The Student Loan Ranger

I am fast discovering something very very annoying:

• Every stone-wall trade I don't enter ends up being a £400-£800 winner.

• Every trade I do enter reverses instantly and moves to either daily highs or daily lows.

In times like these it seems absolutely impossible to lose money in the stock market. So what just what is wrong with me?

Afternoon Update:
Had a nice trade in GM, textbook breakout that I caught a good portion of. Sold out a bit too early, and then failed to re-enter on the perfect retracement and subsequent move. Also taken a long in NOC, very strong resistance at $70 was broken this morning and I entered shortly after the break. Nice retracement and retest of $70 before a great continuation move. It's currently at $70.79 and I'm looking for $71.25.

Oil looking weak again, and the financials are just trying to break even now. C and BAC hovering at support but under the heavy MAs so not considering a long in those yet.

Post US lunch update:
Checked out my NOC, was struggling at $71 all day so took profits there for a low risk $85. GM has been nice today. Oil has been up and down all day, but most of the market is showing decent relative strength and holding quite well.

Probably calling it a day for today, pleased with how it went except for my BARC trade, I just was not thinking!

Big gap down in BAY today, with EZJ gapping up. Barclays has had a big drop under the 200EMA and BP has rallied to highs today and is currently forming a double top circa 529 and is a potential short to 525 - risk reward is not good enough for me to consider an entry though.

Looking forward to a clean day trading the US markets.

I looked over the past weeks 5 minute chart for Barclays and applied the same entry/exits using the Parabolic SAR and I got the following results:

This indicator is a sensation using the Heikkin-Ashi with a 100EMA.

Check back later in the day for some intra-day charts, I'm just waiting for a nice entry at the moment in the UK sector, but I expect the bread is in America today.

US Mid-market action:
I have learned an important lesson today: Do not have friends over while you trade. I missed sensational entries in TSO, ABK, UAUA and GM because I was playing pro-ev with a mate for a while, and then another came round shortly after for a little bit. These trades would have totalled well over £1200 closing at the current prices (and probably in excess of £1500 closing on first exit signals).

Annoyed, but I forgive them lol. Anyway, 2 trades so far today, one good, one terrible. Here they are:

Alcoa long - this was a total disaster entry, my exit was nice as I limited losses and stuck to my plan. Retrospectively, looking at the chart I must have been thinking about shorting but convinced my brain to go long. The setups on the chart, as explained, were terrible! The short target was hit right on the button.. so what the hell was I doing?

Visa long - happy with this trade, as I was in on a consolidation break at $75.02 (whole number break too) with a price target of $76 (closed at $75.965). Nice quick trade that had very little risk with a stop at $74.9. Chose a good exit price as it has tailed off, but I suspect this will move up again.

These are the sensations from this morning. I am dismayed with UAUA in particular as it was a clear setup. TSO was also very clean. GM.. very clean.. you get the idea! UAUA, TSO, GM and AA were the 4 charts I had up on the second monitor from 2:30 onwards.... :(


GM did a similar thing to UAUA in terms of setup and has moved from $10 to $11 at the moment. The reason for the big run is oil crashing again down to the $113 region.

Not so much a roundup this week, more of an evaluation of the patterns and indicators I've been seeing this week. Had a quick glance at a video of me evaluating a long in TSO at $14.82 earlier this week (it hit $18 on Friday). Anyway, there will be plenty more opportunities so I won't be bitter about it.

For those that regularly check here, you will notice a little difference in my chart setups at the moment. Mainly a second price chart comprised of the Heikin Ashi candlesticks, 100ema and the Parabolic SAR. The Ashi is great for checking removing choppy patches and charts, and it shows consolidation periods better in my opinion. The SAR is a terrific indicator from what I am finding, so I'm doing a test here.

I'm going to go through the chart of Alcoa and using the corresponding mid-candle price on the actual price chart, in the lead up to this week we can use the following in terms of support and resistance levels:



We get the following entries using solely the parabolic SAR:
[NOTE: Consider each position size 200 shares]

Parabolic Entry/Exit P/L results:

Now on a technical level, trading using support resistance, candlesticks and moving averages, we get the following trades:

With the following results:

[NOTE: These values should be in $ not £]
[Subtract 20% to account for hesistancy/late entries etc: $880]

Quick statistics:

• We made 53% more trades using the Parabolic SAR indicator.
• The Parabolic SAR gave 2 more losers than winners, however profits nearly double losses.
• Losses only accounted for roughly 10% of the total trade returns using traditional methods.
• At no point using traditional methods would we have been at a loss.
• Despite half the trades, the second method gave over double the profits.
  
