Friday was a small losing day but it is frustrating to think of what it could have been. Poor drawing of s/r lines and the thought process of taking charts too literally and trying bullshit trades led to small losses which should have been big wins had I just followed some simple techniques.
CAB: I somehow ended up down slightly on the longside on this even though I bought $57 in premarket... Yes, you heard me right. I bought it at $57 and it went to $59 eventually and throughout the day I ended up down on it. What ended up happening was I was long $57 due to a consolidation pattern and the fact that I thought the move was overdone to the downside as the acquisition was still happening, it just won't happen on the same schedule as before. I figured some funds would liquidate and some other would pick it up to give it a shot. With the consolidation, I also saw an aggressive bidder that kept refreshing. The thing was that I was afraid since it was premarket and the liquidity wasn't the greatest and I was remembering how NVDA was trading premkt when it had those random flushes. I guess it was a completely different scenario though but either way I put a stop that got hit and I got out for .20 profit. Of course it held a higher low and then at the open it started ramping towards $59. I'm not sure if I would have held on for the open, perhaps I could have put a breakeven stop or a stop below 56.95 which was the point I was risking off of in premarket. Anyway, it ramped to $59 and then started coming off. It came back down to $58 and there was another refreshing bidder. So I know I said that I wouldn't take any L2 trades but this was different. It was holding there for a while, it was at a premkt support level, and my thesis for it so far was holding up so overall I thought it was worth a shot to go long. I only gave it 10 cents below $58 because if he didn't hold up then I wanted to wait until I could get a better price at vwap or something else. Eventually he broke and I got stopped out. I wasn't really concerned about this though because like I said, there were a few things going for it and honestly had it worked I would have been pissed I didn't do more size so no big deal there. Later on it came back to some other support from premkt - which I should have outlined. I definitely have to get better at that even though it may not have hit where I would have placed my bid. After that it started to look like it wanted to go back up with some higher lows and almost an ABCD pattern. It tested towards that $58 level and I thought this was a case to use a breakout trade as it was an important level and it was low risk to see if the breakout would work or not plus everything else described. I should have used more size as well on this. It broke above $58 and started making its way back up. There was a seller in the $58.30ish range. I put my buy stop above there to add because I figured if it cleared that then it would have immediate followthrough. Well it cleared it and then started coming off. And then I decided that if it failed there then it was done for good so I put a breakeven stop and that got hit and then it ended up consolidating and then going higher without me. Afterwards, it retested the prior spot a few times on dips and while one dip went lower than the other, it still held the level as support so there is a lesson right there. So this is the story how I bought the lows premarket and still ended up being down on it. A lot of good lessons here: 1. Depending on the situation, premarket trades can be ok and you can stay with it if you have a cushion. 2. Outline more levels from premarket. These can play a role when you don't believe they will. 3. Don't take the chart literally and think "it has to happen right here and now". Stocks and therefore charts can do a number of things before it goes your way. Here, it broke out above that small level and then came off but the trend was still valid. I just had a horrible add. Had I just stuck with my breakout trade and then added on dips which it did do like I mentioned above, then it would have gone a lot smoother. Just trade off the s/r levels. I am making things a lot harder than they need to be.
NVDA: Definitely some missed opportunity on this and I completely misread it. Basically I was buying dips when I should have been shorting pops. At the open I was open to playing it either way because I wasn't sure if everybody got squeezed out or not. At the same time I have seen the big red candle with big volume as indicative as a top and although I was bullish the day before, now I wasn't sure if there were a bunch of shorts still in it. So I thought that I would let the chart tell me but I misread it due to some key mistakes. I incorrectly put just one level as a support/resistance line from a few days ago while it should have been a zone with a couple of lines (I know better). So I thought it was bouncing off support but actually it just hitting resistance and failing and against vwap as well. Instead of looking at the bigger picture of it hitting against resistance/vwap, I just looked at the little candles and said oh this looks like it is reclaiming support and has a higher low and it broke above the trendline. Where I bought was a perfect short! I realized my mistake and got out for a tiny loss but it's a couple of tiny losses too many. The lesson here is to just use overall support and resistance to base your trades off of and that is it.
Other stocks:
OPK: This was a complete miss as well. I had a feeling this would fade off on the news. The premarket resistance level was $10.09 and after it made the morning flush it got back up there. Now I was right to think that just because it flushed at the open, it doesn't mean that it won't be a good short later on. While it was up there I thought about shorting it but didn't because I thought it could go higher. This ended up being the top. It offered a spot again to short when it was under vwap but I was a bit too late with that although that would have worked. Lesson: Again just use s/r levels and take the trade over/under risk and that's it.
GDX: I didn't trade this either but this is a really, really prominent example of just using s/r levels and not worrying about the intraday patterns. This was going right into resistance but because it just broke out from a "flag" I decided to not try anything. 4 days up and running right into major resistance. So despite the apparent breakout - of course support/resistance played a big role especially when it's up 4 days up or so in a row. So that is the major lesson right there. Also, again going back to the premarket levels and knowing your levels more- while I charted the important levels from the hourly that gave me those huge resistance levels, I have to be better with charting premarket levels so that when I see it pop back to premarket levels I can make quick decisions and go in.
Things to work on:
1. Charting all levels better with the premarket and also with zones of s/r.
2. Know that s/r and the overall condition of the stock (4 days straight up as an ex.) is more important than a small pattern intraday.
3. Don't take the chart literally and think "it has to happen right here
and now". Stocks and therefore charts can do a number of things before
it goes your way.
4. SHORT AGAINST RESISTANCE AND BUY AT SUPPORT. THE END.... Unless in unusual times of volatility.
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