Breakout Trading using Time and Sales

[amit1986]

Thanks DT!

The 20-period EMA has crossed the 200-period EMA just now on NUE which is why it is rallying at the moment. For those position traders who missed an opportunity for an entry, they will be awaiting a pullback in order to go long.

Thus, there could be some good buying pressure on the pullback and the stock could resume its trend. Watching level 2 and t&s to see if a potential long trade is possible.

 

[amit1986]

Managed to get a quick scalp out of NUE of +4 cents per share. Exited when it failed and sellers came in.

Was hoping for a little more but happy to get something out of it.

 

[timsk]

The 20-period EMA has crossed the 200-period EMA just now on NUE which is why it is rallying at the moment.

I'm a bit surprised to read this Amit!
Correction, I'm not surprised to read it all; but I am surprised you wrote it!

Tim.

 

[amit1986]

I'm a bit surprised to read this Amit!
Correction, I'm not surprised to read it all; but I am surprised you wrote it!

Tim.

LOL why is that?

 

[amit1986]

Took another breakout of NUE and got 4 cents per share profit. Clearly got out too early as it's rallying higher right now..

 

[redart]

LOL why is that?

probably because you appear to be more from the school of thought that doesn't believe that technicals on a chart have any impact on the price of an instrument. (or so i thought)
You seem to share similar concepts to DT regarding what makes price move and how to trade (via the DOM/tape reading etc) and you'd NEVER hear DT say what you said regarding the MA crossover!

(Is that sort of what you meant, Timsk?)

 

[amit1986]

I've decided not to take any more breakout trades on NUE. I clearly cannot read it correctly if I am getting only small scalps out of it. To that end, it's best to just protect the days profits and find something else that I can actually read correctly.

 

[amit1986]

probably because you appear to be more from the school of thought that doesn't believe that technicals on a chart have any impact on the price of an instrument. (or so i thought)
You seem to share similar concepts to DT regarding what makes price move and how to trade (via the DOM/tape reading etc) and you'd NEVER hear DT say what you said regarding the MA crossover!

(Is that sort of what you meant, Timsk?)

Well you are correct in a way - I don't believe anyone can really have any sort of trading edge from observing simple MA crossovers, fibonacci's, candle patterns, etc...In order to be consistently profitable, I believe one does need to bring a unique skill to the table that not everyone can develop. After all, anyone can see simple technical patterns on charts and plot fib ratios and trade off of them. And then, most people wonder why most traders aren't profitable. It's quite obvious in my opinion.

The only reason I said what I did regarding the crossover was because I know there are a whole bunch of traders and investors out there who use EMA crossovers to make trading decisions. So, if a bullish pattern sets up on a chart and I know there are a lot of people who are going to trade off that bullish pattern, then there is a good chance the stock could display strong buying momentum for me to jump on board with. Effectively, what I've done is added to the probability of a trade working out. In fact, had anyone taken the NUE breakout, they would have made 20 cents per share profit based on Mr. Charts' setup.

 

[timsk]

(Is that sort of what you meant, Timsk?)

Not bad redart - 9/10!
Allow me to expand a little further . . .

Major moving averages like the 20, 50 and 200 are, obviously, watched by many market speculators around the globe. The MA cross over is so famous as a trend trading strategy that it's now toppled over into infamy - and few people would suggest that it's a viable path to financial freedom in all markets. Even in trending markets, it's going to be faded to hell - stopping novice traders out left, right and centre. That said, because these averages are so widely used, a scalper or day trader could use them as good entry points if the MA cross over is backed by the supply and demand picture - evidenced by T&S, DoM or tracking delta volume analysis etc. etc. So, I don't have any issues with Amit using the MA cross as a catalyst for his trade. On the contrary - it's a simple idea and we like simple! However, as redart correctly points out - I have a big problem with the suggestion that the MA cross caused price to move higher. But, perhaps I interpreted Amit's comments a little too literally?
Tim.
PS. I was drafting my post as Amit posted his - so I only read his after posting mine - if that makes sense!

 

[amit1986]

Not bad redart - 9/10!
Allow me to expand a little further . . .

