Time to adjust the plan

8 Weeks In

Well, I've had 8 weeks worth of trial now with the CTP plan. I think that the realized gain of over 5% isn't too bad...my paper gains are just over 8%. About 4% off my goal. I haven't checked today but I think I may be up a hair in the paper gains department.

Annualized those are 30% and 48% respectively, nothing to sneeze at but far enough from where I expected to be at this point to warrant a review.

I figure that it is time to adjust what I am doing. In the past my plan trials have lasted about 2 weeks maximum as it was usually apparent that the consistent gains were not achievable or the time spent getting the gains was overwhelming...or the plan just plain lost more money than it gained. At least this plan has proved itself worthy of a few adjustments.

STEP 1

Reduce the complexity of the plan

I have been aiming for five types of trades and have only got up to the first three.

• short sell for the downtrend
• long position for the uptrend
• long position counter trend
• short sell counter trend
• long position trade for a long term trade

I figure that reducing the number of trade types that I am looking for and trying will allow me to concentrate on maximizing the potential returns on the active trades before adding the others back in. This pares me back to the typical swing trade styles of short selling and long buying with the trends. I may dabble with the odd longer term buy and hold style should the stock warrant it but all three other counter trend trades are off my list, generally speaking. The fact that a counter trend trade is statistically less probable to produce consistant returns is one good reason to drop them for now, but it is a position trade more than anything so it will have it's use and will stay in my list.

Should the returns meet or exceed my goal then I may stick with this style for a while. Although I like to play so I can't see that happening for very long.

Step 2

Improve the return of the trades

This is something that I decided over the weekend that I needed to do. Looking back at my trades I see some inadequacies that relate directly to my stop settings. My picks are generally good ... statistically speaking ... I just need to remain in the trade longer. The only way to accomplish this is by changing the stop setting rules which I have already mentioned more than once in previous posts. While I find that I am changing stops earlier than I should be it is because I have no firm rules guiding my stop setting, just general ideas where they maybe should be.

Changing the stop setting rules doesn't just mean to leave a larger margin initially. My initial stop has typically been OK if my entry was good. it's the stop movement along the life of the trade, getting stopped out early costs at least $0.50 on the trade profits if it was a spike in price as the price settles back into it's trend quickly and any chance to grab it at a better price is gone.

Rules Rule.

Step 3

Reduce the time spent managing the plan

This is a tough one for me.

I try to nail entries to gain the extra few cents edge or study the charts to find the perfect entry point int he first place. These take time. Nailing the trade entry is not as important as it seems at the time. Over the course of a $3 target, $0.10 really doesn't matter. More use of market orders and either setting orders for market open or at 10am or so will be the next plan.

I expect that I should be able to execute trades, manage stops and check imminent trade charts in 1/2hr per day. This assumes that I have the real work done on the weekend over perhaps a 2 hour period. That would include finding a few more stocks to put on my list, charting a few more to have them ready to trade by for the week, adjusting already charted ones that need adjusting. Cutting out three of the five trade types will reduce research time somewhat.

So that amounts to about 5 hours over the course of the week. I know buy and holders will say they spend far less than this over the same period and that I would have to continue trading in order to make money...perhaps. I cannot justify the possible swings that, as buy and holder, I would have to go through to see a gain over the long term. Realized gains now translate into money re-invested now increasing the compounding effect on the rate of return...or being skimmed to put into use in other ways. I like trading, it has become my new hobby this year and depending on how successful I am it may just be a nice income source to help pay for those toys that I need for my other hobbies. So I don't mind justifying the time spent on the trading plan thus far.

I'll update my stats this evening.

JD.

CAE - CAE Inc

Ticker symbol - CAE

Company - CAE Inc


Research - they have something to do with aviation training simulators...I think they contract out their services and simulators for training pilots...something like that.


Long trade, basically the classic buy at $12.50 on June 17th.

They had a news break of some sort last month and the stock jumped. I won't trade on news. Had I been trading these guys already using my CTP strategey I would have been long late April and been there when the news broke and sold June the 6th...but I wasn't.

They are coming off of a six month consolidation period which was broken Early May and I entered the trade thinking the new lower trend boundary had been set and the price had bounced off of the 200sma line. I had to adjust my lines a bit and I hope they are good now. I set a new TWT up line (red dashed). I have noticed that the old upper trend boundary line can sometimes make a good resistance line as the new trend pattern is established. I don't like adjusting lines to accommodate new prices as it looks like I am trying to make the trade setup look good but sometimes it is necessary. Extending the lines is one thing, moving them is another. This were just little juggles though so I feel pretty good about them even though the 200 sma was crossed.

Someone sent me a quote from some analyst fellow saying that this was a good time to get in...I think he said that at about the time I got in, it really had no bearing on my entry as I read it afterwards. I will be lowering my stop on this one a bit in order to keep it where I think it should be based on the slightly altered lines...$11.80.

JD.

BVF - Biovail

This is a Short position that I entered on May 21st

Ticker symbol - BVF

Company - Biovail

I was stopped out on this trade on Thursday for almost a 2% overall realized gain...OK but the target was much higher than that...I got $1 per share and I was going for about $3.50.

I still think there is $2 left in this TWT down so I will most likely sell short tomorrow or Tuesday.

The red arrow is my stopped out point,

The green is my next expected short sell point.

The thick green line just above the upper blue trend line is my stop line...I did well in that it got me past the rally in the first week of June that actually touched the trend line...I learned from the ATD/B stop out to watch for this.

The long red line is the TWT line for the latest uptrend and I expected the price to rally before it crossed this line, I wasn't disappointed.

My mistake was once the line was crossed I got the stop following the heavy dashed green line which you see intersects at my stop point, that line was my new stop line.

The red circle is the point where I should have been watching for my stop to start heading down as the 50sma (pink) and the 30sma (blue) will intersect very close to the intersection of the red TWT and my original green stop line. I got too jumpy in trying to get my stop "in the money". As a result I expect to lose about $0.50 of the possible gains and I now need to re-enter a trade and start with a potential loss all over again.

The plan

Either enter a short sell Monday morning OR wait until Tuesday to see the downtrend re-established...I will tend towards the Monday entry as the MACD looks good for a continuation, circled in blue and the trend is more likely to continue anyway than not. It is worth noting that my price will be very close to where the price would have been without the Thursday jump in price.

The Lesson:

Back to the stop setting. This seems to be a regular thing for me so I need to just pay attention to the moving averages, extend the TWT lines and take note of them as resistance and support and try not to get over anxious about locking in gains while getting the stops set.

