Continuation Patterns make money

This morning I have done something I never do. I bought 3 different stock options. I bought TSLA, SPY and VMW. I must have been hungry. I put them together on my quote sheet so I could watch them.

TSLA....this is one I have added to my list. This morning S/O saw the news report and the picture of one on fire. This was a 2nd day of bad news for TSLA so this morning we both jumped on it. It had a continuation pattern and no signal when we got on board right off the open. S/O said "Get in off the open." so I jumped with him. Profit $1419.89

If you look at the chart you can see TSLA was a continuation pattern on the 55,34,21,10,5, and 3.

SPY was bought using the S&P and SPY chart. I had "E" @ abt 9:53 and entered the trade. I exited abt 10:31 when the hammer appeared on the 5 and 10. I almost always exit when I see hammers. Hammers signal a change is coming. Hammers inverted or not on a down move signal an up. A hanging man on an up move signal a down.
Profit $479.65

VMW was spotted by my S/O. It was totally an "E" trade. Entered VMW @ 9:42 and bought an 82.5 Oct put. Exited VMW @ 10:47. Profit $898.54.

I have noticed a lot of continuation trades on the "E" charts. What I mean is the 5 and 10 pull up to the 20 and then move back down (or up) the next day. I still use this as an entry point because the 5 and 10 have already crossed the 20.

Look at TSLA on a 10 E chart. Starting 10/2 you had a cross then flat and then around noon a solid down going into another pullback at the close. The 5 and 10 never crossed the 20 but continued its downward move today.

So..........what did GW say about OCT? PLAY WITH CAUTION TAKING PROFITS QUICKLY! The 10 E chart shows that exactly what GW taught in 1-5 is still true today.

Done for the day.



Edited 2 time(s). Last edit at 10/03/2013 10:49AM by Darcy2.

Darcy thanks for this, my friend and I saw the same thing on TSLA, I played it for a little yesterday after it broke support and again today... I'm still hesitant when its not a fresh movement because I'm new to this style, especially with spotting continuation and getting in on an already formed E chart... but I'm starting to see what you mean

ChairmanFaust Wrote:
-------------------------------------------------------
> Darcy thanks for this, my friend and I saw the
> same thing on TSLA, I played it for a little
> yesterday after it broke support and again
> today... I'm still hesitant when its not a fresh
> movement because I'm new to this style, especially
> with spotting continuation and getting in on an
> already formed E chart... but I'm starting to see
> what you mean


We are entering the slow season so I am beginning to wonder if this may be a new pattern for the change over. Look at it like this....

You are to sell when the 5 crosses the 10 but if the 5 and 10 do not cross the 20 and the following day the 5 the 10 cross each other in the same direction as the day before you have a continuation. These are short charts so the trade will be fast. This is technical trading. A continuation pattern forms triangles.

Use this pix:



Now on a 10 chart... that decending line you see here...use your 20 ma as that line as resistance and the area where the chart starts its turn around as support.

On the 10 chart for BWLD draw a ray line off the 20 ma and a ray line off the candle bottom on the 12:00, 12:10 and 12:20. If that line drawn off the 12:00,12:10 and 12:20 line is broke YOU MIGHT have a trade. Remember the 5 and 10 ma must also cross.

PLEASE DO NOT TRADE OFF MY INFO. I AM USING BWLD AS AN EXAMPLE. I am using only the 10 chart for an example. BWLD has support on the 55 and the 21. Also at this time (1:36 PM) the market has pulled back.

Thus is offered only as a study.



Edited 2 time(s). Last edit at 10/03/2013 01:47PM by Darcy2.

Quote
Darcy2
On the 10 chart for BWLD draw a ray line off the 20 ma and a ray line off the candle bottom on the 12:00, 12:10 and 12:20. If that line drawn off the 12:00,12:10 and 12:20 line is broke YOU MIGHT have a trade. Remember the 5 and 10 ma must also cross.

so in this example, if you were watching, you wouldn't get back in until the close of the 13:50 candle, when the 5 and 10 cross again?

