Take profit? - cut lose? - market direction anticipation?

When to take profit? Take profit quickly or be patient to hold more time for more profit? When to cut lose? Cut lose earlier at maybe 0.618 retracement, or at the low of the breakout bar, or at the support (e.g. 50MA, 200MA, or previous low)? What if a stock bounce immediately after cut lose? Trading is an art and also dependent on probability. I think there is no fixed answer to these questions or any others. The answer is more likely related to the natural of the stock and the market condition.

Today market tanked for around 2%. I am also an victim of this sell off. In the past year, I am doing really bad at the market transitions from bull to bear. I am quite bullish these days. I thought the market would pull back a little bit to 50SMA then resume uptrend. My argument was the small cap (IWM) and micro cap (IWC) show more strength comparing to SPY and QQQ. There were still many good setup, especially in small cap biotechnology stocks. Because of this conviction, I still buy momentum stocks. However, there were no follow through in most of these stocks and reversed back. I cut loss in many trades today.

AERI: no follow through. I bought dip at the yesterday b/o level, but price went down further.

TGTX: initial b/o above 17, failed b/o. This stock sucks. I got whipsawed in it three times now!

ONDK: new IPO. failed b/o, closed below the b/o bar.

DATA: good fundamental stock. No follow through from yesterday's reversal. dipped below 83.8 which is yesterday's low, then reverse and closed high around 84.74. This stock still has a lot of dip buyers.

OVAS: gave up 4% gain. it only has around 200k daily volume. lesson learned: for thinly traded stock, take profit when there is good profit. Do not be greedy. I had a maximum 6% gain intraday.

NLNK: no follow through from yesterday's b/o. closed below 42. an inside bar.

NOAH: no follow through. Stopped out with a profit.

BMRN: very volatile intraday. hope it will b/o tomorrow above 94.

I shorted the market on Dec-31-2014. Market gapped up big on Jan-02-2015 then faded. My short did not work. My initial plan was that market had a gap down then I would cover. Today I anticipated market gap up but it gapped down and down 1.8%. Wishes not work.

Short squeeze play - CMCM

Short squeeze setup can be very profitable. The key is to time the squeeze to catch the short term momentum. Today's CMCM is a good example. I was in at 15 around Dec-22-2014 with a stop at 14.7, which is the lowest of the consolidation. This setup had a very good risk-reward ratio. There was an initial bounce on Dec-26 which shows some confirmation. However, it sold off next day when reaching around 15.7. For this kind of trade, I need to take profit quickly. But I was stopped out around 15.2 with min profit. After that, I "hated" the stock and removed it from my watchlist. Today, what a good day for CMCM!

For a stock with daily volume around 500k. The average volume on each 5 minute bar is around 15k = 500k/40. In today's 5 minute chart, CMCM had over 100k in the first 2 bars. This indicates buyer coming in. Now CMCM sit right below 50SMA. This is at a perfect price to take profit.

What a pity! I missed this one. This happens. To have this kind of trades working needs luck and close monitoring the price/volume action.

These days I was also in and closely monitoring YNDX. Today YNDX broke down. So either ways!

The short squeeze play needs some new/catalyst.

EP list for January 2015

This episode will be used to document all the EP occured in January 2015. I will keep updating it for each trading day.

1. 2015-01-02 (Friday)
2. 2015-01-05 (Monday)
3. 2015-01-06 (Tuesday)
4. 2015-01-07 (Wednesday)
5. 2015-01-08 (Thursday)

Watchlist for 2015-01-05

Quite a few small/micro cap biotechnology stocks are set up for a potential breakout next Monday.

ONDK BMRN AERI OVAS DHT CMLP NYLD OAK INVN CLNE KCG PZZA APA LE HSY RJET IPHI

Day trading Setup or 1-Day Swing strategy

Recently I have one day trade or 1-day swing setup working very well. It should be the same setup "5" by stkb2009. The setup is look for a volume and price breakout on the 5 minute chart. This works well for the low float thinly traded stocks. Today I had 2 trades on NLNK and NOAH. I hold them overnight for a momentum continuation on next Monday.

Couple days ago, I traded DDD and VDSI for the same setup. Usually the setup has very short momentum which just lasts to the morning of next trading day. For DDD and VDSI trades, I looked for more momentum then gave up 1/4 of gains due to the fade. After I sold the stocks, they faded even more.