JD.

ATD/B - deconstructing the trade

Well, my ATD/B long trade did not go well and I compounded the problem by dinking around with the stop rather than really double checking the chart properly. The stock price hit my price and sold yesterday so this is not really hindsight as it is very recent and this stuff was already in place for me to see before yesterday. I thought that the price was going to rally any time now and I lowered my stop setting to try to stay in below the possible bottom, not in the plan so I got emotional, always a bad move.

This link to HF deconstruction is a post where I deconstructed my failed HF long trade. It outlines what I would have done for the short sell stop progression leading up to the long trade. Notice on that chart that I left the stop above the upper trend line longer than I have been based on the previous history as I noted "it bounced last time so I might expect it to bounce this time." So I might have expected ATD to do something similar based on the last twoTWT up. The HF study waas a hindsight one but again all the indicators were there.

The difference with ATD/B is that the price dropped below the last low point this time ...which still puts it above the lower trend line and indicates that the TWT is still heading down.
This is where the MACD could comes into play. The high momentum from this last TWT peak is lower than the peak from May 12th, the previous TWT high. Trading based on the MACD at this point would have me selling to get out of the trade if I was long and holding if I was short.
It is worth noting that the TWT downtrend that we just came off of has something else to say.

I plotted the initial TWT line (green) from May 12th to May 31st while I held a short position, then on June the 9th I ammended it steeper and adjusted my stops to follow the new line. Today I extended the original line and the current rally in price hit the old line...I should know that the first plotting is significant and kept an eye on it.

I keep saying how significant these lines are but I don't follow my own words and adjust to reduce losses or increase gains too soon and I do not get the results I aim for. So not only should I have expected the bounce and rally, I should have expected the peak of the rally and realized that the TWT down may not be completed yet. So when the price bounced off of the lower trend boundary on June 11th the plan could have been: (considering I had the same short position)

Short then Long trades

1) cover the short as I did

2) enter long as I did but perhaps earlier...I waited an extra day but I would likley still do the same again, that fits the plan

3) expect a possible peak at the original TWT down line and tighten the stop, not loosen it as I did once the price started down

4) stop out could have broke even or close

5) a) perhaps re-short on Friday's open, given the price activity I thought of it, I try not to trade on Fridays though so no go

b) hold and wait for the TWT resolution...next low bounce watching for the original TWT line to act as resistance this course of action will likely produce more trades and more opportunity for small gains...not really a great plan.

c) hold and wait for the TWT resolution...next time the price crosses above the old TWT line convincingly, buy. Best plan

My CTP strategy involves letting long positions run once a downtrend reverses. This is an example of letting the short position run being the better choice rather than looking for the target trade and had the HF example for stop setting been followed the result would have been:

The more ideal Short Trade, "the one that got away"?

1) Leave the stop above the upper trend boundary until it settles into a down trend (May 14th to June 1st)

2) Once the price crosses the 50 SMA it is pretty committed so the stop can track steeply until it hits the 50SMA line (June 5th)

3) A good built in stop line can be the 50 SMA line so I would track along that next, gives the price room to move (June 6th to date)

4) Once the price hits the lower boundary it is time to start tightening the stop closer to the price to maximize profits should the price bounce. (lower the stop to near the TWT line but not past) So according to my own plan, which I didn't really follow, I would not have been stopped out on the latest bounce from a short position and my original short would not have been stopped on the previous little bounce in late May. So not only would I be farther ahead in gains I would not have entered the long position that I did and would not have lost anything. Depending on how steep I followed the stop after the bounce would determine if I were still in the trade or stopped out for a profit.

The point is that either way, had I used my plan I would be much farther ahead in either circumstance. My plan is now to wait until the green TWT line is broken before considering re-entering a long position. I should note that it is worthwhile extending TWT trend lines until they intersect the boundary line that they are approaching as they can act as resistance...ATD/B a case in point.

Something to keep in mind is that a trend is more likely to continue than to reverse...this is definitely true of the larger trend but can also be applied to the Trend Within a Trend to a lesser degree in so far as it applies to setting the stops. Time to start paying more attention to my own ramblings. So, if you extend the lower trend boundary line and the green TWT line they go for some time before they intersect...the price very well could bounce along between the two for a while yet creating a good short position but not a high probability one. I am going to wait it out.

U did the same thing on the way up and I waited for the price to break down past the upward red TWT line before shorting it on the 11th.

I didn't have to but it beat watching the price perhaps bounce of the line one more time, and it is working well. My stop is still near the 50sma and will follow the 30 sma once it crosses the 50 on the way down. I think that following the moving averages and using the various intersections on the way down as targets for the stop may be the way to go...more research needed though.

JD

VT - buy and hold vs CTP

OK, So the comparison looks like the buy and hold crowd have me beat...but do they really? Let's de-construct the final numbers and see what we see. Keep in mind that I am working with a $5,000 initial capital investment.

I am on a bit of a bandwagon here as I have had some online discussions with active traders and investors and everyone tells me that I cannot produce the returns that I say I can. I don't generally spew inflated numbers, on the contrary, I will always fudge the trades against me and understate the figures. For the trades I have listed here I believe that I likely could have pulled another $25 - $75 per trade ($200 - $ 600 or an extra 4 - 12%) while watching the stock price action and placing the trades. I only used the chart that you saw in the previous posts so it is rough.

This stock is uptrending so well that it actually is in favour of the buy and holders' numbers...so I thought it might be a good example.

Buy and Hold results

There could be two buy and hold methods applied here. The first being the addition of shares along the way which would appear to minimize the risk somewhat and make it easier to get started as only 100 shares are bought up front. Final cost is higher though.

• Start with 100 shares
• 6 trades
• 600 shares today, average cost of $11.58
• yesterday's close = $14.73, paper profit = $1890.00
• capital used for this = $6948.00, the entire capital plus some margin (borrowed money)
• Return on investment...on paper = 37.8% over 10 months, annualized that would be 45.36%
• Potential loss at the start = $150 and it remained so until right near the end.

Buying 600 shares right off the bat would have gained = $2838 BUT the potential loss off the bat would have been $900.00. It would have also required $6000 up front.

• Start with 600 shares at $10.00
• 1 trade
• yesterday's close = $14.73, paper profit = $2838.00
• capital used for this = $6000.00, the entire capital plus some margin (borrowed money)
• Return on investment...on paper = 56.76% over 10 months, annualized that would be 68.1%
• Potential loss at the $900 or 18% of the initial capital. the break even time would have been about late December.

