something different — a late session trade. After missing a few days last week with sickness, and with the holiday on Monday, I felt guilty at not having been active enough recently. So I came back after lunch and watched the end of the session, which meant I was around to catch this little rally on MU (core) for a few hundred dollars extra.

Trade, Thursday 14th Feb 2019

Just time to post this quickie — a ten minute trade straight off the core list.

Not much to say. Standard setup, good clear entry, obvious price target. Five hundred in the bank. Perfect kind of trade for when you’re still feeling a bit groggy from the flu. Or anytime, really. Who doesn’t like easy ones?

Trades, Wednesday 13th Feb 2019

I’ve been unwell since the end of last week, hence not having posted any trades here for a few days — nothing to post. Back in the saddle now, so here are a couple from Wednesday. Nice easy ones that don’t require thinking. I can’t be taxing my flu-addled brain too hard..

Five minute in and out on TEVA. Clear signal + obvious target = no brainer. And I have no brain to speak of at the moment, so this worked for me. $330 profit pays for some hot drinks and paracetamol.

Another five minute trade, only this one in the opposite direction. Dropped quickly, and started to recover even more quickly, so again, it did not require much thought to get out at the first obvious target. Almost four hundred dollars profit makes me feel better about getting out of my sick bed.

In all seriousness, I’m well over the worst. I would not have risked trading if my head wasn’t up to it, it’s just not worth it. But nice quick simple trades like these, whilst not massive winners in dollar terms, are ideal when you just want to keep things ticking over.

Trades, Thursday 7th Feb 2019

Yesterday I posted a trade worth $100/minute. Today’s first trade beats that handsomely. Here’s what happened on GRUB:

That’s well over four grand in well under ten minutes. As I said yesterday, trades like that don’t come along every day. When they do happen, we need to treat them like any other trade. A glance at the scale shows that this stock was extremely volatile prior to my entry, trading relatively massive range already. So all the signs were there that this could be a big winner (it had already travelled more than $5).

It’s easy to be intimidated by that kind of volatility, but as long as we remember that the same rules apply whether the stock has moved $5 or 50 cents, we shouldn’t go too far wrong. Tight money management keeps us from huge losses. Had this not worked right away, I would have been out in a heartbeat. Given the speed it moved, that might have meant taking a few cents loss in the time my exit order went through, but that’s an acceptable risk given the potential reward.

The other trade I’m posting for today was much more ‘normal’. This was BBT:

Much more sedate, the sort of thing we do see every day on the NASDAQ.

Trades, Wednesday 6th Feb 2019

Another day, another two-biter. Oh, yeah, yesterday was a three-biter. Well the principle is the same — no reason not to take a second entry when all the stars align and the signal is good. Which is what happened on NYT:

Unlike yesterday, these were both winners. The second signal occured on massive volume, providing ample confirmation. The exit was obvious to anyone who trades my strategy. If you are into trading double tops and the like, you could have had a nice short after lunch, too. Personally I was long gone by then.

Despite hitting a four-figure profit, that wasn’t my most profitable trade for the day in terms of dollars-per-unit-of-time. That accolade went to MGNX. The scale is a bit off on this chart, so it doesn’t look like much, but this netted well over $600 in under five minutes. So yeah, more than $100/minute. I stress that is not the sort of thing that happens every day. Which is why it made it into to day’s blog post!

Trades, Tuesday 5th Feb 2019

Sometimes it takes a few bites at the cherry to get what you’re after. But there’s a fine line between flogging a dead horse and taking legitimate trades. If a trade does not work out but the stock goes on to present a second signal, it’s perfectly valid to take that second entry. And if that doesn’t work out but a third comes along, there’s no reason not to take that as well. Such was the case on QCOM on Tuesday:

If this was a stock that I did not know well, I probably would have let it go after the second failed signal. As it is, I’ve been trading QCOM on and off for the best part of 20 years. I’m not saying I have a feeling about this stock, because that’s mumbo-jumbo and not something to base trading decisions on. But I do have two decades experience of seeing how it moves, which gives me the confidence to keep taking the signals it throws up when they come along.

