3SOF

You are right scottish.. i didn't notice either RSI already at 70

QuoteWell GTE closed today at 1.87, and I'm gutted with myself, as I've got to learn to take profits. 

Yeah, isn't it a pain in the neck, deciding when to take profits?  If we sell too soon...that just about guarantees that the stock is going much higher.  If hang on for more...it goes down.



For what it's worth, one thing that helps me is to sell at least half the position, if not all, when a target is made, or approaching a target (sometimes they fall a little short).

Quote from: Melf Elf on October 17, 2005, 10:48:13 AM
If you use the two highs of 1.63 - the 1.14 low = 0.49 added to the breakout at 1.63, that measures to 2.12.   The top of the cloud is 1.82.

 

Quote from: ScottishTrader on October 26, 2005, 10:49:40 PM
Anyway, the best thing to do is not get emotional, stick to my trading plan and hold for a close above 1.75

Scotsman,

Sounds like a plan.  1.76 - 1.775 "should be" support.

I'm holding b/c we should have news soon about the DOD viewing of the Stratalite.  (Got in around 2.05)

My biggest problem with buying these breakouts is I can't tell what is a good buy and what is chasing.  For example, David buys alot of stocks after they have gone up a significant percentage (and before they pullback).  NVAX, USEY, AVII were all purchased in this manner.  When I try to follow the safer plan of bying on the pullback from the initial breakout, I still end up off b/c I' wait too long for a bigger pullback and the stock starts rising again.

I also am reluctant to set a stop on GTE b/c I know it will pullback eventually and pretty big.  Maybe the triick is what Michael says, to buy stocks whose fundamentals can support the breakout.

I had an order in for 1.78 this morning, hoping for a quick move down to support, then the Hammer that Scotsman mentioned. (I could do without the ugly dress though).  No go.  The low was only 1.85, well above support.  GTE now is up 14% on the day.  Good for you guys!

Quote from: logocovet on October 27, 2005, 09:26:24 AM
My biggest problem with buying these breakouts is I can't tell what is a good buy and what is chasing.  For example, David buys alot of stocks after they have gone up a significant percentage (and before they pullback).  NVAX, USEY, AVII were all purchased in this manner.

David likes stocks that have momentum, i.e. stocks that are "on fire."  Almost by definition, they are well away from the point of the breakout, and many of them don't pull back.  Everyone trades differently.  If on certain stocks, you are uncomfortable, then you might require them to pull back a certain amount before you enter.

QuoteWhen I try to follow the safer plan of bying on the pullback from the initial breakout, I still end up off b/c I' wait too long for a bigger pullback and the stock starts rising again.

That's alright.  Then you might just pass on those, and not chase them.  I wanted GTE this morning for 1.78, for a risk of about 2% (close below 1.76).  That's playing it pretty close, I realize, and  I diidn't get it.  That's fine. 

In other words, decide what risk YOU want to take. 

QuoteI also am reluctant to set a stop on GTE b/c I know it will pullback eventually and pretty big. 

Just my opinion, but I wouldn't stay in if there is a pullback that is "pretty big."  No reason to take big hits and suffer through stocks.  There are plenty of others to play.  GTE has QUADRUPLE support at 1.76-1.775.  If I owned this stock and it broke that support, I'd sell it, and go and play something else.  Again, just my opinion.

Quote
Maybe the triick is what Michael says, to buy stocks whose fundamentals can support the breakout.

I think that's an ideal situaltion, if there is such a thing as "ideal" in the stock market.  If that KOMG chart looked as good as the fundamentals that Michael has helped us with, I'd be all over it on the long side. 

IMO GTE has always been a pump and dump ever since it was a 2c stock in the OTCBB. Good luck to all here nut I believe this one is destined for under $1 soon.

Personally, having been burned several times recently chasing stocks after breakout, I think that I am going to have to adjust my trading style somewhat. 