I've been using the 21, 34, and 55 GW charts (sometimes 89, 144, 233, and D) when watching for support/resistance... in the BWLD example, i'd see it hit support on the 55 chart on the 12:15 candle... once it hits, id watch the 3 chart, exiting around 12:30... then id wait for the close of the 13:10 candle on the 55 to make sure support was broken, then get back in as long as my 10e was still in place and my 3e and 5e were moving back into my direction...

needless to say its a lot of work, maybe unnecessary considering your method, but my practice trades have suffered lately because of support/resistance reversals... if you followed BWLD for the day would you have stayed in through the support provided the 20ma on the 10e was never crossed? I realize exits are a bit subjective but if im up, im out when the 5 crosses the 10 on the 10e chart

I trade small charts only. I seldom trade off anything higher than the 55. I have on occasion used a daily with a 233 but not hat often. Remember that the BWLD is used only as an example so....as we break this down I hope I can make some sense in what I am writing.

Looking at the 55 chart of BWLD you can see the candle close breaking through the 20 support at 13:10 while at the same time it hit the support on the 10 of the 20 ma. So you are 100% correct there. And yes I would have waited to enter this trade IF I had not spotted it sooner especially with the 20 ma coming up on the 55 chart. GW's sigal happend right on the open. So the real trade would have been from the open until it hit the 20 ma on the 55 and then out. At this time both the 5 and 10 moving averge on the 10 E chart hits the 20 coming up. Chances are in this time frame you option lost some money off the profit you would have made had you entered on the 55. Remember though I was only referring to the 10 E chart.

For another real money trade today let's look at BIIB. This was just so tasty and S/O entered this trade.

There was a HRFP on the 55,34,21 and E on the 10,5,and 3. On the 10 E chart note that the E had already formed by 3:10 PM on 10/2. Drawing the lines off the 20 and across the bottom of BIIB starting with the candles starting at 3:20 until the close gives you the triangle. Bought 4 Oct 245 Puts for $7.20 and sold for $12.10 leaving some on the table.

On the 55 notice that BIIB candles open below the 20ma and fought the 50 for a short time. The entry for this trade was right off the open according to the 10 E chart signal.

Notice BIIB had been up in this crazy market. Look at the stock RSI on the 55. Notice something concerning the candle on 10/1 @ 12:15? The stock RSI went into the oversold position yet when you look at the $'s where the candle is it did not make another high. Then on 10/2 you have starting @ 10:25 4 candles flat but higher than the one mentioned @ 10/1 @ 12:15 but the Stock RSI didn't go as high. This is a warning of a downtrend starting. It is divergence.

These are things I look for but since I was in 3 trades I passed on this one. S/O entered this one, TSLA and VMW.

I wish I picked BIIB instead of SPY! I am a techincal trader and I trade mostly small charts but at times I will watch the Daily and 233. I like getting a paycheck everyday.

Excellent eye on the bearish divergence on the 55... I also see the triangle you mention, we haven't gotten that far in the gary classes yet if that is something he covers.... however, I was looking at BIIB this morning but was scared off by the 200ma on the 34 so I left it alone fearing I'd get in only for it to bounce off... especially with the low volume this morning... but these examples are great, I'm being a bit too picky and over thinking things... its tough starting out with a small basket... to get the mental thing right... do you find trades almost everyday... all year long? You mentioned entering a slow season... I'm hoping to use this technique to build my trading leg so that I can eventually do the trades that GW teaches which require significant funds (buying 5-6mo options for 233/D/W trades)

Just an added note... My friend that uses the W.I.N package on tradestation said, that he had an alert to do this trade on BIIB at 10:00 this morning. He bought six of the Oct13 245 puts for $6.60 and sold them for $11.70. That's a profit of $3,029.59 after all incurred costs. Not a bad day! There is more than one way to skin this cat!

ChairmanFaust Wrote:
-------------------------------------------------------
I'm being a bit too picky and
> over thinking things... its tough starting out
> with a small basket... to get the mental thing
> right...

It is never wrong to think or over think when protecting a small basket. When this happens trade virtual what you fear most. It helps to develop the mental thing.

> do you find trades almost everyday... all
> year long?

Yes. But I do not always trade them. I really like sticking with the basket of stocks I have. New stocks I like to watch before I trade. I like to look back on these on a daily and 55 chart for gaps and placement of moving averages.

> You mentioned entering a slow
> season... I'm hoping to use this technique to
> build my trading leg so that I can eventually do
> the trades that GW teaches which require
> significant funds (buying 5-6mo options for
> 233/D/W trades)

I think it is best to stick with 2 or 3 trading tecniques taught by GW. I would say since you are looking to eventually do longer trades also read anything BCT posts. He has that down really good.

