Wednesday 22 May 2013
Easy Day
See the 5 minute chart of the Dow Jones below. Point A signifies a test in a rising market - classic down-bar, narrow spread, closing in the middle, volume less than the previous two bars. I went long at this point and, as the title to this blog suggests, it was not particularly stressful! The market responded nice and quickly to this test and I took 25 points profit. I exited the trade at this point for a few reasons - 1. 20 points is my target, 2. the bar was approaching a former level of resistance, 3. the half hour bar was about to finish, and the volume on that bar was extremely high (due to the News action at 3pm), which could have meant I would have watched my profit diminish which, as I write, is exactly what has happened - the half hour bar appears (at this moment) to be turning into a top reversal and a possible indication of weakness.
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Good job Rita! May I ask as you put in a trade at A, where would you put your stop? Also notice the previous red bar, in my opinion, has a very similar setup to your previous blog post.
ReplyDeleteHi Edmond, I usually put my stop 20 points away, but if at an area of, say, stopping volume, the stop would be below that area (not sure if this makes sense). Yes, there is a previous test on the above chart which would have been a good entry point. But if I remember rightly there was News around that time which is why I did not take that.
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