wot happened next? No:5

[wasp]

patience is no problem

 

[SOCRATES]

Good, very good.

 

[charliechan]

would anyone care to say which stock this is, or is that all part of the quiz?

i'd just like to know in order to understand if that move was technically based or fundamentally based. (although i do see what socrates ment when he said it was on the cards 9 bars previously - things sure were looking weak)

im sure most would agree that long term moves tend to be fundamentally based, where as the shorter ones are technically based.

imo, playing pin the tail is futile unless all the facts are understood.

 

[wasp]

would anyone care to say which stock this is, or is that all part of the quiz?

i'd just like to know in order to understand if that move was technically based or fundamentally based. (although i do see what socrates ment when he said it was on the cards 9 bars previously - things sure were looking weak)

im sure most would agree that long term moves tend to be fundamentally based, where as the shorter ones are technically based.

imo, playing pin the tail is futile unless all the facts are understood.

I agree, its hard to say purely on the price action itself but I guess thats half the point!

 

[Splitlink]

A slight variation this time.

You've been holding a long position from the black line and you are a bit nervous with the penultimate shooting star type candle and have decided to look for an exit just below its low if it goes that way the next day. Unfortunately you get no chance with the gap opening and like a good numpty you can't bring yourself to bite the bullet and flee so you watch the candle develop with some relief that it closes well off its low.

So wot happened next and how do you plan to manage your position from here?

good trading

jon

I hope I've been a nice, long time in this share so that I can get out at a profit. I'd sell.

Split

 

[SOCRATES]

would anyone care to say which stock this is, or is that all part of the quiz?

i'd just like to know in order to understand if that move was technically based or fundamentally based. (although i do see what socrates ment when he said it was on the cards 9 bars previously - things sure were looking weak)

im sure most would agree that long term moves tend to be fundamentally based, where as the shorter ones are technically based.

imo, playing pin the tail is futile unless all the facts are understood.

It does not matter what the instument is, whether it is a share, or a future, or a currency or whatever, because the development and progression is clearly technically based.

Nor does the timeframe actually matter either.

What matters is how it does what it does and sussing it....and...(at the risk of starting a hornet's nest) having the ability to futurologise events yet to develop by backwards, forwards, and current engineering.

I am not going to make any further comment so as not to spoil MM's comments being prepared.

With regard to fundamentals...they are important, of course they are, but fundamentals do not drive the price. Otherwise it would be easy to pick winners just by analysing the balance sheet, profit and loss, directors' report and chairman's statement and so on...and to avoid losers by doing the same...

I remember a few years ago there was a share called BTR....in play...

There was nothing wrong with the company, its products, its ability to print profits consistenly, the management, or their order book....yet...for some time...it fell and fell...much to the consternation of the fundamentalists, the shareholders and of course the management who proceeded to play the most convoluted game of musical chairs imaginable....and then....one day....it stopped falling...and began to climb again ...back to normality and all was forgotten as if it had only been .....just a bad dream...

 

[SOCRATES]

I hope I've been a nice, long time in this share so that I can get out at a profit. I'd sell.

Split

What do you mean you hope, Spitlink ?

Read Barjon's post again, this time properly, and note his entry point, and the dilemma that he faces....

There is no room for hope in trading, or for any emotion of any sort.

But there is a requirement to confront situations that arise and to deal with them properly.

Hoping does not come into it at all.....not in the least.
In point of fact, there is a very easy solution, but I am not giving it publicly so that I can never ever be accused of giving trading advice, thank you very much.

 

[barjon]

would anyone care to say which stock this is, or is that all part of the quiz?

i'd just like to know in order to understand if that move was technically based or fundamentally based. (although i do see what socrates ment when he said it was on the cards 9 bars previously - things sure were looking weak)

im sure most would agree that long term moves tend to be fundamentally based, where as the shorter ones are technically based.

imo, playing pin the tail is futile unless all the facts are understood.

charlie

I don't know if you've picked up on the previous wot happened next threads - particularly nos: 2 & 4. You will see from mr.marcus' analyses (here's one http://www.trade2win.com/boards/showpost.php?p=264199&postcount=4) that he is, in a sense, reading any fundamental information via the price action. The fact that he, in particular, has been able to project the future price action with such accuracy several months into the future (they have all been daily charts) is perhaps an argument for suggesting that the price
/volume action represents all the facts you need?

good trading

jon

 

[barjon]

A slight variation this time.

