I wasn’t thinking about Monday being a holiday until I looked at the first hour of trading. I hope most of you made this into a four day weekend. However it’s surprising how regular the movements often are on a narrow range day.
After a small gap, the first hour had a trading range of under five points, and because of the holiday weekend the day’s entire range was only a little over six. The market made an early pullback and then rallied with a small A-B-C Measured Move that completed a larger A-B-C pattern that began yesterday. That gave a double Fibonacci signal for the high of the day.
From the top, a Measured Move down (100%) created the first leg of a larger A-B-C. It ended with a Stochastic divergence at the same time the market tested a pivot from earlier in the morning.
A rally of 50% set up another reversal, and then it was down again in an A-B-C Measured Move to set up a bottom pivot. This was the third touch of a support level shown by the blue horizontal line, the third Measured Move of the day, and it completed a larger A-B-C that ended at a Fibonacci 62%. Lots of tradable setups but unfortunately no range to work with. Have a nice long weekend.
Dear Mr. Christie
I have been studying your excellent website in detail since I found it by accident on Easter weekend. I have even made a binder of every post, highlighted the trade setups you describe and am about halfway through summarizing it all. I have a feeling, for the first time ever, that I have found some principles that I understand well enough to make money.
But I still have lots of questions and wonder whether you answer them. I have a number of specific questions about where to place protective stops upon initiating trades.
Do you respond to specific questions, and if you do, should I pose them through the comments box or do you have an email to send them?
Thanks.
Hi Steve,
Sure — glad to answer questions. Just realize that I am a VERY discretionary trader, so don’t be surprised if my answers are sometimes ambiguous. For example on initial stops I may use a recent pivot, sometimes a moving average, or in some cases just the reversal of the entry bar. It all depends on the specific situation. (I like CLOSE stops.)
Comments are preferred unless the question wouldn’t be of interest to others. Or there is an e-mail form in the “About” section at the top of the page.
Lowell
Dear Lowell
I’d like to get a feel for what size stops you usually find yourself using. What does it mean to you to have a close stop? For example, would you set your stop fairly often as little as five ticks? (I know the market has to breathe.) What would be the largest stop you would use under normal circumstances? I am not trying to pin you down here. Rather I am trying to eliminate indecision in my own thinking and it would help me to get an overall idea.
A related question is: What minimum reward to risk ratio do you consider acceptable?
Thanks.
Steve,
I used today’s post to answer questions about my use of stops.
Lowell