The Basics of Trading

This is a discussion on The Basics of Trading within the First Steps forums, part of the Reception category; Hi Mark. I have looked at your 5 stocks and have set out my thoughts for the stops and targets.If ...

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Old Feb 17, 2003, 9:01pm   #71
Joined Feb 2002
Hi Mark.
I have looked at your 5 stocks and have set out my thoughts for the stops and targets.If we imagine we are in these trades.
ABF Long. Stop at 502,Target 545.
AL Short. Stop at 792,Target 648
DGE Short. Stop at 650,Target 565.
JMAT Long. Stop at 725,Target 795.
MKS Short. Stop at 318,Target 280.

I would like to see what you think Mark.
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Old Feb 17, 2003, 11:51pm   #72
 
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Mark,

Here are my attempts. My learning from this is that there are several trades here where I'd have to wait for the price to come to me. Even then there are several I would not take due to the RR issue.

I'm still undecided about the balance of anticipating a reversal from that point or waiting for some evidence. Personally I'm much more prone to wait for the latter (i.e. for a long either a higher high or a close above the previous days high (in these conditions I'll wait for the close above the previous days high for longs)).

ABF Long 530 Stop 499 Target 546 RR 0.5
AL. Short 784 Stop 801 Target 649 RR 7.9
DGE Short 569 Stop 650 Target 500 RR 0.9
Short 630 Stop 650 Target 500 RR 6.5
JMAT Long No way (no space to down trend line, no new highs/lows).
MKS Short 299 Stop 320 Target 285 RR 0.7

So of them all only AL. and the 'wait for it' DGE appeals. In both cases I'd sacrifice the RR for some movement in the direction I subsequently anticipate. the targets I've used have in the main been based on the previous high/low in the direction of the dominant trend. Target setting from a trading perspective is certainly a topic worth exploring IMO.

Cheers,

Andrew
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Old Feb 19, 2003, 9:17pm   #73
 
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FTSE Beater started this thread Hi all

I'll be hopefully running through my analysis of these shares tomorrow, so if you would like to add your analysis feel free
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Old Feb 20, 2003, 1:39pm   #74
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Can some one please explain the meaning of the trading expression "Covering Shorts". I understand going long or short, but am not really sure what "Cover" means.

EG. With SB To open a short position I would sell and To close it, I would buy.
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Old Feb 20, 2003, 1:56pm   #75
 
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Covering is just closing a short, to go flat rather than net long.
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Old Feb 20, 2003, 1:57pm   #76
 
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Quote:
Originally posted by Fluke
With SB To open a short position I would sell and To close it, I would buy.
therefore, you are 'covering your short'.

Covering just means closing.
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Old Feb 20, 2003, 2:04pm   #77
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iSquared and Skimbleshanks.

Thank you both for your prompt reply Thats cleared it up for me.
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Old Feb 20, 2003, 2:53pm   #78
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Hi FTSE Beater, Fluke and iSquared et al

Well, first post here (and first post ever on trading, soÖbig gulp)

FWIW, this is my reading of these charts (hope Iíve understood these candles)

ABF, long, buy 511, target 532, SL 500, R/R 2
Al., short, buy 760, target 720, SL 790, R/R 1.33
DGE. Short, buy 600, target 570, SL 650, R/R 0.6
JMAT, long, buy 740, target 800, SL 700, R/R 1.5

Coming up to speed with this thread but feel the only way to make progress is to publish andÖ

Look forward to hearing from you, Mark.

Regards

SoldierofOne
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Old Feb 20, 2003, 6:18pm   #79
 
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FTSE Beater started this thread Hi all

Hi SoldierOfOne Ė Welcome to T2W, and straight in the deep end

Thank you Chartman for posting up that chart. Shows exactly what I should have done with my BARC trade

ABF

Click the image to open in full size.

I would put the stop at 498 (below the January support and just below the round number) The target would be the resistance at 545 which was support in September and December Ė which is exactly what iSquared has said.

Fluke, I think you got it spot on. The only change would be the Stop loss, as round numbers often offer support or resistance, but thatís a minor point at best.

SoliderOfOne. With regards the Stop, I think the same applies to you as Fluke. I think the target of 532 would be great if you were trading intra-day, but for End of Day trading you need to look for more major resistance. Iíll be hopefully looking into that over the weekend.


AL.

Click the image to open in full size.

Fluke, we agree with each other. Stop at 792 (above the last recent high) and the target of 648, as that is the January low.

ISquared. I can see why you set your stop at 801, but I feel if it broke out of recent high, then 801 would soon get taken out. The profit target was good though and a RR of 7.9 is great.

SoldierOfOne, a great place for the stop-loss. I feel think the same applies as before, the target could be a little further, but for a short-term target, I would agree 720 is the next stop


DGE

Click the image to open in full size.

Everyone said 650 as a stop which is great
The target is the difficult thing with this one. I would be tempted to say no target and just see what mid-air support it finds. If on the current chart you canít see a logical target, then you need to see a longer time frame. Even when you do that though the only support I can see is at sub 400, but at those levels bargain hunters come into buy the stock up Ė so itís a tricky one that one.

JMAT

Click the image to open in full size.

Click the image to open in full size. Oh sorry Ė fell asleep looking at this chart.

The main problem is that it is just drifting, with no clear direction. I agree with SoldierOfOne. Iíve put the target and stop on the edges of the range, but if I found myself in this trade I would be looking to get out as iSquared pointed out.

Fluke. I think your right to set a tight stop, and just find the nearest exit door.


MKS

Click the image to open in full size.

This is an interesting one because it is coming upto what would have been itís profit target at 280. At this point I would be looking to narrow the stop, and get out at the first sign of a bounce off 280 (maybe with the view to short again after the break-out)

Fluke Ė I think your right, but then you end up with a poor R/R. 318 would be a good stop if you think that 280 will fail to hold.

iSquared I agree with you on this one, and Iíll make sure I cover target setting this week.


Well thatís how I see these charts. I hope my criticism came over as I might it, which is purely constructive. There are no right or wrong answers and I would like to thank SoldierOfOne for being brave enough to post up their views.

Thank you to those who posted and the next lesson on target setting is in production.

Take care,
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Old Feb 20, 2003, 8:06pm   #80
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Mark.
Thanks for your valuable tuition on R/R,I am learning how to put it together now and using this on my Sharescope charts.
Its practice. practice. practice.from now on.
Looking forward to you next lesson
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