The E chart is not taught by GW. Neither is the triangle I shared with you as far as I know. Neither is some of the things I use. What happened with me is:

1) I took 1-5

2) I took advanced which some of those trades taught I couldn't do because of funds. One of the trades taught in advanced I practice and have practiced since taking Advanced. I have yet to apply that trade with real money but I love that trade and will eventually do that trade.

3) I added many more technical books to my reading list than what was mentioned by GW.

I did this when sitting in one of GW's 1-5 classes he started talking about RTP and DE. Honestly at that time I could not afford those classes. But a bell went off in my head. This bell said...since GW has learned more information for trading there was more information about trading that I could learn. If GW found this information so could I with study and reading. In the meantime I lost much of my basket so that's when I decided to READ all the technical books on GW's list, especially since I skipped over them, and to get as many books as I could about technicals. It was here where I really broke bad on getting serious. I can't mention how many books I got for birthday and Christmas presents. The most helpful book was "Technical Annalysis for Dummies" and the 2 most helpful web sites was CandlestickForum.com and Investopedia.com.

I also surrounded myself with fellow traders most of whom are no longer trading. One fellow had built his basket up to $800,000.00 and lost it all on 3 trades. He never moved money from the trading leg to W/O and he got to the point where he reused to accept what the market was willing to give thus remaining in losing trades well beyond any sort of exit point. I actually learned more by not doing what many of my fellow traders would do. The main thing was they would get anxious to trade and jump well before a trade was ready. Big mistake.

My goal is to buy 700 shares of AAPL and to do the printing press rather than W/O. AAPL is great for the Printing Press and virtually I have paid for 700 shares in less than 1 year. Now to build my account to do this. This is part of the reason why I generally trade in and then out in one day. I send this money to another account to build up $'s to buy AAPL.

That is my goal. I will probably never retire since I do enjoy my work and because I work at home. Any stocks I buy will pay dividends.



Edited 3 time(s). Last edit at 10/04/2013 09:29AM by Darcy2.

Darcy2 Wrote:
> I think it is best to stick with 2 or 3 trading
> tecniques taught by GW. I would say since you are
> looking to eventually do longer trades also read
> anything BCT posts. He has that down really good.

I agree, I have not changed my GW practice, what he and BCT do is my goal, I've just added a 21 GW chart and the 3,5,10 e charts to my workspace... i'm just sticking to these 2 techniques until I have it down... I see the potential with these small chart trades for novice traders like myself... it allows me to build up to the more advanced things out there...

> 1) I took 1-5
>
> 2) I took advanced which some of those trades
> taught I couldn't do because of funds. One of the
> trades taught in advanced I practice and have
> practiced since taking Advanced. I have yet to
> apply that trade with real money but I love that
> trade and will eventually do that trade.
>
> I did this when sitting in one of GW's 1-5 classes
> he started talking about RTP and DE. Honestly at
> that time I could not afford those classes. But a
> bell went off in my head. This bell said...since
> GW has learned more information for trading there
> was more information about trading that I could
> learn. If GW found this information so could I
> with study and reading. In the meantime I lost
> much of my basket so that's when I decided to READ
> all the technical books on GW's list, especially
> since I skipped over them, and to get as many
> books as I could about technicals. It was here
> where I really broke bad on getting serious. I
> can't mention how many books I got for birthday
> and Christmas presents. The most helpful book was
> "Technical Annalysis for Dummies" and the 2 most
> helpful web sites was CandlestickForum.com and
> Investopedia.com.

Gary no longer offers the same 1-5, advanced, and DE classes... however, I have done 2 of his 3 new classes which approximate 1-5 I believe, I have the 3rd one coming up in November, thankfully his RTP class is affordable (compared to what it was originally) and so I will be taking that all next year.. I'm looking forward to absorbing as much as I can, thanks to you and this forum I've also picked up the dummies guide and have found it a good read... I've preordered my 2014 almanac and I may get the candlestick dummies guide as well... along with the technical books on gary's list... I too have some friends who are doing this stuff religiously and I'll probably be trolling these forums for a while to come... I haven't been this into something since I got into computers in high school and made a career out of it...