For me, GTE was a good play because I identified the breakout before it happened, when it was in the ascending triangle.  Ideally, if I see an ascending or symmetrical triangle situation, I aim to buy as close to the ascending support as possible,  and call that ascending line your absolute sell line.  That way you have a guaranteed and diminishing level of risk.  But sometimes it doesn't always work that way.  With GTE, I bought on the breakout of 1.60 resistance (actually at 1.68).  Unfortunatley this breakout was false and pulled back below this level. (see mine and Melf Elf's discussion of this earlier in the thread).  I saw this as a failure and a sell sign and duly sold for about an 8% loss (and wasn't too happy about it).  But the price did not breach ascending support, which should have been my sell line, and rebounded to make the full breakout.  I then realised I had made a mistake, that the breakout was genuine, and bought back in at 1.75.  So while I am sitting on a nice little profit right now, this has been negatively impacted by the loss I made on selling earlier for a loss.  To protect this profit, I will sell on a break of the new ascending trendline, no matter what. 

I am also working on trading peaks and dips (which to date I've had little success), identifying overbought situations in which to take profits.  With GTE, I didn't like to see so much of my profit erased on the last pullback, but wasn't willing to sell, so just ate it. Fortunately for me, GTE seems to have bounced back from that and is still bullish, but using indicators to find good sell points on stocks like this, SVA, NVAX to name but a few recent ones, can really make all the difference. On NVAX, David let a 111% profit turn into a 36% profit in 3 days. Here, when the RSI hit 70 at the top of the last run, I should have immediately been looking for any sign of weakness or reversal to sell, and then considered a buy back after a couple days, closer to the ascending trendline.   And if you sell at a high, only to see it race higher, don't worry about it, move on to the next one, or wait for it to set up for a buy-in where you have a smaller level of risk. 

That is at least the idea, but it's easier said than done.  I'm doing my best to stick to plans like this, but when I see something racing, I do keep making impulse buys to "chase a winner".  These have been, without a doubt, my biggest losses, losing 75% on HYRF just recently, 30% on SVA, because I was doing just this, and when it pulls back and you are immediately in the red, you are loath to sell, and then it can get really ugly

So for GTE, I think we are still definitely in a bullish breakout trend.  High volume on up days with lower volume on the pullbacks.  There is some resistance at 2.16, and it could pull back again from that level.  At present the trendline stands at about 1.90 for tomorrow, which puts it .23c above the trendline.  This represents a potential risk of 10.8%, which is a bit more than I'd be comfortable with for an opening position.  As Melf Elf said, you're comfort level with risk is your own, and it may cause you to miss some plays, as he just did.  I can normally handle about 5% risk in a trading plan, so would look for a low print of 2.00 or below to buy.  My feeling is that a breakout above 2.25 should run, but may be dangerous to buy into unless you are good at reading the sell signs and willing to execute whenever you see percieved weakness.

Here's the chart, hope this discussion of my trade helps.

good job scottish...

Quote from: ScottishTrader on October 30, 2005, 10:20:52 PM
Personally, having been burned several times recently chasing stocks after breakout, I think that I am going to have to adjust my trading style somewhat. 

Scotsman,

Very nice post!  Applause.

You're on the right track here.  It took me a long time to recognize that analyzing a chart and actually trading the stock are two very different things.

I very much like your example about entering the stock and using the up trendline as your stop, knowing, for example, that you risk only will be a loss of, say, 5%.  Not only does that limit your risk to a level with which you are comfortable (barring a gap down), it takes these emotions out it: 

"Should I sell?" 

"Should I hang on and "hope" that the stock doesn't sink any lower?" (I know that I'm in trouble when I start "hoping" that the market will bail me out of a losing position). 

When we blindly jump into stocks without a trading plan, without knowing where our stop is, without having an idea about a profit-taking exit strategy, we can get to some big trouble.

Stay with this concept, Scotman, because I think that your results will improve noticeably if you employ the kind of strategy that you've discussed.

 

Thanks very much for your words of encouragement. 

Looking over my trades for the last month, it has been just horrific, and now I want to start to turn things around.  Very often the difficult but right thing is to pass up what appears to be a rocket for exactly this reason.  Too often I have not wanted to "miss out", but I have to keep reminding myself that there are stocks "ripping" every day.  If you play it right, and identify a few stocks that yoou are happy with your entry level, and have a plan to stick to, things are so much safer.

Let's continue to keep our eyes peeled for nice set-ups that provide exactly this. 