You've been holding a long position from the black line and you are a bit nervous with the penultimate shooting star type candle and have decided to look for an exit just below its low if it goes that way the next day. Unfortunately you get no chance with the gap opening and like a good numpty you can't bring yourself to bite the bullet and flee so you watch the candle develop with some relief that it closes well off its low.

So wot happened next and how do you plan to manage your position from here?

good trading

jon

Pardon me for telling you but you made the blunder of not getting out on the toptail, which in this sequence of price scheduling is screaming at you that it is the top of the move.

When you are long, you sell into rising prices, not into falling prices.

In every respect I agree with MM and his synopsis above.

For this reason an exit now is a damage limitation excercise that could have been avoided if you had taken advantage of the momentum building up to the top, instead of hoping perhaps for more....which it is obvious that market conditions prevalent now cannot give.

Kind Regards As Usual.

Don't worry about me, socrates, this is not a real trade :cheesy: and the story I have made up is pure fiction.

Our fictitious trader has had sufficient intuition to be worried by your long tail but not sufficient to be spurred into action or to recognise mark's dancing girls and thus finds him/herself still holding the position. The point is, what's to be done from here? Part of that is about a judgement on what may happen to the price and part is about position management from this point.

good trading

jon

 

[laptop1]

would anyone care to say which stock this is, or is that all part of the quiz?

.

I think its a secret, if I new what stock it was I could give some feed back.

 

[SOCRATES]

Don't worry about me, socrates, this is not a real trade :cheesy: and the story I have made up is pure fiction.

Our fictitious trader has had sufficient intuition to be worried by your long tail but not sufficient to be spurred into action or to recognise mark's dancing girls and thus finds him/herself still holding the position. The point is, what's to be done from here? Part of that is about a judgement on what may happen to the price and part is about position management from this point.

good trading

jon

Alright Barjon, given your assurance that this is hypothetical and not real and does not constitute a committment in real money I am happy to provide the solution.....

The first thing you have to do is to check the spread on the instrument.

The key price in this case is the Bid Price.

Once you calculate the bid price by knowing the spread here is how you proceed, and the reasons for it.

You now place a STOP one point below the calculated bid, which means that the stop is really tight under the closing price.

The closing price is the bottom of the filled candle, showing red.

Therefore the stop is placed really tight right under the base of the filled candle, showing red, and not anywhere else, and not fancifully under the tail or marginally in the tail or at the price level at which you would imagine you bought it, because this is make believe, but in paper trading terms you effectively bought it.

In this way a (paper) profit is locked in and guaranteed.

Now...

In the next trading session, this price is going to oscillate.

It is guaranteed to oscillate for a very simple reason not connected with supply and demand.

It is going to oscillate because of the information shock delivered to the market as a result of a sudden and unexpected gap down with restrained downside volatility to accompany it .This will have an unsettling effect.

The audience...will be shocked by this....and will want some sort of confirmation before they gather enough confidence, that is collective and individual "bravery", to committ one way or the other.

In the meantime there are relevant supply / demand considerations inexhorably intertwined with this situation "as is".

This is because the situation of locked in holders has additionally to be considered.

These conflicts of interest are potentially going to cause some volatility in the interim.

But the object of the excercise is to protect profits.....and then it does not matter if the stop is hit....and when the dust settles ...then there will be a clearer picture on which you may act with confidence.

There you have it Barjon.

Kind Regards As Usual.

 

[SOCRATES]

I think its a secret, if I new what stock it was I could give some feed back.

Yes, indeed....if we all .....new that....there would be no point in discussing it would there ?