Darcy,

as always, thanks for the candid account. your insights and experience is helping us all. hope we can give back half as much.

You all already have...my pleasure to share what I can.

Another successful continuation pattern today in LNKD and NFLX.

I bought LNKD 235 Oct Put 5 @ 6.40. It was out of the money but LNKD was close to being in the money. This was abt 10:02. Sold LNKD before 11:00 probably around 10:56 for a profit of $3389.86. %-age abt 106%

S/O traded NFLX bought @ 10:12 Oct 315 Put 3 @ 9:15 just sold @12:17 for a profit of $2,445.34 or 89%.

According to the talking heads LNKD will be affected by the Twitter IPO. The talking heads didn't say if it would help or hurt but I think it may help LNKD rather than hurt it.



Edited 1 time(s). Last edit at 10/08/2013 11:31AM by Darcy2.

I also traded LNKD today. My trades are still small and my goal was only $500 but it started moving quickly and when I saw a profit of $1100, I grabbed it right away. Could have made nearly double that had I stayed in, but I was quite happy with my results.

Darcy, I notice that normally you seem to purchase the weekly options, but it looks like you purchased the monthly puts above. Curious to know how / why you pick one over the other.

robert

Low volume made me think the move would be slower than what happened. I was in the position when Boehner spoke. I think that drove the stock down really fast. Fast enough that I made my money and ran with it.

Watching the Charts made me think it woud go down then sideways then down then sideways. Those sideways moves can eat up a weekly.

I don't like being in a trade when politicians or the Fed speak. I have had really bad experiences whe that happens. Had I known Boehner was going to speak I probably would not have traded at all.

I traded LNKD as well today. I had to choose between LNKD or AMZN. Both would have been profittable. I am glad I chose LNKD. I had a really big day.

My mentor continues to complain a ton about what is going on in Washington. He does not like playing Puts. He does not feel he does well when trading PUTS. He is too stubborn to accept help from me, his pupil, so he sits on the fence and waits for his big setups for his next call. I am just happy that I know how to make money going both ways, and feel as comfortable trading Puts as I do Calls.

I have listened to "The Instant Millionaire". After getting past that guy's voice, the book was very good. I feel like Rocky Balboa right now!
I am now listening to "The Millionaire Mind". So far it is pretty good as well.

Hey guys I joined you in that trade, I also did some others, all virtual trades in the name of nailing down an exit strategy... I find myself mixing the 5e and 10e charts depending on the move:

Date	Symbol	Entry		Entry Notes
8-Oct	ISRG	9:34	$17.80	E-Continuation from previous day
8-Oct	PCLN	9:35	$18.70	E-Continuation from previous day
8-Oct	LNKD	9:45	$5.75	E-Continuation from previous day
8-Oct	GOOG	9:52	$20.40	E-Continuation from previous day

Date	Symbol	Exit		Gain/Loss	Exit Notes			
8-Oct	ISRG	13:11	$19.20	$1.40	1pm candle closed below 20ma on 10e			
8-Oct	PCLN	14:30	$47.50	$28.80	2:30pm candle close above 20ma on 5e			
8-Oct	LNKD	12:56	$12.55	$6.80	AFK stop limit reached (would have exit at close of 2:30 on 10e)			
8-Oct	GOOG	12:46	$23.80	$3.40	AFK stop limit reached (would have exit at close of 3:20 on 5e)			
			

rookie30

I heard the "big" traders talking during lunch yesterdsay saying they make more on Puts than Calls. I love puts when a stock has shot to the moon and I see it pulling back. I get all fuzzy inside!

ChairmanF...

Sometimes I exit simply because I am okay with what I have made. Sometimes I sell when the candles are telling me the trade may come to an end. Sometimes I exit around lunch because I see a pull back and thus far generally after lunch the stock doesn't move as far down as it did before linch. The pull back can eat up a lot of my profit. As I said I would rather make 2 fast nickles than one slow dime.

Hey rookie I agree w/ you 100%... exits can be hazy... I've seen it go both ways, flat at lunch and then the wrong way or flat and then full steam ahead in my original direction... My goal is to keep the emotion out of it as best I can by finding technical indicators to exit on, the best one so far seems to be 5ma over 10ma on the 10chart... but there are times when you see the 5 candles doing funny things that make you want to jump ship or stay put