CXO Postmortem for Gary's Students

Would any of Gary's students care to dissect a CXO trade that did not go as planned. I entered on the 233(SLI) on 5/17 on the close of the first candle. There was also SLI in the daily coming off the BBB and laminate support of 55,34,89 directly below with the 144 ma slightly below. The 233 had laminate support from 233,89,144 ma and was coming off the BBB. With the candle coming off the middle BB on the weekly I thought I could call the candle white. Would you have taken this trade? Did I miss something obvious?

You may have taken the perfect signal, SLI with additional supporting criteria, but other factors would affect whether I would have personally taken the trade, and of course it still might not work; that said, please understand this is not criticism but just observations I make before entering a trade. FYI I have taken everything that Gary has ever offered though I will not be referring to the mechanical aspect of the trade which seems to be the answer you are looking. At least this will give you another traders perspective and some aspects of the processes I have developed over the years that have improved my trading plan and P&L.
The day of the signal May 17, 2018 I would first look at the weekly chart an observe only high volatility chop since the first of February. On the daily and 233 I only see price congestion above my entry point and resistance at the $ 157.00 area. Next, I notice on the daily chart on March 27th and 28th that the stock looks like it hit a ceiling and fell to the floor with a gap down and strong follow through in the following days. This resistance was confirmed again on the daily chart on 4/19, 4/30, 5/2 and 5/9 - 5/10. I use the recent price movement to answer 3 basic questions for my trading plan: Initial profit target, exit point and probability of success. If I considered taking the trade on the 17th at the close of the 233 candle this would put me in the trade around 154.00; I see an initial profit target of 157.00 due to the confirmed resistance and my initial exit point would be around $ 147.70; please note that my numbers are only for a big chart trade. Based on the congestion above my entry point and the recent price rejection above this entry point I would see a low probability of success. In addition, the math is an absolute deal breaker, I am risking $6.30 loss for a potential $3.00 gain, stock or options it does not work for me. I always know my initial profit and loss points before I will enter the trade, this information is also required as a part of my money management.
Might not be what you are looking for, but I hope you find something useful.

Thanks work in progress.

How did you determine your loss point at $147.70?

Welcome ncptech

Just below the pivot low made on 5/16/18. I have found that an adverse reaction in the market can pull a stock down to retest a recent low or support area while the reason for getting into the trade is still sound; for this reason I go below a recent pivot point or other support area. After reviewing several trades I figured out that by adjusting the number of shares or contracts down slightly to meet my risk / money management criteria and giving the trade more room to work would actually improved my bottom line.

There are so many things about trades to learn. I am a GW student but only 1-5 and advanced. S/O (husband) and I have been successful traders now for many years. We never hold our trades over night...ever. I can't help you with any of GW's new methods but I will share with you about what I see. But then hind sight is worth millions!

When I add all the extra moving averages (MA from this point forward) it is no wonder you thought you had a trade however if you remove the 89 and 144 MA's you can clearly see that you had a straddle for a few days and then a Put.

I don't know if you use the MACD but the volume on it along with the 20 MA as a support, which is the center of the BB (bollinger band) and the fact that there was no candle close above the 50 moving average which you would have needed in order for this stock to rise indicated that you needed to wait for that signal before entering any trade. Your BB was also telling you that the stock was going flat for a few days notice it never balloons out for a few days. There was no volume.

When the BB does start to move it is the lower band which signals a move down because the upper band is also pushing down as is the volume on the MACD and the 20 MA or the center of the BB. Your entry for a trade happened on the open of May 22 and it was for a Put. You could have entered a Put on the 17th but it would have been a little more risky because the stock could have broken through. You could have done a straddle for 2 days. [www.investopedia.com]
and then sold the losing trade while keeping the winner. (Advance class trading from GW)

Regarding the CXO trade, neither the Monthly nor Weekly supported this trade. Any historical (seasonal or earnings) data to support this? Any continuation or reversal patterns in place? None that I can see. That said, a good rule of thumb on any SLI entry point is to exit the trade if, by the 3rd period from the entry candle, the trade isn't going in your direction, period. Exit point for the 5/17 CXO entry off the 233 should have been on the 1:23 candle on 5/18 @ $153.49, as it wasn't moving up. This rule somewhat helps mitigate losses on bad entries.

SLI entry on the Daily chart on 5/10 would have been a better choice, given it had bearish divergence. And pay attention to big charts, they matter. Using only SLI and laminated indicators [and nothing else] can't be the only basis for a trade.