• The Parabolic SAR gave the largest profit return at $254.
• Sup/Res methods gave us the largest loss, albeit the only one on that system, at $110.

Very interesting I think. I was going to do the same for other stocks, but that just took me 1.5hrs to compile so might not be worth it. Ideally, we would use a combination of both, interestingly, the SAR seems to prevent losses very consistently. Although winners might not run as long, the SAR is a good early indicator to close or enter a trade, which must be used alongside the other methods and practices of technical analysis.

If commissions are a big thing for you, then trading the SAR method is probably not a great idea. I factored in $8 as commissions for each entry and exit during this experiment. The most blatant thing about these results, well, from the physical "hit the button" point of view, is that I factored in a 20% loss to the results. I did this for the following:

• You will never exactly hit the bottom and you will never hit the top
• Most traders will wait another 2-3 sticks for confirmation
• If a trade instantly goes against you and you see a loss on the blotter, you might close out
• Technical difficulties
• Distractions

This equates to missing 1 trade from 5, which I think is a realistic ratio.

In terms of the solid patterns I saw in this chart, the wedge formation beginning at open on the 5th, that lasted until 14:30 on the 7th was the most powerful indicator. Also the prevailing resistance level displayed in the 'lead-up' chart was the most influential horizontal price, slightly outpowering the initial support line. The overall large downward trend line was struck twice with good drops following it.

The double bottom from 5th open to 8th open was also a great indicator. There were a few double bottoms and double tops near the faster lined MAs, especially on the 6th and 7th, in the scheme of things these are better ignored, but both would have given over $45 in profits, thus are profitable, but risk reward wasn't that great in each occasion.

Pretty quiet morning so far, Barclays is the most outstanding member of my watchlist as it soared to just shy of £4 earlier. I have got into the routine of a 10am wake-up, because with the UK markets, the moves are made too early and too quick to capitalize on until you wait for a retracement.

BARC however didn't, and it dropped to support this morning on my chart before going NASA on me and exploding.

Anyway, here is my Alcoa entry/exit dissection from yesterday, I'm pleased with both so it's a great trade. I really had to close the trade before I went out at 7:30pm, and I got a decent entry signal in terms of risk:reward. I continue to be bullish here, but I felt any opening gap might have stopped me out for a loss.

Agrium was very nice yesterday with its movements, and I think I'll add this to the watchlist on a full-time basis.

I've just missed a good entry on a BARC short because I've been writing here, oh well. I'm currently waiting for EZJ to break or reject 347.. (oh wait a sec it just did and is now at 341!). BAY is really choppy this morning and it looks like it fancies a drop to the 250 range.

US hitlist remains the same as yesterday, but with Agrium and Ambac in the mix.

Note:
This is the 100th post on this blog, and is somewhat of a milestone for me. It's been a very tough year so far, but I've learned a lot and I feel that I'm getting to the stage where I am comfortable with my abilities as a swing trader. I also believe that once I can learn to pull the trigger without a second thought, I will be a solid intra-day trader.

Hopefully by new year I will be hovering around the 200 mark for posts, will less "rag loss" postings about things going wrong.

Fear is the number one enemy for anyone that wants to day trade. Fear makes you miss opportunities like nothing else does. I seem to be low in confidence at the moment, for whatever reason - probably because I hate CMC and don't want to give them any more money in commissions.

Check out this EasyJet chart from this morning.. I sat and watched this all day as 5 indicators to short the stock came and went. The first indicator was the most blatant sell signal you will ever see in your life as a trader. For whatever reason, I just could not bring myself to move my cursor over the sell button and press it.

The unfortunate thing is, the more of these plays I pass up, the less confident I become. It's a perpetuating cycle of fear that I must learn to break quickly.

Lunchtime update:
I've started to only watch Barclays (BARC), EasyJet (EZJ), British Airways (BAY) and BP (BP.) in Europe for the past few days. I should really phase out one from the airlines and perhaps introduce something from tech, mining or something consumer related. Oil is such a big factor at the moment, and as I familiarise myself with the airline movements I'm still happy to keep 2 on the books.

Elsewhere my US setup for today is:

• Potash - agricultural
• Alcoa - metals
  
• General Motors - vehicles
  
• Tesoro - oil refiner
  
• United Airlines -airline
  
• Bank of America and Citigroup - the financial spine of my US operations.