Here in 3SOF i'm learning everyday ..applause for both of you Scottish & Melf elf 

Hmmm... realised I hadn't posted on GTE in a few days, and reading over my previoous posts, it looks like I did not follow my plan as I stated it.

Doh!  Well, am still holding, and it has broken sideways out fo the ascending trendline, probably in expectation/waiting around for some news which is overdue this week.  Not sure whether news being overdue is a bad sign (apparently due to their corporate offices being taken out by hurricane wilma), but at the moment there is strong support at 1.87 (have a look at stockTA.com for this).  So I will hold for news and sell on a break of 1.87.  I still see GTE as wanting to go much higher, we'll see

Thanks for everyone's comments.  I had to sell my postition in GTE due to a margin call (mostly due to SVA and EYII's recent drops). 

Although I enjoy this site greatly, I've not been doing very well with this breakout trading style.  It is mostly due to my inexperience (and the bearish market didn't help).  Anyway I'm down about $5000 this month.  It is a good thing I was doing well the two months prior to Oct so I'm pretty much even for the past 3 months.  I'm going to go back to a more LT trading style.

I also have to use stops more to limit losses.  When I don't uses stops I always have the tendancy to just wait that day longer to see it the stock will rebound.  The day tends to drag onto a week and my losses grow.

Logocovet,

you're not the only one.  I have also lost a disgusting amount of money in October   After a screaming September where I was up over 60% on my ini9tial investment (mostly due to HYRF) I lost everything I gained and more in October.  Whiile I'm not happy about this, it has taught me some very important lessons - stops are certianly one of them (though I have to use mental stops, as my account will not let me put stop loss orders in).  Also, I am not willing to chase stocks any more (or at least right now.  I would much rather look for the opportunities when a breakout is developing or identify changes in trend where the loss potential is small.  As for inexperience, we're all learning!  I've only been actively trading since August!!  And boy have I learned a lot in that time   I've paid for it too, but that's the way.

GTE where it is I would say is a good buying opportunity.  While there is a bit of a sideways trading issue going on here, hopefully news arrriving very soon will remediate this situation.  Support sits at 1.86-1.67, as tested friday, so a limit order below 1.90 gives a good risk/reward.  I am a little concerned with this one that no news is not necessarily good news, so will be playing it carefully, but I would encourage you to consider some of these short term trades if you can.

Another option is to just follow David's picks for a while and see how that goes - i.e. buy and sell with him.  I have been seriously considering doing this as I was very unhappy with my performance in October, but keep getting side-tracked by other plays.  Also I don't have enough money to buy 15 (or even 10 right now) positions and make it worth my while, so it means making a choice. Still, I may do this for a bit, to relax a little and leave the buying and selling decisions in his experienced hands.  Alternatively, you could also give yourself a 10% rule for a bit, locking in profits whenever you've made 10% on a trade.  Sure you may miss some big gains doing this, but it will give you a feel for locking in short term profits more regularly, and it is much nicer to see more green trades than red ones.

Anyway, just a few thoughts that might help out 

ok having a bit more of a look at the candlesticks, I am getting more bearish on GTE, and seriously considering selling on Monday, although I don't want to as we're still waiting for news.

The problem is this... 
After the runup that peaked at 2.30 on the 24th October, we saw a 2 day pullback, printing a low of 1.85 - presumably health profit taking.  This analysis was confirmed by the nice marobuzo obtained on the 27th, pushing prices to the previous high close.  However, then next day we saw a hanging man, and this was followed by 2 down days, pulling us back to recent support, which is holding at 1.85-1.87.  My concern is that GTE could be forming an imperfect falling three methods http://www.candlesticker.com/Cs89.asp and Monday could be down significantly, confirming that the hanging man was indeed a reversal.

So my plan is slightly revised, but still stands.  Sell on any print below 1.85 on Monday, as I see this as absolute short term support.  Volume has been low and everyone is expecting news, which everyone is also expecting to be good, i.e. http://biz.yahoo.com/bw/050923/235375.html?.v=1. 

however, if things start to head south, it may well be because some insiders have heard things that aren't as good as everyone else wants to hear (this brings back memories of SFP, if anyone remembers that run-up before delayed results, and when results came out, it tanked).

Apologies, not having much luck with stockcharts today, will try to get a chart up when I can.