CTP Strategy


I used the same buy in numbers for both styles and for the shorts I applied, more or less, the same fudge factor. This makes it as even as you can get when comparing different strategies.

• Start with 100 shares, and only ever trade 100 shares of this stock
• 8 trades
• yesterday's close = $14.73, paper profit = $173 (only 100 shares still active)
• Realized gain = $1075.00
• capital used for this = $1450.00 at the most
• Return on investment...on paper = 24.92% over 10 months, annualized that would be 29.9%
• Potential loss at the start = $50 and it was only ever that at the beginning of each trade

Ok, so they have me beat unless you consider that I could have bet the farm just like the buy and holders did...plunk $5K down and run the numbers again. I will do one trade and then just give the numbers for the entire run.

• 1st trade - 500 shares @ $10.00, stop at $9.50
• P/R = 4:1 still, potential loss = $250.00
• stop out at $11.50, realized gain = $750.00 (that's already a 15% return)
• the previous gain can fund the next trade at $12.50 without using margin
• final total gain of the trades = $5375.00
• Return on investment = 107.5% over 10 months, annualized = 129%

Hmmmm....makes one wonder.

I am not a gambling man so betting the farm is not in the books so instead I know that I can afford about 4 active trades of 100 shares each. The return might not be stupendous per trade but it's the percentage return that is important. Even if half of those trades had gone wrong, and not the small ones, I would still be up $2500.00 or 50%. I like those odds better then having the one single trade go wrong and loose accordingly.

The other advantage is that this stock is going up...buy and holders either lose money or sit on cash while the stock goes down...I trade it and make money even in the rough times. So a downtrending stock can be at least as profitable as an uptrending one.

Had the buy and holders used only the 100 shares to invest like I did then the numbers are much different. Something like a 10% gain overall. Even spread over the 4 or maybe 5 active trades if they all went in their favour might produce 50%....I think it unlikely though as the stock does not consistantly move like this one has over the very long term. That and I may have a few bad trades but they are less of an impact as there are profits taken often.

Having said all that there are some stocks that are real gems and they are super performers...trying to pick them is the key ...and a very elusive one at that. So I do not try to pick them, just trade the charts, take some profits and maybe keep my eye out for a stock that might take off to concentrate on.

I hope this was, at the very least, entertaining.

JD.

VT - a virtual buy and hold

The buy and hold strategy applied.

Note that there are three posts to complete the trading and comparison.


A little historical trading, virtual if you like

I am not going to note the chart for this as it wouldn't be clear and these are very straight forward trades anyway. This one almost has training wheels on it. I will put prices on the trades but they will be skewed against the trades with late entries and rough exits. I will outline two methods to trade this stock. Both will work, I did not figure this one out ahead of time but I have a feeling I know where the comparison will go....no not where you expect for this stock....read on.

Buy and hold

Strategy - Buy a small starting position, 100 shares and add to it at each time the price hits the buy target...the lower trend which is the 200SMA line.

• The 200SMA (green) line can be used as a support line very often and with good reliability


• 1st trade - Mid Aug, buy 100 shares @ $10, set stop below the 200sma by $0.50 ($8.50)


• P/R = unknown as the goal is not a target, potential loss off the start is $150


• 2nd trade - late Nov, buy 100 more shares @ $11.00, stop is at $9.80


• the stop is moving up every once in a while to stay roughly $0.50 under the 200sma


• position = 200 shares average cost = $10.50


• P/R = unknown, potential loss at this point is $140


• 3rd trade - mid Jan, buy 100 more shares @ $11.50, stop is at $10.40 (give the drop down some room even though most might not have anticipated it, it only would have taken $0.05 and the stop is only being moved occasionally so it would likley have been fine)


• position = 300 shares, average cost = $10.83


• P/R = unknown, potential loss is about $129


• 4th trade - Early Feb, 100 shares say $11.50 again, stop = $10.60


• position = 400 shares, average cost = $11.00


• P/R = unknown, potential loss is about $160


• 5th trade - Mid Mar, 100 shares $12.50, stop = $11.00


• position = 500 shares, average cost = $11.30


• P/R = unknown, potential loss is about $150


• last trade - mid may, 100 shares $13.00, stop = $12.00


• position = 600 shares, average cost = $11.58


• P/R = unknown, potential loss is about $0, finally got to the point where the stop is above the average cost. stopped out profit would be $252 at this point and can only go up

The final buy and hold tally to date

600 shares, average cost of $11.58, yesterday's close = $14.73, paper profit = $1890.00. The capital used for this would be $6948.00, the entire capital plus some margin. There are no realized gains at this point.

Buying 600 shares right off the bat would have been = $2838 BUT the potential loss off the bat would have been $900.00. It would have also required $6000.

JD.

VT - CTP strategy applied

CTP - The Counter Trend Positioning Strategy

Note that there are three posts to complete the trading and comparison.

I won't list the stops as they move faster with this method as they follow the price up within the trend...more or less along the green and red TWT lines on the chart. The position will always be 100 shares either short or long. The target is always about $3 but I and skewing the trades against me so I will use $2 for the P/R ratio.

• 1st trade - mid Aug, buy 100 shares @ $10.00, stop starts at $9.50


• P/R = 4:1 potential loss at this point was $50


• stop out at $11.50, realized gain = $150


• 2nd trade - Early Oct, Short 100 shares @ $12.50, stop starts at $13.00


• P/R = 4:1 potential loss at this point is $50...but there is already a gain...so a loss on this trade would be a loss of profit, not a loss of capital...this is a very important part of the strategy, keeping the capital intact.


• stop out at $12.00, realized gain = $50


• 3rd trade - early Nov, short 100 shares @ $12.50, stop starts at $13.00


• P/R = 4:1 potential loss at this point was $50


• stop out at $11.25, realized gain = $125


• 4th trade - Late Nov, buy 100 shares @ $11.00, stop starts at $10.50


• P/R = 4:1 potential loss at this point was $50


• stop out at $12.50, realized gain = $150


• 5th trade - Early Jan, short 100 shares @ $13.00, stop starts at $13.50


• P/R = 4:1 potential loss at this point was $50


• stop out at $11.50, realized gain = $150


• 6th trade - early Feb, buy 100 shares @ $11.50, stop starts at $11.00


• P/R = 4:1 potential loss at this point was $50


• stop out at $12.75, realized gain = $125


• 7th trade - Mid Mar, buy 100 shares @ $12.00, stop starts at $11.50


• P/R = 4:1 potential loss at this point was $50


• stop out at $14.25, realized gain = $225


• 8th trade - Late Nov, short 100 shares @ $14.50, stop starts at $15.00


• P/R = 4:1 potential loss at this point was $50


• stop out at $13.50, realized gain = $100


• last trade - Mid May, buy 100 shares @ $13.00, stop starts at $12.50


• P/R = 4:1 potential loss again is $50


• the stop today would be at $14.00, the close yesterday of $14.73

The final CTP tally to date

At yesterday's close = $14.73, the paper profit for the outstanding trade = $173.00. The realized gains would be $1075.00. The capital used for this would be $1450.00 for the highest cost trade, about 25% of the capital.