Major moving averages like the 20, 50 and 200 are, obviously, watched by many market speculators around the globe. The MA cross over is so famous as a trend trading strategy that it's now toppled over into infamy - and few people would suggest that it's a viable path to financial freedom in all markets. Even in trending markets, it's going to be faded to hell - stopping novice traders out left, right and centre. That said, because these averages are so widely used, a scalper or day trader could use them as good entry points if the MA cross over is backed by the supply and demand picture - evidenced by T&S, DoM or tracking delta volume analysis etc. etc. So, I don't have any issues with Amit using the MA cross as a catalyst for his trade. On the contrary - it's a simple idea and we like simple! However, as redart correctly points out - I have a big problem with the suggestion that the MA cross caused price to move higher. But, perhaps I interpreted Amit's comments a little too literally?
Tim.
PS. I was drafting my post as Amit posted his - so I only read his after posting mine - if that makes sense!

Tim has pretty much said what I was trying to get across, but in a nicer way.

With respect the second last sentence, however, perhaps here's what I meant to say: the presence of the crossover induced many traders to start buying up stock. This increase in demand was the result of today's crossover in the moving averages. However, there could have been a host of other factors in play here, but I do believe the today's EMA crossovers were the primary catalyst driving the stock higher.

Or, perhaps, I could be incorrectly interpreting what you are trying to say, Tim?

I have attached the daily chart and the 5-minute chart of NUE for reference purposes.

 

[DionysusToast]

moi ?

For sure, I'd never say that 2 MAs are the cause of a move....

 

[amit1986]

Only two small scalps so far, both on STI:

STI Trade 1: -4 cents per share
STI Trade 2: +12 cents per share

Should have taken an early entry on STI but decided to wait for the breakout because the market could have turned around any second. The first STI trade was a bit of a mistake (hence the loss) as I entered for a quick scalp a minute before the leading indicators data came out. Should have waited till after the news.

 

[DionysusToast]

Only two small scalps so far, both on STI:

STI Trade 1: -4 cents per share
STI Trade 2: +12 cents per share

Should have taken an early entry on STI but decided to wait for the breakout because the market could have turned around any second. The first STI trade was a bit of a mistake (hence the loss) as I entered for a quick scalp a minute before the leading indicators data came out. Should have waited till after the news.

Scalpy day today. The market is doing nothing but turning around

 

[amit1986]

Scalpy day today. The market is doing nothing but turning around

Agreed. But even trends are a little hard to find today, so scalping is also a little tough. I'm a little frustrated with these small small gains...looking for a nice, juicy large gain.

 

[amit1986]

Didn't take any further breakouts on STI as the markets are looking weak.

Just got news that Wikileaks' founder says he is going to "release information on banks". This should be interesting as STI is a financial stock, so not going to trade at the moment.

 

[DionysusToast]

Agreed. But even trends are a little hard to find today, so scalping is also a little tough. I'm a little frustrated with these small small gains...looking for a nice, juicy large gain.

This is one of the reasons I moved to the ES to be honest.

I am not a person who would scalp on most days but today with a 3 point range, there's not much choice.

2 scalps for me today - 1 point each. Small money but scaleable as there's still size there compared to my diddly account....

If the morning was this quiet - I can't imagine how lunchtime will be !!!

 

[amit1986]

This is one of the reasons I moved to the ES to be honest.

I am not a person who would scalp on most days but today with a 3 point range, there's not much choice.

2 scalps for me today - 1 point each. Small money but scaleable as there's still size there compared to my diddly account....

If the morning was this quiet - I can't imagine how lunchtime will be !!!

LOL well thank god I've got that review project to work on for T2W for lunch time!

It's not that there have been a lack of opportunities in general, but as I trade only low ATR stocks that I can read on level 2, it really limits my choices. Most days, this isn't a problem but with options expiration today, I did expect a little more action.

 

[amit1986]

Got my eye on a few stocks this morning: SLE, CLD, HOLX, CHX, VVUS, CCL, CHTP, IDCC and ITMN.

Remember, stick to trading stocks that are easy to read, no matter how good the chart setup is. I often say that if I can't read it, then I don't trade it. Otherwise it feels like gambling and gamblers always lose in the long run.

 

[amit1986]

Scalped 10 cents CHK breakout

 

[amit1986]

Missed a second CHK breakout ...was watching something else