Wednesday, July 12, 2006

Coaching Call Week 4

Today Rob and I began with a review of the trend concepts explained in Chapter 4 of the manual. We'll talk more about trends next week. We spent most of our time refining my watchlists. We broke down the Bulls folder into 3 subcategories: Waiting For Pullback, Setting Up (Pullback Started), Hotwatch (Risk/Reward & Candle). There are two additional subcategories to the Bulls category that we will eventually use: Buys (It's time to buy today) and Long (stocks I own). Rob explained what criteria constitutes where to place each. I'd say it's fairly obvious from the naming, but I'll breakdown the criteria a little to disambiguate ;-).
  • Waiting For Pullback: We missed the most recent swing low and are waiting for the stock to pullback down to an area of support where we can enter.
  • Hotwatch (Risk/Reward & Candle): We may be able to enter a trade on this as the stock is looking like it has come down to a level of support, but need to analyze the risk/reward and see if the setup makes sense for our target price (where the last swing high was).
  • Setting Up (Pullback Started): These are stocks that are not quite ready for the Hotwatch, but have begun to move off their swing high.
  • Buys (It's time to buy today): Our reward:risk is at least 2:1 and we should put in our stop limit order for controlled entry (along with a stop-loss) and hope to get filled today.
  • Long (stocks I own): Stocks that have been filled that we should be watching to adjust our stop-loss and otherwise manage.
Next week I need to read Chapter 5 in the manual and I've been given the greenlight to paper trade any setups that I discover have a 2:1 reward:risk. I've also allowed to look for Bearish trending stocks. At the moment, the market isn't given a very clear direction. Even though I'm anxious to enter some paper trades, I probably would be on the sidelines with real money for at least a couple days. As I stated before, I plan to manage my paper trading as close to live trading as possible. However, I don't want to delay too much, favoring getting in there with my paper trades and learning my lessons sooner rather than later. I don't think it wise to avoid mistakes by not acting. After all: "Experience is that marvelous thing that enables you to recognize a mistake when you make it again." -- Franklyn P. Jones (a distant relative, as all Jones's are :-P)

1 comment:

neal douglas said...

I am just starting out in options trading I find you blog very helpful I to went to TmTT 3 day but was unable to get that much money together on a Sunday. So I am at a much slower pace than yourself doing research on the net and buying some oliver Veleze dvd now and then. Keep bloging Ill keep reading neal