Another heavy oil influence in the mix today. Depending on commodities I might also trade US Steel. There are a lot of financials reporting today, Freddie Mac and Ambac the big ones. These losses could pull down the market quite a lot so I'm ready for that. Mastercard and Visa are also potential trades on large positions too.

Evening update:
Financials have actually been pretty good, oil is kind of holding around $118-119 and there has been some nice trading today. EZJ is a gem for signals, but I was busy waiting for entries in GM and AA to notice another double bottom into close.

Pretty annoyed with another stock I noticed pre-market - Agrium. It's some kind of agricultural stock that trades in Canada, I saw a big gap down and an ascending triangle had formed (I checked after I saw news about earnings) and was getting ready to play this on the open. But it gapped up and didn't give an entry.

Couple of charts here from so far today, including a follow on from TSO yesterday..

Decided to have a long lie, as I knew EZJ and BAY would gap up strongly and not really allow a good entry. I was right.

However this morning I am being confronted with a raft of computer problems, network down, internet choppy, broker platform crashing or not loading, ADVFN L2 service not working.. the list just goes on and on.

There are sometimes too many battles to fight in trading and it feels that it's not even worth donning the gloves to take them on this morning!

But I'm not a quitter so I'm waiting for a nice retracement in some stocks - because they are ALL up this morning.

Afternoon update:
Today has been a sensation for airlines and financials.. and pretty much everything else. There are 6 minutes until the opening bell in New York, and today I will be looking to trade from the following stocks:

• UAUA - Airline
• TSO - Oil refiner
• General Motors - Vehicles/Transport/Industrial
• Bank of America - Financial
• Citigroup - Financial
• Home Depot - Consumer retail

Quite a lot of good looking setups (descending triangle in GM and TSO for example). However I am anticipating a gianp gap up across the board, so I will look for early signs that this momentum will stick - or wait for a retracement.

There is a feed meeting today which will impact heavily on the markets so trading while trying to guess the outcome is extreme risk.

Some decent technical action this morning in EasyJet and Siemens. Haven't got my clout back from CMC yet so missed both.

Quite annoyed about that because they were probably the simplest trades you'll ever see..

EZJ setup was a simple drop from a double top, which hit support this morning - I was initially looking for a gap-fill, but this became unlikely with a series of spinning candlesticks, which hit off not only the prior support/new resistance line, but also the strong 200EMA. My target was the support in the 315 range - which it hit nicely, consolidated and gave a nice long entry at 215.5. This would have been a short and high risk trade given the proximity to the 200EMA.

EZJ dropped off early, as oil.. now this is just ridiculous.. oil rose 80 cents... can you believe that.. 80 cents and airlines drop 3% at open!? Anyway, oil news as ever is the catalyst for the opening price and the late afternoon rallies in the airlines, everything in between is TA-able.

SIE was even simpler, a nice drop off in the morning and a consolidating range at €76 which was also where the 200EMA was providing support. This is close to a nice golden cross on the MAs, but is also looking to establish some kind of short term down trend from what I can see. My target would have been the 50SMA at €77. SIE is a very nice chart to get technical on, particularly the 15min timeframe.

At the moment I'm waiting for the US to open in 40 minutes. I'm going to be tracking BAC, C and TSO only today.

In other news I have began recording my screen as I evauluate trades. 3 videos with one as an evauluation, the second records the entry point and targets, and the third records price action in accordance with targets. I'm hoping this will let me see a lot clearer where I'm making mistakes.

It's working already, I watched back my original entry in BAY this morning. 3 words.. What, the, f***.

US Midday update:
Big big drop in oil, down to $120pb. I think this drop is overdone, even though there is no reason for it to move up or down at the moment. Iran nuclear program? Who cares?

Great technical action on BAC, as well as UAUA with the latter up 10% within 30mins as a reaction to oil drop. Nice move. On the back of this I expect some strong moves in BAY and EZJ tomorrow - but we will see where we close with oil tonight. Still in oil news, Tesoro is in a perfect descending triangle at the moment (look at the 1hr chart), and I am becoming bearish on this. $14.5 is a very key price here, and I'm looking for a drop and a re-test. Of course, we will see what happens with the crude price.

Bank of America chart so far today...


You can see a nice drop, and the chart writing explains it. Notice the fantastic divergence on the MACD and the picture perfect bear flag setup. It doens't get much cleaner than that for a long setup.

I've cut out using the stochastics indicator, it doesn't really work well in shorter timeframes. I've started using a side-by-side Heikin Ashi chart with a 100EMA featuring the Parabolic SAR indicator. The HA cuts out a lot of noise and gives you a better clue to where things are going.