JD.

ATD/B -Alimentation Couche-Tard Inc - long

Ticker symbol - ATD/BCompany - Alimentation Couche-Tard Inc

Long trade, basically the classic buy at $13.60

Bought today at $13.60

The red dashed lines intersect at my purchase price, the pink dashed line is my stop setting



The Buy In and the Stop:

I basically followed the plan from my last post on this. I bought in higher than I might have due to me farting around with the order in the morning. I could have got it for $13.50 but ended up at $13.60. My ultimate setup is to buy the stock at the open at whatever price it is going for. That saves a lot of time and hassle as I can spend time chasing the price trying to squeeze every penny out of the trade when, in the long run, pennies here or there don't make that big of a difference.

I set the stop right under the dashed red TWT line, $13.00

The price may pullback 1/3 of the jump:

" I fully expect that the price may pullback 1/3 of the jump from today anyway...this kind of a momentum price action quite often does that. "

Well, it didn't do that this time, it's certainly not a sure thing. I opened at the close from last week and never really went below that price.

The Targets:

A possible $1-$2 or so total target. Profit vs risk ratio = 1.7:1 to 3.3:1.

The target is smaller due to my $0.20 higher price getting in and the P/R ratio is smaller also as a result. The stop setting is also now $0.10 farther from my price. I usually go for higher P/R but this is the counter trend move and, while the P/R will always be lower the ultimate potential is that the price breaks the upper trend line boundary and continues upward in a new trend...should that happen the lessened profit and increased risk will be well worth it. Besides, I have some realized gains from the previous two trades from this stock should I need a bit of a buffer...not that I want to squander them on a poor trade, they are just a consideration.

The Goal:

The primary goal due to the small target and the trend is to have a position when the price hits...and possibly breaks, the upper trend line(s). If it doesn't I get a target profit. If it does I may be able to ride the new uptrend for higher profits or for a long term holding that I can keep buying into as the price continues to follow the uptrend.

I don't think the price will break the upper trend boundary line. I'm not 100% sure which line will serve as resistance but I am confident that the price will continue down after that point allowing for another target for a short sell trade. Perhaps this will be the start of a very wide triangle consolidation pattern with a trend down between the lower trend line on the chart and the lower of the two upper trend line boundaries.

JD.

LNR - Linamar update

For any interested in LNR it made it to a low of $15.35 and closed today at $15.56. This may establish the new lower trend boundary.

Note the following points - history:

• blue arrows indicate the price touching the new trend line


• the last two (yesterday and today) bounced right along on it


• the 50SMA (pink moving average) corresponds with the new line


• the MACD is moving up and will intersect the green momentum trend line this can act as confirmation more than indication, lower red circle (keep in mind MACD is a derivative of the price and represents a following trend so getting to know the chart without it is a better long term plan...more on that another time perhaps)

Entry point:

The upper red circle contains the entry point for a long position, I will watch it closely on Monday and perhaps trade on Tuesday. Monday could be used but the odds aren't as good without one more day of action right above the trendline to confirm the entry is good. I like to see a reasonable bounce first.

Target:

The upper trend line has not been established yet so there is no defined target yet. The upper blue line now only indicates some price highs. The trend line will most likely end up parallel to the lower line which places a possible target at $19.50...almost a $4 max profit. That will not be known until the price peaks and starts down.

The red horizontal line is an historically significant support / resistance line and COULD hold the price below $17.75 as it did on May the 9th. Minimum target is $2.25

Stop:

Set for $15.25, approximately $0.25 under the trend line, buy in may be as high as $15.75. Max loss is $0.50 per share

Profit / Risk ratio:

So P/R ratio is between 4.5:1 and 8:1. Either is acceptable even excluding that I have decent profit already on this stock.

Strategy:

• Enter the position early next week.


• Leave the stop wide enough to let the price move as it may hover under $17.75 as it did in May, perhaps only as high as $16.50 until it crosses


• The lower trendline and the 50 SMA will eventually squeeze the price to the line


• aggressive trading would follow that lower trendline with a stop just under


• conservative trading will hold it closer to take a small profit if the price pulls back from the line


• Worst case is the price drops and a $0.50 per share loss is realized...always know the worst case...actually the real worst case could be that the price gaps down to $14.80 or so which jumps past the stop and sells at the lower price...it is possible due to the gap up from that price in early may. I think it very unlikely but worth mentioning.

Should anyone be brave enough to try this or any other trade that I outline I wouldn't mind hearing about them. I wouldn't post this unless I seriously was going to follow my outline...keep in mind that conditions may change between now and the actual order that may have me not trade the stock and I may not post that fact until after...so you do take your chances, do your own due diligence...whatever that is for you.

JD.

Revisiting my old trades

I decided to apply the CTP strategy to my previous trades to see where I would have been from the first day of trading. I had used a number of "strategies" that never amounted to being consistent so I thought it would be a good exercise. It would also serve to refresh my recollection of some of the errors that I made along the way as these strategies were all mostly of my concoction and let me kick my proverbial ass for not keeping the ones that are likely to turn out to have been good long term investments.


I won't get into the individual trades but I will just start a running total on this post and continue adding to it as I go along and bumping it back to the top each time. There were 39 different companies traded over the period from February to May. At the end I will post the companies I traded and the ones that would have been still active.

• Stocks calculated so far = 10 of 39, in alphabetical order
• 4 would not have been considered for CTP trading at all
• Realized gains to date = $2892 (cash)
• Realized return = 57.84%
• Still remaining active = 3 long, 1 short
• Portfolio value = $9472 (includes stocks that wold still be considered owned today)
• Portfolio value increase = 89.44% (four month return)
• Annualized return = 268.32% (based on the non-compounded four month return)

The stocks that remain active would be considered long term keepers but that only works that way due to the method used to trade them...not because I researched them.