 

[charliechan]

It does not matter what the instument is, whether it is a share, or a future, or a currency or whatever, because the development and progression is clearly technically based.

Nor does the timeframe actually matter either.

What matters is how it does what it does and sussing it....and...(at the risk of starting a hornet's nest) having the ability to futurologise events yet to develop by backwards, forwards, and current engineering.

I am not going to make any further comment so as not to spoil MM's comments being prepared.

With regard to fundamentals...they are important, of course they are, but fundamentals do not drive the price. Otherwise it would be easy to pick winners just by analysing the balance sheet, profit and loss, directors' report and chairman's statement and so on...and to avoid losers by doing the same...

I remember a few years ago there was a share called BTR....in play...

There was nothing wrong with the company, its products, its ability to print profits consistenly, the management, or their order book....yet...for some time...it fell and fell...much to the consternation of the fundamentalists, the shareholders and of course the management who proceeded to play the most convoluted game of musical chairs imaginable....and then....one day....it stopped falling...and began to climb again ...back to normality and all was forgotten as if it had only been .....just a bad dream...

i agree that time frame or asset matters little in technical analysis. we are understanding crowd activity. i merely wanted to know so that i could get some understanding as to any event that mave have caused a panic - but, as you rightly observe, there was a weak move up prior to the move down.

so, there are 2 situations afoot:
1/ price is being 'put' up in the prior days, ready for the smash down. it would seem that insiders opened the price lower on the last day. why? one thing can be sure, the selling continued, but some buying has come in suggesting some sort of value is being explored. prices were deemed too low at the low! will it last? i wouldnt put any money on it without understanding fully/more

maybe, some minor news broke some days earlier - thus the weakness? no buyers, but the price was still put up in order to attract some people, and increase profits for the inside money as they started selling on day -2.

2/ the ceo croaked, got busted with a hooker, some other shock news that in the long term isnt that bad. sure, i agree, earnings, pe ratios and other stuff arent the issue. but did some news break mid-day that caused a weak stock to break? if so, after a day or so, folk will come to their senses and notice little (fundamentally) has changed, and the stock still has long term legs.



so, with all due respect, although something minor may have happened, i think knowing if this is just play, or panic either 2-9 days earlier would help.

one thing though - this will probably cause a load of confusion - even if smart money is sure of the end game, they know dumb money aint - so price could still go for a small re-test , so they can be taken to the cleaners twice if price is to go lower.

 

[charliechan]

charlie

I don't know if you've picked up on the previous wot happened next threads - particularly nos: 2 & 4. You will see from mr.marcus' analyses (here's one http://www.trade2win.com/boards/showpost.php?p=264199&postcount=4) that he is, in a sense, reading any fundamental information via the price action. The fact that he, in particular, has been able to project the future price action with such accuracy several months into the future (they have all been daily charts) is perhaps an argument for suggesting that the price
/volume action represents all the facts you need?

good trading

jon

lol - no i havent followed them, only noticed them. dont want to sound arrogant, but i dont have the time - not saying the lessons arent of value, just i learn better from practice, not reading. academically - i never got any medals (only some qualifications )


yes i agree, usually price and volume is all that is needed EXCEPT in the circumstance of sudden news breaks. tuesdays euro decline on the consumer confidence number being a case in point. thats why i thought such awareness may have been of use here - but given the prior weakness im not so sure.

 

[SOCRATES]

i agree that time frame or asset matters little in technical analysis. we are understanding crowd activity. i merely wanted to know so that i could get some understanding as to any event that mave have caused a panic - but, as you rightly observe, there was a weak move up prior to the move down.

so, there are 2 situations afoot:
1/ price is being 'put' up in the prior days, ready for the smash down. it would seem that insiders opened the price lower on the last day. why? one thing can be sure, the selling continued, but some buying has come in suggesting some sort of value is being explored. prices were deemed too low at the low! will it last? i wouldnt put any money on it without understanding fully/more

maybe, some minor news broke some days earlier - thus the weakness? no buyers, but the price was still put up in order to attract some people, and increase profits for the inside money as they started selling on day -2.