I am absolutely livid with CMC Markets at the moment.

Unbeknown to me, they have started charging commissions.

They didn't tell me about this.

I spent £170 on commissions on Friday.

So not only do I have to deal with a spread I have to deal with a commission that they didn't even warn me about.

Morning update:
I am back in the game - CMC have said that fixed risk accounts are not subject to commissions and therefore I will be issued a refund.

However that did not stop me from making a horror show in BAY this morning :(

Afternoon update:
These guys are unbelievable. It now seems I will in fact be charged commissions for trading through CMC.

According to the nervous posh guy on the phone, there was a technical error with my account and it wasn't put onto the automated commission system. I mean come on, have you ever heard of such a thing? These accounts are all automated, there isn't a human sitting at a desk going "Oh yeah, wait a minute I haven't put him on the 'let's lose his money' list yet". Unreal.

My initial question was this: If the system is automated, then why am I paying commissions? Why does anyone pay a commission for a CFD - there aren't any brokers going out to the floor to get you the ticket at the best price are there? CMC Markets is really just a bookies at the end of the day.

The longer you trade, the more you realise that honesty, fair execution and reliability do not exist in any way on the contractor or brokerage side.

CMC Markets are looking set to join III in the shallow grave. I can't keep giving these crooks my business.

Couple of interesting setups amongst the candidates this week. A lot of weighting towards US stocks this week in terms of the better opportunities.

Starting with some financials, Citigroup and Bank of America look ok. I'm bearish on both in the immediate short term, particularly C. BAC looks really stretched at the $34 mark, and I think it is trying to establish some range trading potential between that and $28 in the short term. However, depending on oil news etc leading into Monday, it could easily rally past this, and if it does it should be quick and relatively sizable.

Bank of America (BAC) 15 min chart:

I'd like to see a pull back from this, that's what I expect. It will be interesting to see if it pulls back to the support at $28, or if it hits this trend line it could be trying to form. I would be bullish on the trend line as it would form an ascending wedge, which is a slightly better indicator for me. The $6 channel is very exploitable for profits, however we could see some big gapping this week.

Citigroup timeframes on the 5min and 15min both indicate a drop on Mondays bell. 5min chart is consolidating in a clear range as shown by the first chart. Looks stretched here after a nice explosion, good shorting opportunity but be wary of a sharp move off the MAs and over the $19 mark.
The 15min chart is probably a little better to look at in terms of support resistance ambiguous line at $19 (prior support new resistance). These are why I think C will drop off on Monday morning and then perhaps rally later in the day depending on news. C is forming a wedge on the 15min chart which is something to look out for, as it is fast approaching decision time.

Tesoro is a chart I haven't analysed for a little while, so I've just drawn in a quick few lines. I really rate TSO as a tradable stock as the movements and patterns are really crisp across most timeframes. Here's the 5min chart first, similar to C's 15min chart, where $15.4 is a key level at the moment. Nice wedge forming here and we could see some nice action in this on Monday, depending again on oil and gas geopolitical events etc.

Clear as day descending wedge on the 15min chart here back a few days now. Strong support in the $15 area, but it has wicked down once to $14.80 so watch out for traps. I'm looking to trade this through the week as these patterns are very good for either-way trades therefore I will react to the events as they happen instead of declaring myself bullish or bearish here.

Elsewhere it is a huge week for RBS as they report earnings on Friday. It should be a horror show if anyone else is to go by (HBOS, Alliance Leicester..), however the market will no doubt do the opposite we expect with RBS. Should provide some nice scalping in the lead up to Friday, but could be a very very risky play holding into earnings on either side.

Volkswagen looks nice off the €194-6 area for a long. British Airways jumped the to I think a 4 month high briefly on Friday on acquisition news, I traded the jump but didn't short it back down. the 196-260 channel is a slight more expanded now to about 275 - but I will wait for some re-testing action there.

Otherwise it should be a fairly straight forward week.

Evening update:
I have started coverage of EasyJet (EZJ) on the basis of an excellent 10 minute chart. Also adding Wachovia (WB) and Alcoa (AA) to the list. I have removed Transocean, Time Warner and Microsoft on the grounds I never trade them and hardly even check their charts.

Back from my holiday this morning after a week away. Looks like I missed some good trading, particularly in airlines and retail which would have been nice.

Not really prepared for today (even the US markets later), and because I'm not too hot on sentiment at the moment I won't trade until Monday morning.

I will be scanning through my watchlist this weekend looking for potential trades and I will include anything interesting on a post on Sunday night.