This is still all based on the initial $5000 with margin available to allow up to $15,000 available for trading. I'm not certain, given the timeline of the initial trades how much margin I might have used had I been CTPing. I assumed that all virtual positions were 100 shares...although with the realized gains I could have been doubling up or more on some stocks but I will assume that the extra capital was used to buy more companies instead to lessen the reliance upon margin.

JD.

ATD/B - Alimentation Couche-Tard Inc closed

Ticker symbol - ATD/B
Company - Alimentation Couche-Tard Inc

Short sold at $14.55 for a possible $3 or so total target. Profit vs risk ratio = 6:1

Covered today at $13.40 as the price rose to hit my stop setting. $1.15 profit.

I contemplated moving the stop down as the initial price had started to slowly move up when I checked around 10AM. Obviously I should have but I am satisfied with a 7.2% net return on this trade, not too bad for a little over a week. the newer trend lines have been confirmed.

I had made a small profit on this one on an initial short sell in the middle of May that only returned 1.31%. I missed about 3% in the re-entry of this trade due to the stop settings. I should have been able to stay in and seen a 12.4% return on the trade or $1.90 per share, hindsight. I learned from that one well though as BVF did the exact same thing but I saw it coming and adjusted my stop accordingly so I stayed in that trade through the rally in price.

Total net profit for the stock to date: $124.83 or 2.49% increase in the portfolio overall.

The Next Step:

The Buy In and the Stop:

Note the dashed red Trend Within a Trend (TWT) line right under the sell point arrow circled. that is the new tentative TWT as it touches the low prices for Wed, Thur, and Friday. I might expect it to hit that line again a few times on it's way up so I would want to buy in at about the red arrow price on Monday and leave the stop set below the new TWT line...or even under the blue lower trend boundary line until the new TWT is firmly established.

The price may pullback 1/3 of the jump:

My stops are supposed to work as my re-entry point if they are hit where I expect them to be hit. Today I should have bought the stock as soon as it was covered as the price is climbing nicely. I really don't have the time to always watch for these so I decided to be satisfied with entering the long position on Monday. I fully expect that the price may pullback 1/3 of the jump from today anyway...this kind of a momentum price action quite often does that.

The Targets:

There are three targets on the next trade, $14.40, $14.80 and $15.20, roughly. As the overall trend is still down this next trade is Counter Trend for the Position...the whole premise for CTP. This trade is more risky as it is going against the trend which is why I use the TWT and keep the stop setting following that. It also has a smaller profit target. Assume that I get in at $13.40 I have between $1 and $1.80. Profit vs Risk ratio (P/R) is between 2:1 and 3.6:1 as my loss allowance on this trade will be $0.50. I could use realized gains to make this number look better but that wouldn't give me the correct "feel" for the trade.

The Goal:

The primary goal due to the small target and the trend is to have a position when the price hits...and possibly breaks, the upper trend line(s). If it doesn't I get a target profit. If it does I may be able to ride the new uptrend for higher profits or for a long term holding that I can keep buying into as the price continues to follow the uptrend.

I don't think the price will break the upper trend boundary line. I'm not 100% sure which line will serve as resistance but I am confident that the price will continue down after that point allowing for another target for a short sell trade. Perhaps this will be the start of a very wide triangle consolidation pattern with a trend down between the lower trend line on the chart and the lower of the two upper trend line boundaries.

JD.

ATD/B - Alimentation Couche-Tard Inc update

Ticker symbol - ATD/B
Company - Alimentation Couche-Tard Inc

Short sold at $14.55 for a possible $3 or so target.
Profit vs risk ratio = 6:1

Today was an interesting day. I was at work doing some computer stuff so I checked on my ATD position...I was also setting a new order but that's another story...ATA, missed my price today on that one.

Important lines:

• Blue solid, the original trend boundaries
• Blue dashed possible new trend boundaries
• Pink dashed, stop settings throughout the morning

Other important points and actions:

• The price hit a new low in late April of $13.18, this is either just an intratrend low OR a new trend low point
• The high of $15.95 Early May bounced off the old upper trend line...so I didn't know yet if the trend has changed a bit or not.
• The minimum target is the potential new lower trend line
• I lowered my stop to $13.80 last night
• Once the day started and the price started heading up I lowered the stop to $13.60
• The price inched higher looking like it is confirming the new lower trendline
• I moved my stop lower to $13.40...this is a profit protection move as those two stops increased my "locked in " profit by another $0.40 per share.
• The price maxed at $13.35, close, then ended the day at $12.99.

Three choices for tomorrow.

1. Leave the stop, maybe the price will go lower and I can move the stop tomorrow night
2. Lower the stop to maximize gains even more and likely get stopped out.
3. Set a Virtual Trailing Stop Order (VTSO) and get the best of both worlds.

The VTSO will follow the price down at a certain distance. If the price moves up the stop stays. I tried using these in the past and they don't work very well except at the end of a trade when you know you are near the target.

I am up almost 8% at my stop setting, 10% where the price is so I need to decide if I am satisfied with 8% on this trade or go for a few more points.

I think the price has bottomed and is headed back up. If so, this will set me up for a long trade on Monday or Tuesday...if not I would like to ride the price down...VTSO it is, set at $0.40 above the price.

JD.

U - Uranium Participation

Ticker symbol - U

Company - Uranium Participation Corp.

I entered this trade today, Short sell at $9.15 for a possible $2 to $3 or so target.
Profit vs risk ratio = 4:1 to 6:1.

Research: Uranium...I know what it is but I don't know what they have to do with it.

I placed the green circle on the chart as a target zone about a week ago. I find that doing this on the charts makes it easier to very quickly glance at them to determine if they might be ready to trade. The TWT (trend within a trend) line (red) had four touches as the price rose and pulled back to the line before rallying. I felt that it was important for the price to break that line down before entering a short position especially as the line corresponded with the 30 period daily moving average. It broke the line convincingly yesterday which made today the best entry point as the odds are unlikely that it will re-cross the line.

Following is a one year weekly chart to show the general long term downtrend.

JD.

Monday morning update

I am sitting on only two active trades right now, both short positions. Just didn't find anything else to get into right now that looked ideal. I will not enter a trade that looks questionable just to have cash in play at any given time.

ATD/B and BVF. Between the two of these they have the potential to return 10% overall, more is likely but less is also possible. Depending on how long they take to get to the respective targets will determine whether they will meet my running goal. Although I do expect to add two more trades this week I also don't mind just sitting on these two for the time being.