Of course, the key to being able to keep taking those signals is to avoid blowing up our account by taking a loss on the failed ones. Getting out at break even at worst means we can take those signals all day long until a winner comes along. Ideally we want to cover our commissins, as was the case with the first one. But sometimes slippage means we lose a little, as happened on the second entry. I’ve shown it as break even on the chart because is was a close as makes no difference. 1 lost cent is a small price to pay for the 49 cent win that came next. So although it took some work, QCOM put another $460 (after commissions and that earlier loss) into my account.

Here’s a trade that went much more smoothly:

Pretty textbook stuff. And when I say textbook, I’m obviously talking about my own textbook! All the trades I post on this blog are from the setups in my book. Setups that have worked for decades, and continue to work day in day out. People sometimes ask me if I have any new strategies. Why change a winning formula? This stuff is simple and it works.

Trades, Monday 4th Feb 2019

Nice trade to start the day. ROKU was rocking, and merited taking the earlier of the two entries. Could have tried holding this to the $50 mark, but with two grand already showing and momentum weakening, my resolve weakened with it. There was a valied entry when it went through the fifty buck mark, with another five hundred dollars on the table for anyone who missed the first go. And there was a pretty good opportunity to take a short trade towards the end of the session too, with a good signal that would have led to another several hundred dollars. Anyway, $2020 profit in under an hour is a good result by anyone’s standards.

Next up, some PZZA. Very easy entry, and the exit was pretty obvious too. On any other day this would have looked like a nice trade, but next to ROKU it seems very ordinary.

Finally, your weekly reminder that I don’t post all my trades here, only those that I think are interesting for one reason or another.

Trades, Friday 1st Feb 2018

A couple of quick ones. First off, the bottom of a long move down. SNE dropped off a cliff right from the open. It can be tempting when you see a precipitous fall like this to jump in for the ride. That is almost always a bad idea though. We follow strategies for a reason. Jumping in and holding on tight is gambling. With no plan for the trade, you have no idea where to get out. So although we could look at this chart and say, “Heck, we missed a hell of a drop,” the correct reaction is to say, “Followed the strategy and walked away with almost three hundred bucks in ten minutes with negligeable risk.” That’s how we keep from blowing up our account, so we can be around for all the other lovely trades that come along.

Lovely trades like this from MU, which is currently on my core list because it keeps making nice, easy, predictable moves like this:

This was a slower trade, taking about half an hour, but as the tortoise knows only too well, slow and steady wins the race.

Trades, Thursday 31st January 2019

I briefly touched on account size in yesterday’s trades post, pointing out that trading a cheap stock can mean large profits even for a relatively small trading account. Here’s a trade at the other end of the spectrum — CHTR — a stock that was, at the time of this trade, priced well over $300.

At first sight, such a high price might make the stock seem untradeable. But one of the wonderful things about trading stocks is that we can scale our position size according to the price of the stock being traded. Typically I trade at least a thousand shares at a time. Even for me though, and even trading on margin, CHTR was a bit rich. That’s fine. I cut my position size in half, which enabled me to jump in and ride the price rise, catching almost $5 a share. Even with my half-regular-sized position, that meant a profit of $2,350 (before commission). More than two grand profit. On one trade. In well under an hour.

I could have traded even smaller, cutting my position in half again and still made more than a grand off this single trade. The beauty of higher priced stocks is that a modest percentage move in the price makes for a large dollar-value change. Bigger move / smaller position size. It all evens out, or, as was the case here, we come out ahead.

I definitely wouldn’t recommend high priced stocks to anyone getting started because, frankly, we have to have our psychology locked down tight or we aren’t going to be able to hang in there as the price whips around in whole dollar amounts. Besides, there are always plenty of trades on more modestly priced stocks to be had. Like this one on HRB:

Here we are back in twenty-buck territory. Does that mean we’re restricted to smaller profits? Not at all. Trading just 500 shares (which we could do with a sub-$3k account), this trade would have netted $300. My regular 1000 share position size pulled in $600. And if our account can handle it, there was plenty enough volume here to double up and take $1,200 on this trade.

Hopefully these two extremes traded on the same day, more or less at the same time, show that whatever our account size, there are always good profits to be had from the stock market. Every day.