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Richard Scionti avatar
Okay so that was super fast but I want to explain my $ICPT trade for those interested in #daytrading. Yes, I only made 1.5%, but it could've gone south very easily. https://www.tradingview.com/x/AcKuoZFG/ The solid white and red lines are the 0.5 and 0.382 fib lines. These were drawn BEFORE THE MARKET OPENED. To understand how this works, watch this video: https://www.youtube.com/watch?v=aEFyGb7u0pE&t=3s The colored moving lines and simple moving averages. The important ones that were used here are the 10 (blue), 21 (green), and 200 (red). The orange line by the green shouldn't have been there. That's the basis line for the bollinger bands I was using, so just ignore that. The dashed blue lines are support and resistance levels that I drew MID TRADE. Finally, the green and red zones: The green is the profit I ended up taking, and the red was my assumed risk. This was drawn AFTER the trade. Okay, here's how it went down. At 9:35, I saw the chart approaching the 0.382 (red line). It bounced very quickly the first time, so I put in a limit order at $18.41. Why did I do $18.41 and not the fib line? The 200 SMA had just crossed over that level, so in case the price bounced on that instead, I opted for a worse entry to gurantee a position. At 9:38, with the big green candle, I put a limit sell order in at $19.30 to take profit on the anticipated bounce off the 0.5, but we never made it that high. At 9:40, I noticed the 3 bottoms making a trend line between 9:35, 9:37, and 9:40. I drew that in bluee and anticipated a wedge at 9:42 with the 21 SMA being resistance. It's important to note that I also look at the MACD, relative strength, DMI, and ADX when trading, but I removed those here to prevent confusion. AT the time, all these indicators looked strong, but the lack of volume had me concerned about the breakout. 9:43 showed a breakout down. We lost the wedge. The next candle, we bounced sharply back up to our resistance. When you have a quick bounce like that, your first thought should be "What am I bouncing off of?" That's when I drew the second trend line between the bottoms of 9:31, 9:37, and 9:43. I realized we were approaching another wedge between a trend and the 21 SMA, this time with the 10 SMA further applying supportive pressure (however the 10 SMA does not hold nearly as much influence as the 21; Bigger numbers = bigger pressure). At 9:45, I saw we lost the wedge with big bearish volume, while all bullish volume was basically gone. I cancelled my limit sell and then closed all positions here to take profit. I knew that my profit would be small, but I also knew we were heading down. This was all on the 1 minite timeframe and the whole trade lasted 15 minutes. "But Richard, why are you working so hard for 1.5%?" 2 reasons: 1) it's not always 1.5% 2) consistency compounds Let's say I get to the point where I average 1.5% profit per day trade. That means I'll have some runners, but I'll also have some losses. For the sake of argument, lets says that I always use the same position funds, meaning I always use the same pool of money in full for every trade. 52 weeks per year * 5 days per week = about 260 trading days 1.015^260 = 47.99 So say we started with $1000. $1000*1.015^260=$47,990. That's a decent income off of 1.5% average. And again, with the potential of ONLY 15 MINUTES PER DAY. That's the idea we're looking for. Obviously, the goal is for the average to be over 1.5%, and I'm still learning so I'm sure I'm far from it, but that's why it's so important to analyze these small trades. You need to learn what you did right and what you did wrong to improve future consistency. Here I saved 1.5% profit on a bad trade. Next time it might be 15%. The practice to learn from on the small trades is what helps you on the bigger ones. #AmateurInvesting
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