I am working on a method of scanning the stocks to get to my short list of possible trade setups quicker. I'll post something on that later as it's still a work in progess.

JD.

HF deconstruction

OK, so my HF position got sold on the stop today. I had been second guessing my trade on this one since Tuesday. The only thing I could have done at that point was to sell and get out and maybe break even but I chose to lower the stop instead. Down $0.60 per share with commissions.

In my post about Setting Stops I used HF as the example.

It convincingly broke the lower trend line on the way down today. I remember saying "...it looked good. Still does but ...", so as it turned out crawling along the line was not what the price had in mind.

Three quotes from my May 28th post that should have been red flagged by me...but I had already entered the trade and emotions got in the way of clear thinking and I didn't re-read it afterwards. Had I, I might have sold on the 30th or 2nd of June for a small profit.

#1) "I am entering this stock later than I would like"

So, if there is always another trade, as I always say, why did I feel the need to enter this trade at all. I could have...should have...kept looking.

#2) "The last six months is all I have made notes on as it is the most relevant and the most defined trend."

Nothing wrong with that...except if you tie it in with the last but not least by far of the quotes...

#3) "This does look like a very shallow downtrend over the last year."

I should have realized that the "most relevant and the most defined trend" was in fact a downtrend once I zoomed out to the one and two year charts. The moving averages should have clued me in as well.

So, late stage entry against the prevelant trend with no prior gains to back it up and a chance for a profit exit prior to the drop.

DUH!

Lesson

Don't let emotions get in the way. As much as I thought I was analyzing this one right I missed all the signs telling me I was wrong as I was hoping for a nice gain from what looked like a decent setup, as late as it was. Now for the most necessary part...

Would have, Should have, Could have...

Had I been watching this one using my CTP approach I would have short sold April 18th or 21st. Once past the mid May hump I could have followed the price down with a stop until the price drops below the moving averages:

I added two Simple Moving Average lines (SMAs), one at the 10 day average (red wiggler) and one at the 50 day average (blue wiggler). I assume a buy in say, at the $13 mark to make the math easy and to fudge against me a little.

I used the solid purple (pink?) for my stop guide as follows:

#1) Leave the stop above the upper trend boundary until it settles into a down trend, it bounced last time so I might expect it to bounce this time. I should already have some profits to allow me to be a little looser withthe stop as well.

#2) Once the price crosses the 50 SMA it is pretty committed so the stop can track along this steep line which more or less tracks the price down. The stopped profit at the end of #2 would be about $0.70 per share.

#3) A good built in stop line can be the 50 SMA line (blue) so I would track along that next, gives the price room to move. I might use a 30 or 20 SMA line depending on what the chart looks like. The stopped profit at the end of #3 would be about $1.00 per share.

#4) Once the price hits the lower boundary it is time to start tightening the stop closer to the price to maximize profits should the price bounce. I drew the line a little later but I meant it to reflect today's drop through the trend line.

From this point on I would move the stop by following one of the shorter period SMAs (10 or 20) or leave it looser by following the 30 or 50 lines. The shorter lines will be more likely to get hit if the prices jossles around a bit. At this point the profits are already locked in at $1 per share or more so there is some wiggle room.

It may do some bouncing at $10.60 or $10 but if it doesn't then there really isn't any particular bottom. Perhaps this will start a new steeper downtrend with some further CTP opportunities or just bounce back up and sort of continue the current trend...it's possible bu not a chance I was willing to take.

JD.

SIF/UN and the real trend

This is a chart of a recent non-CTP trade that I have learned a few things from, the real mistake is outlined at the bottom.

SIF/UN

OK, the blue circled arrows represent the buy and sell that I actually did, my stop is the purple line again. I bought in at $14 and sold at $13.65 for a $0.35 loss. I managed to miss the first price dip after my purchase but decided to not let it go as low next time figuring that it would have been a reversal. WRONG

Had I been following my CTP strategy (which I was only just getting into at this point) I might have followed the red circled arrows. Seeing as this is an income trust I try not to short sell as I would have to pay out the dividend should I time it wrong.

For ease of calculations and to reflect what my actual trades might have been, every purchase would have been 100 shares. Ideally I would already have profits on this stock to let me be more comfortable with a wide stop so I would leave the stop set below the lower blue trend boundary line which was established May 21st.

1) 100 shares at $13.00, stop at $12.25

Maximum Loss Allowance (MLA) of $0.75 per share or $75

2) 100 more shares at $13.75, my Average Cost Base (ACB) for 200 shares is now:

((100x$13) + (100x$13.75)) / 200 = $13.375 per share

My stop would be at $13 so my MLA would be $0.375 per share or $75 total

3) 100 more shares at $14.00, so my ACB would be, for 300 shares:

((100x$14) + (200x$13.375)) / 300 = $13.583 per share

My stop would be at $13.40 so my MLA would be $0.183 per share or $54.90 total

Today I might have moved my stop up to $14.75 to be ready for a drop to make some profit and still leave a little room to move or to $14.25 to leave it more room to climb. I do expect the price to open around $14.80 after such a steep climb to $15.13. either way I would have been in the money.

Paper gain would be at $1.547 per share X 300 shares = $464.10.

If I just let the original 100 shares ride the whole time I would be at :

Paper gain would be at $2.13 per share X 100 shares = $213

The real mistake

OK, here is the six month chart after going to the one year and plotting the longer term trend boundary lines, the upper and lower blue lines. These last three months were only a Trend Within a Trend!!! While the above trade with multiple entries might have actually worked, the entire premise for the trade was wrong. Pulling the stop up snug would be prudent as the price is not too likely to break the trend...$14.50 might be the best. The target for this TWT was only $2.50 per share and that stop would only net $1.50. Not worth the risk of adding additional shares tot he trade. Historical studues are fine but they ALWAYS look better after the fact.

The upper trend boundary had been established between November and January and pegs the next peak almost exactly at $15.13 ... today. This is not apparent on the initial six month chart. As my CTP strategy has the trades occurring as close to the trend lines as possible my actual trade was right in the middle, not my ideal trade by any stretch of the imagination.

Now the price is at the upper so I would expect that it will drop from here over the next couple of days and could continue to drop over the next month or two. I need to determine if short selling is going to pay enough to make having to pay out the disbursements worth it at $0.10 per share per month. A little weekend work as I try not to trade on Fridays.

