Why I listen and trade with the news sometimes...

There are times you can listen to the news and know a stock will move up or down depending on that news. I remember when S/O and I took 1-5 Gary said to see how the news affects the market as well as stocks. The news about FB although not great was not so bad to move the stock much but the news of another "maybe cause of a fire" was going to hurt TSLA BADLY.

It seems there was a fire at a home and suspicion was that a TSLA car while parked in the garage was the cause. Given all the bad news around TSLA and fires I knew a Put was in order.

I bought 12 144 Dec Put contracts placing my order 5 cents higher than was being asked. I bought off the 5 E chart. I wanted in right away and didn't want to wait for a pull back. I knew a pull back would happen. I was in about 10:01 AM @ 2.38 with a 5 cent spread.

As I said I expected a pull back and really we are suppose to wait for one but I knew (because of watching TSLA) the options on this thing would go nuts. The pull back came around 10:26. My trade was up to $954.00. In about 20 minutes my trade went from $954.00 up to $234.00 up.

If you want follow me with my trade.

Look at the 5 E charts and you can see the candle move that removed over $700 from my trade. Panic was not in order. Looking at the charts was in order!

I draw a line about where I enter a trade. Draw a line off the top of the 10:00 AM candle wick on the 5 chart. As you can see the pull back was not above where I entered the trade and the option was still in my favor. Had the option been lower even though no candle was higher than my entry I would have exited.

But there was no reason to leave this trade. NONE...ZERO...NADA! The pull back was not higher from my entry and my option was moving in my favor even after the pull back.

I started to monitor my trade. It was my belief based on the charts that my trade would go lower and that I should exit before the second pull back would occur.

Slowly it began to turn in my direction. If it hadn't started to move in my direction I would have closed the trade.

Look again at the 5 E chart. I have a very light. light blue BB on my 5 chart. When that small white candle formed on that BB followed by a DOJI I sold. You can also look at the Stoch RSI hiting the oversold and lamanating on the 55, 34 and 21. I exited based on all that information.

73% profit...$1,886.69. S/O did this trade as well but bought out of the money and made 69% profit.

Way to go and thanks for the detailed posting

Thanks for discussing your exit thought process. I'm getting pretty good at identifying my entry points, but my exits are still rough. Had I been in that trade yesterday and seen my profits dwindle from $954 back down to $234 I would have hit that sell button and run. I did just that last week. I got out of two trades, keeping a small profit, when a pull back occurred. However, had I waited about 30 minutes to an hour later, both trades would have shown a profit of at least $1,000.

How do you know when a counter-move is just a pull back before resuming the original trade direction and not the beginning of a reversal?

robert Wrote:
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> How do you know when a counter-move is just a pull
> back before resuming the original trade direction
> and not the beginning of a reversal?

In trading short charts a pull back can hurt you unless you get your entry right. I knew there would be a pull back and generally I wait for one but being busy this time of year caused me to enter PDQ because I wasn't sure when the pull back would happen on TSLA. But I believed it would continue going down after any pull back based on the news.

However that doesn't really answer your question. So....Mark the entry on the chart where you made your decision to enter the trade. Depending on which chart you use and are watching will depend on an exit.

If you are using small charts generally the 55 is your trend chart. However if you noticed I am usually out of my trades before noon. Expect a reversal around noon generally. (Yes I know I use generally often because things happen generally in the market)

Watch your MONEY FLOW. If the money flow turns and continues to go opposite your trade things are looking like a reversal.

If you can see how trades are moving in your stock; such as Qcharts has a file called "stock watch" which gives you tick by tick of contracts bought, you can see a reversal occuring. What I mean is...Say you bought calls and things seem to be going slower which makes you wonder what is happening. You would look at the amount of trades going through and would look to see if the puts are heavier than the calls. If so you are seeing a chance of a reversal.

I know that some here has said turn your candles off. Only do that for short time. I only change to a line chart when I am looking for support or resistance. Candles that are indecision will give you a signal that a change in the trading is occuring. These candles usually are spinning tops, or will have long wicks either on the top or the bottom. Go to www,candlestick forum.com and order a mouse pad that has the major signals on it. I have one and have copied off these signals and take it everywhere I trade. I refer to it often. I marked on the copied paper whether the signal is up or down. Put you "Market Makers Edge" book right next to you and use a paperclip on the pages that explain the candle signals. If you do not have this book yet....get it!

There are more signals but these are the ones I use but often I get out of the trade when a white or red candle forms on the BB...a white one if my trade is down and a red one if my trade is up. Remember to allow the entire candle to form on the chart you are watching and waiting a few minutes (2-3) to see what the second candle will do. If it matches the one on the BB get out.

Taking any profit is never a bad hing even if you could make hundreds of dollars more. I would pick up $100.00 off the sidewalk if it was laying there so why not take $100.00 profit if you are unsure of the trade?

Although I seldom hold over night I did buy 3 Dec wk 4 Calls on MA yesterday for 9.60 and sold a short time ago for 22.05. I simply followed GW's split rules and knew MA would go back up after my peak play. I can usually watch 2 stocks at a time but I knew after looking at the charts it would go up. How did I know this...Look at the 55 chart. See the 50 moving average scooping under the candles? See where on 12/18 the candle came back and touched the 50 moving average and then moved up? This is what made me 90% sure a call was the way to go and to remain in over night. There was a pull back but on the 55 chart but it never crossed my entry line and my 5 moving average never crossed the 10 (E signal to sell) on the 55 chart. I entered on the 55 and sold with that red candle forming on the 55 because of (luch time) and just was happy with my profit. Looking further I saw that profit takers were entering the trade according to my "stock watch", and money flow.

Hope this helps and can give you some insight as to how I trade.

Darcy, thanks for the further explanation. I look forward to reviewing it in better detail this weekend when I've got more time to sit down with the charts and study a bit.