Practice trade

I have done a few practice trades recently that started out well, but lost money when I stayed too long.
Example: TWTR, 4/14/14 BTO @9:39, 44 put @ $1.75 At 9:55( option $2.37) the 3 and 5 min charts histogram and RSI(oversold) were showing signs on turning to the upside. The 10 min chart still appeared to have room and momentum to the downside with the ADX showing continued strength. The stock reversed and lost all the gain in the next 15 minutes. I seem to remember other posts recommending waiting for the 5 ma to cross the 10 ma on the 10 or 13 min chart before exiting the trade. It seems when I wait that long I sometimes lose much of my gains. I realize I was trading a mixed market which isn't the optimum situation. Questions:Was this just a bad trade to enter ? If not, would you have recognized the stock was reversing and not just head faking? What would have giving that indication?
Thanks in advance for any insight on this. I really appreciate all the help you guys provide on this site

By the way, Twtr did end up getting back down below the 9;55 dip. Considering the favorable set up of the 55,34' and 21 charts, would you have weathered the temporary rise of the stock from 9:55 to 11:00 before it started back down again?

I am not looking at my charts, but I will share this with you and it might help. When I enter an intraday position, I focus closely on my MF and candles off the 10MA Chart. If you are in an intraday trade and your MF and candles are drawing and painting in the direction of your trade, you are safe. If the MF starts to turn and candles start to weaken, WATCH OUT FOR THE TURN!. If following a turn on MF, you see a Doji and or a negative candle, get out. Your run is about over. It is not worth staying in because the Option Price does not work in you favor. When I see the MF turn and candles start to weaken, I know the Option Price is going to bury me, so I leave the trade.

There is more to the MF/candles that is critical to entry and exit, but I will not throw too much out at once. If you are one that will venture out a bit away from the norm, try practicing the process above. I think you will see quickly that the results are amazing and your loses are minimal to none. I have spent literally dozens of hours studying how all of this work in unison. There are elements that are revealed in charting that are scary consistent. I have peeled the cover back and figured out so much of this.

Just know there are some scary statistics out there regarding the success of those who try trading for a living. It truly takes more work that 90-95% of america is willing or take the time to give. We can talk to you about what we do to trade well, but it will take developing your strategy and approach to what works for you. As I have always stated, if you knock homeruns in practice, you will knock homeruns in the real world.

I will start my first Tortoise and Hare account in the fall. Yes, I am going to use Gary's process by starting with a $2500 account and "Go All In" each time I trade. I am excited about that. Think about it, if you know how to identify when a trade is not working, and you can get out with a minimal loss, why not go for it? I want the challenge, and I am not risking any of my basket in the process of taking that kind of risk. I want to share that experience with the forum when I start. I will let you know if it works as it seems.

tpplayer32, I do not want to confuse you based on my suggestions to do some things a bit differently. If you are confused, please, please, disregard. I am twisted a little differently, and I do not reach everyone. I sometimes feel like "Rain Man".

Take care and trade well!

Good l

Hum...I am wondering why you bought a Put? Looking at the 10 chart there was a gap up on TWTR on 4/14. The 55 shows a small gap up. A put would have to happen quickly because the direction of the trade was up. This sort of gap is telling you to wait for the pull back.

Gaps are interesting. A stock can gap up and continue up, gap up pull back and then go back up or gap up and fall.
A general trading rule for gaps is to wait and see if the gap closes and then continues in the direction of the gap or if the stock is an exhaustion gap. I found this really works when a gap goes outside the Bollinger band. There is sometimes a pull back if there is not a gap on all charts. If you do not see a gap on a bigger chart like a daily the gap usually (not always) pulls back within the day of the gap.

Generally if a stock gaps up and the candle is on the Bollinger band or right inside it it will go up some more before pulling back. Gaps usually happen on sudden good or bad news and that news can be nothing more than TWTR is up and running...or some such nonsence.

You could look at the daily chart and see if the trade would be up even if you were trading for a quick $ but TWTR would have been best entered after the gap pulled back and then continued in the direction of the gap off the 55 the next day. You could have traded it up on the 15th to the 50 moving average and when the candle pierced the 50 moving average on the 55 chart you could have stayed in the trade until the candle landed outside the Bollinger Band on the 55.

Looking at the 34 you had another gap up on the open and a slight pull back because of the 50 moving average. Once that candle picked up support on the 20 moving average you could have entered your trade there (12:54) and remained in until the power move of the last 2 candles above the 200 exiting around 3-3:20. This would have been a $3.50 move or about that.

Usually you should wait for the 5 to x the 10 but on a very small chart like a 3 or 5. I generally exit when my candles start pulling away from the Bollinger band and start going sideways or when the candles start getting a distance from outside of the Bollinger band. I've missed extra $'s but I was happy with my trade.Sideways moves can eat up your gains when trying to trade fast.

As far the ADX if you look back to 4/04 you can see the ADX hit that high on 4/14 so it was warning you that the ADX (strength of the trend) would slow. As the stock began to pull back the strength of that trend (down was slowing not picking up stream. The ADX was saying this trend (pull back) will not last long. Looking at GW's reason to enter a trade you had a HRFP up not down on the 55. Had you entered a call on the open even at the high of $41.43 and stayed in the trade until the close of 4/15 to the high @ 3PM of $45.52 your trade would have been over $4. Everything on the 55 chart said up.

When using the E charts make sure they agree with your GW charts. If they don't you are risking a trade not trading it with confidence. Most of the time (I can't say always) S/O and I try to trade when the 55, 34, 21 10 E, 8E, and 5E (S/O uses the 13) are all reading the same direction.

I hope this helps some.

Try this site for gap info:

[www.investopedia.com]

Darcy and Rookie, thank you so much for your insights and suggestions. I have learned so much from your many posts. I am continually amazed at your patience and graciousness to share your expertise.There is so much in the market that I don't see yet, but, I'm getting there. One of these days when I can repeat Rookie's words as in " I got it", if I can't pay you guys back directly, I'll try to pay it forward in your names. As for your advise on this trade, I will be studying on it and hopefully incorporating the lessons learned going forward. Thanks much. By the way, those gaps are really small; I could hardly find them amongst the MA's. It's amazing they have so much influence on the stock movement.

@rookie30,

You said, "There is more to the MF/candles that is critical to entry and exit, but I will not throw too much out at once." Would you please go into more detail?