JD.

Setting stops

The Stop Order

A Stop order is an order to sell a stock when its' price hits a preset price to lock in a profit (profit protection) or to limit a loss (stop loss) when the price drops. The reverse is true for a short position.

Once the order is triggered it becomes a market order which is an order to sell the stock at whatever price it will go for. The only problem with this is that it COULD sell for less than anticipated due to market conditions...I have had it happen once or twice when the difference was more than just a few cents. There are other concerns but they are less of a concern than not setting a stop at all.

Picking the stop price

I am trying to pick a nice conservative stop setting rule for my trades that leaves enough room for the price to do it's thing, keeps me from losing my shirt if I am wrong, and lets me use the stop as an exit strategy farther into the trade.

Stay outside of the lower boundary line longer, the Stop Loss Order

The best I can come up with is to leave the stop outside of the trend boundary line (upper and lower blue lines on the chart below) by a certain margin until the price has moved far enough to justify moving it tighter or just higher. In my conservative approach I have moved them tight soon only to have to move them back again as the price moved back toward the trend line. I move the stop quickly to lessen the possible loss should the stock reverse, I need to rethink this action.

I should always consider that if I would be willing to lower the stop again to stay in the trade I should just leave it where it is until there is a large move in the right direction and a good Trend Within a Trend is established. The stop in this case is there to prevent a large loss should the price drop substantially.

Follow the new TWT line, staying in the game

Once the TWT has been plotted (green and red lines on the chart below) it now becomes my new low trend line boundary and I can work with that to get the stop Into The Money.

Tighten it up near the top, Profit Protection

As the price approaches the upper trend boundary line the stop can be tightened up to maximise the profit while still leaving some room for the price to break the trend up. Of course I can also choose to just sell the stock or set a different kind of stop (Virtual Trailing Stop Order VTSO) to follow the price up should it keep going.

Here is a prime example: HF

$11.60 on May 27th

Red dashed horizontal is my buying price, $11.60 on May 27th. I like to use three days after the bottom as a guide to buy in on this trend style. It allows some level of confirmation of the price action...it looked good. Still does but I just have to have some more patience as the price crawls along the line.

Current Stop $11.15

Purple dashed is my stop price...currently $11.15. On May 30th the price jumped to $12 so for Monday I moved my stop up only to have to move it back down as the price started back down again. You can see the tail on the price for today went below the lower trend boundary...the tail indicates that the trading price went down that low...$11.30 or so...but went right back up again. I'll talk about these "candles" another time, now that they can be seen I should mention them.

The few cents below the line I would just consider part of the margin for error in the trend line setting, it isn't that precise as the lines are drawn on the 6 month or more chart and when we zoom in to 2 or 3 months the margin can be seen clearer. I might move the line to reflect this slightly lower low to accommodate the next cycle low...might as well be closer.

Case 1) Tight stop

The trouble is that a stop set too tight can sell the stock too soon, this is called getting "stopped Out" and I may see a loss or perhaps a small gain but will miss out on a large move right afterwards. Even if getting back into the same stock with another trade the commissions must be paid again and if the price moved up at all that potential profit is lost.

Case 2) Wider stop

The potential loss remains higher for a longer period of time.

The happy medium

This is where the strategy gets a little grey and the gut kicks in. I'm not certain that a plan of attack can be setup to leave enough room for the price to move but keep it close enough to reduce loss off the start. Experience will likely play a big part in getting this right.

I think that certain moving averages may work depending on the expected price change, a long uptrend can easily use the 50 daily moving average while a shorter TWT may be OK with the 10 or 20 daily moving averages. Historical checks seem to lean this way anyway.

JD.

Today's game update, LNR deconstruction

Ahhh...the stats are not looking as good today. My three positions are pulling back a bit (or rallying in the case of the short trades). I widened the stop on one to give it more room for tomorrow's movements, although I don't think it is needed I don't want to lose the trade for the sake of a few cents.

I decided to can the EFX/UN trade altogether as it really doesn't fit my plan and the target is not really all that large unless I wanted to hold it throught the next intra trend pullback (the price usually drops after each successive climb, this is called a pullback, the price going up is a rally).

I do like the setup for SW so I will watch it and buy some shares if I still feel comfortable with the potential.

LNR regained some of the lost price but is still looking like it may continue down slowly or it may rally up after establishing a new low for the lower trend boundary to be set by. I am keeping my eye on this one to see which way it goes to re-enter a trade when the time is right as any stock traded successfully is worth watching for another good trade.

This is a four month chart that shows the important timeframe for the trend reversal, prior to this the price was falling then formed this nice curved shape, the teacup. I could have been bought anywhere along the bottom red line but I didn't get in until the last days of April. I could have seen up to $1 more had I been watching this one earlier...but I wasn't. I think that I bought it the same morning as I found it as the pattern was just to classic to not trade and, in hindsight, it fit my current plan nicely.

Notice that once the red line is started mid-March that the price lows follow the line very closely as if they were bouncing off of it. It only took two weeks to establish this line and it held as a line of resistance right through.

Also worth noting, the upper horizontal red line was established in late 2005 and has been significant three times since not including the brush on May 9th.

The "handle" that has formed over the last weeks is also a classic part of the shape but it doesn't really indicate which way the price might go next. The purple line was my stop setting. The green line is the Trend Within a Trend (TWT) line for the small downtrend. The blue right hand boundary line is still moving as the price continues horizontally...once the price breaks up the line stops moving as it remains touching the last low price.

Should the price break down then I would have to wait to establish the new trend lines.

JD.

Today's game, SW and EFX/UN

After yesterday's LNR selling I put some effort into adding another position to remain at the four minimum. None of my picks were an ideal trade so I looked at my list of uptrenders to see if any would make a decent addition even without falling precisely in my CTP plan.

Two came up, EFX/UN Enerflex and SW Sierra Wireless.

EFX I placed an order on and missed my price so I let it go for another day. Nothing fancy, just an attempt to snag an already in process uptrend.

SW is approaching a critical point where resistance, trend and moving averages are approaching a confluence...should be interesting. According to the trend it would have been a good buy May 28th but the price seems trapped in a triangle.

I circled the "zone". I traded this one prior to setting CTP in motion and got stung for my full loss allowance in April, you can guess which day that happened on...look for the big red day. I did investigate this company in the past and I do feel they would be a good long term holding.... but that doesn't matter.

Here is a tighter shot of the "triangle":

Interestingly this produces a better image.

