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Author Topic: Momentum Trading - Analysis of an AAPL Daytrade  (Read 828 times)
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tamo42
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« on: 2011 Jan 04, 08:06:22 am »



I was asked to go into more detail about how I made 4.2% in 13 minutes yesterday on a daytrade.  Since I have a few moments before the market opens, I thought I'd throw this little point-by-point analysis on how I did it.

A year ago, I wrote up a post called Daytrading Dos & Don'ts, in which I described a little bit about how I trade.  Part of that is focus.  At the time, I was watching GOOG, but I switched over to AAPL because it was showing better action in percentage terms.

So yesterday, I was watching AAPL as I usually do.  And I saw the formation shown in the chart below:



On the breakout from the ascending triangle, I bought the 320 calls for 14.40 each at 10:06.  

Entering trades at the right time is only half the trade.  You must also sell at the right time, based on your strategy.  I have somewhat complicated money management rules that I use to prevent myself from getting too worried, anxious, hopeful, greedy, or afraid in the markets.  Once I'm in, I know exactly when I will sell for a gain and when I will sell for a loss.  In this case, the gain rules applied (fortunately that is the case most of the time!).

So I sold a third of my position at 10:10 for a profit of 0.30.  

I sold the next third of my position at 10:15 for a profit of 0.50.

I sold the last third at 10:19 for a profit of 1.00.

Overall, I sold for an average profit of 0.60, which on a cost of 14.40 is a return of 4.2%.  In 13 minutes.

If I had held everything for a maximum gain, I would have done better.  This time.  My management rules exist to give me small, predictable returns as many times as is possible.  It's not about the home run.  Babe Ruth was the home run king, but he was also the strikeout king.  That doesn't work for my money.  In daytrading and momentum trading, it's about taking the quick, highly probable profit time and time again.

I hope that clears things up.

Happy trading!


* 2011 01 03 - AAPL trade.jpg (24.22 KB, 800x357 - viewed 273 times.)
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Neal McSpadden
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« Reply #1 on: 2011 Jan 04, 08:15:29 am »

thanks for this one!!! That was very interesting
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« Reply #2 on: 2011 Jan 04, 08:34:19 am »

"bullish push shows direct of the day"

i really cant see anything there. For me its just a green field. Or all the other marks u have done. Maybe u can advice a book i should read?

Its really interesting but if you dont see 70% of the stuff or dont get it, its hard to follow after a while.
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tamo42
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« Reply #3 on: 2011 Jan 04, 09:19:11 am »

Technical Analysis of Stock Trends is sort of the bible for technical analysis.  It's been around forever, this is the 9th edition. 

But really, if you want to learn, read everything you can find.  I've probably read 500 books on the stock market, and I'm always reading more.
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Neal McSpadden
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