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

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.

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.

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.