The blue lower trend boundary, the red horizontal resistance line, all the waving moving averages (ignore the gold bands) and the price are all headed, roughly, for the $17.50 mark shortly. The important thing to watch for is what the price may do at the apex as it will go somewhere other than horizontal. I anticipate a steep rise in price but I am willing to wait for this resolution first as the uptrend really has not been confirmed yet. I might buy if the price convincingly hits $18.

Had I been following CTP all along, or at least since December I would be up $15.50 per share...somewhere north of 85% realized gains...so I would just buy today(actually on the 28th) and hope for the jump. If it reverses and I loose I would not be too concerned as my gains are already well into the green and it would amount to $0.60 to $1 per share loss. As I am starting this one without any gains already in my pocket for this stock I will play it very conservative as this trade does not really fit my plan...it just looks like a good setup.

I am treating each stock as it's own entity as it would be too easy to squander yesterday's $2.40 per share gain on this trade...I will keep it tracked with LNR for future trades for that stock. I'll expand on the thinking behind that another time.

JD.

LNR - Linamar

I sold my shares of Linamar today. The price dropped to my stop setting and sold.

Realized profit for the trade: 16.3% net

Duration: 5 weeks and 2 days


I re-plotted the trend lines to see if there is a good re-entry coming up. It appears as though the last two weeks were a very shallow downtrend, which I realized but never plotted. I still would have left the stop where I did as I could have sold two weeks ago for 23% and chose not to. Looks like it's time to wait this one out and look for another stock to trade.

I won't post the chart tonight but it looks like it may continue up after finishing with this little consolidation phase...basically the price action remains mainly horizontal while traders re-position themselves, kind of an equilibrium. There was a rather large jump in price in one day a while back and a previous long consolidation and shallow uptrend. For those who follow the MACD (I'm not going there in the posts yet) it displayed a classic positive divergence pattern that pegged a good entry point almost anytime in April. For pattern traders the cup and handle is now pretty much complete so we need to see where the price goes from here. I suspect it will see $14.50 to $15 and that would be a good re-entry point for a long position...but I won't bank on the drop from here to there. For me, the CTP trader, I will wait for the next trend to emerge then position accordingly.

JD.

BVF - Biovail

This is a Short position that I entered on May 21st

Ticker symbol - BVF

Company - Biovail

Ex-Dividend date : May 20th.

Note about the Ex-dividend date: if I had shorted this stock one day earlier I would have been responsible for paying out the dividend in cash at $0.375 per share. Got to watch for those dates when shorting. Income trusts have monthly dispersements so they are best to just not short at all.

Unlike the HF example, I don't have a clue about what these guys do or where they are based. If anyone feels so inclined to look it up leave a comment if you have time. I don't intend to.

This is a classic swing trade for a downtrend but forms an important part of my strategy. Swing trading is basically trading with the trend. In a downtrend you short sell on the price peaks and cover or buy back in the valleys. You would keep doing that until the trend changes then you change your strategy to follow the uptrend. It really isn't fancy or all that difficult but the key would be to recognize the trend and enter many trades to increase the odds of getting the price movement that you want.

green dashed vertical line is my short sell date ( I use red for a typical purchase)

green dashed horizontal is the purchase price.

pink dashed horizontal is the Stop setting.

In a short sell the stop line below the purchase price means that the trade is In The Money (ITM), if the price RISES to the stop line it sells and there is typically (but not always...that's another story) a profit realized. So right now if the price went up I would still make about $0.15.

I expect the price to follow a similar pattern as in March which would have gained $2.50 per share had I traded at that time. Notice that trading for the price drop in a downtrend allows a much longer drop or a larger target to aim for than the price increases by about 2 to 1. This is why I believe it is important to short sell in order to follow the Counter Trend Positioning strategy. The regular long position, or the typical "buy" has a much smaller target which makes the trade riskier and I would like to have more profits to act as a cushion to be able to enter the long trades with confidence in order to be there when the price breaks the tend. I'll maybe expand on this another time.

JD.

Morning fun

I played around with the order this morning to see how I could affect the selling prices. It was interesting to see my order amongst the rest and what happened as I changed mine at certain times (this is through my trading software supplied by my broker).

A little morning fun.

I couldn't do this with a stock that is traded on very high volume as my piddly order would mean nothing in the general fray. Other than a little fun it shows me how it is very possible for a larger volume trader to influence the prices during the day.

For me the few cents that the stock moved meant little as I was trading 100 shares so a $0.01 per share move = $1. For someone with a few thousand shares (say 6000) the same $0.01 move could equal $60.

JD.

ATD/B - Alimentation Couche-Tard Inc

Ticker symbol - ATD/B
Company - Alimentation Couche-Tard Inc

I entered this trade today, Short sell at $14.55 for a possible $3 or so target.
Profit vs risk ratio = 6:1

I think they are some sort of food chain or other. OK, that's it for the research part of this post. Glad I've got that part over with...

I tried short selling them just last month but the price jumped on a super high volume day (they average around 300,000 shares per day and on the 21st they hit about 2.5 Million, I didn't anticiapte that). As a result of the price jump my Stop setting was activated and I automatically covered for a small profit.



















(I've really got to figure something out for these charts)

I circled my last trade in red. My current stop is $15 marked by the purple horizontal line and my price is marked by the horizontal green at $14.55. I see that the low in late April never made it to the lower trend line so I might expect that the next low may only go as far as $13 for a reduced target of $1.50 of which I may only get $1.25 per share. That is OK as my loss allowance was $0.45 so the profit vs risk ratio is still about 2.5:1.

To get more complicated I could draw two new trend boundary lines that would look like the trend is shallowing or getting less steep. It would make the target about $12.75 or so. See the following fuzzy chart:

The blue dashed lines would be the possible new trend boundaries, I also added the red line to show the shallowing of the "Trend Within a Trend" TWT (Yah, I dropped the A...you can figure out why) compared to the previous two. Perhaps this would have given me some warning as to the last trade well in advance as the price bounced off this red line on the 20th, the day before the big volume day. Note that this line would have been established on May 5th and confirmed on the 20th. It is also worth noting that the previous two TWT lines would have also been established, and held pretty close, after only one week following the bounce off of the trend low boundary. At the very least this should have been my indicator to leave a wider margin when placing the stop setting, it only needed to have been $0.20 higher and I would still have this trade active.

Lesson, draw the lines as early as there is a possible trend to see. I keep finding that these lines are more important than one might think initially and they can be adjusted along the way if needed.

JD.