2/ the ceo croaked, got busted with a hooker, some other shock news that in the long term isnt that bad. sure, i agree, earnings, pe ratios and other stuff arent the issue. but did some news break mid-day that caused a weak stock to break? if so, after a day or so, folk will come to their senses and notice little (fundamentally) has changed, and the stock still has long term legs.



so, with all due respect, although something minor may have happened, i think knowing if this is just play, or panic either 2-9 days earlier would help.

one thing though - this will probably cause a load of confusion - even if smart money is sure of the end game, they know dumb money aint - so price could still go for a small re-test , so they can be taken to the cleaners twice if price is to go lower.

Yes, sure, but I am not saying anything beyond what I have said so far because Mr Marcus is going to post his analysis and I am not going to muddy the waters by trampling over his intent in advance of the event, nor am I going to trample over it afterwards, by the way So I am not going to express views at this juncture in deference to him and the effort he is prepared to make, which is commendable.

 

[Splitlink]

What do you mean you hope, Spitlink ?

Read Barjon's post again, this time properly, and note his entry point, and the dilemma that he faces....

There is no room for hope in trading, or for any emotion of any sort.

But there is a requirement to confront situations that arise and to deal with them properly.

Hoping does not come into it at all.....not in the least.
In point of fact, there is a very easy solution, but I am not giving it publicly so that I can never ever be accused of giving trading advice, thank you very much.

Thanks for the post.

I would agree if we were talking about entering the trade. It is fatal to open a trade and hope for the best but since that is in the past and we have been caught with our pants down I can only say that I hope that I can close the trade at a profit. I can't, very well, say that I am certain to make a profit if I close as soon as possible, or do you believe that I can? Nevertheless, I have hung on to shares too long in the past to stay with this one. I'd rather be out of it and looking for something else..

Regards Split

 

[SOCRATES]

Thanks for the post.

I would agree if we were talking about entering the trade. It is fatal to open a trade and hope for the best but since that is in the past and we have been caught with our pants down I can only say that I hope that I can close the trade at a profit. I can't, very well, say that I am certain to make a profit if I close as soon as possible, or do you believe that I can? Nevertheless, I have hung on to shares too long in the past to stay with this one. I'd rather be out of it and looking for something else..

Regards Split

Well. that's right, there is no point in wilfully boarding leaky ships with wonky boilers.

But there are lifeboats provided, and there to be used in an emergency as I have illustrated in my post above in my reply to Barjon,given his assurance it is paper and not real.

In this particular scenario there is the opportunity to escape unharmed and even with the possibility of a bit more profit, providing it just lifts a little during the expected volatility....and kill the stop...and a nifty exit.... and then with the treasure ashore.....time to see what develops next and seize the next opportunity quick.

 

[toro168]

Move stop or keep finger on mouse :cheesy:

Look intraday for strength or weakness

Volume is big (mighty big) on this last bar and I suspect a bit of a bounce (or more) might be to hand

fill gap?

low of last bar might be sharp edge!

 

[barjon]

......................yes i agree, usually price and volume is all that is needed EXCEPT in the circumstance of sudden news breaks. ...............................

charlie

Not sure I'd go along with the EXCEPT. In the analysis I quoted mr.marcus identified that the exceptional rise must have been news driven and then concluded:

"Considering the exceptional nature of the previous day, it should be amazing that weak hands still bought the market and this considering that we had gapped higher. This is possibly contrived to bring in final demand using another key number. The two candles and the level of price movement will leave weak hands exceptionally vulnerable in this market"

Of course, if you are talking about minute by minute trading as the shock event is actually unfolding then I wouldn't quarrel, but if you are talking about trading opportunities in the aftermath then that's something else (if you see what I mean )

In this case (just to bring it back to No:5 )we have the shock event for whatever reason and we're left holding the baby with decisions to make.

good trading

jon

 

[laptop1]

Personally, I would wait for a reaction back up, then look for a place to short to take the low out on the last bar whether it be a 1min chart or a daily chart. the same would apply.

I would scale in.