The market is hovering at the resistance with a lot of noise recently. This is when I do not hold my trades too long. I rather prefer to take my money when I have it and trade the pullbacks to get back, and so on…
Have you heard the expression: “feeding the ducks”?
When a trader makes his money on a good trade, he waits for a moment to sell. What is the best time to do that? – When the crowd wants to buy.
Last Friday I was finishing some of my trades from earlier last week and also from previous weeks.
Let’s look at my exits from IWM. I had multiple entries. I mentioned previously that I consider every entry of the same ETF as a separate trade.
My goal is to never have a loosing trade. This is why I use very rigid size control to manage risk and hold the trade when at least I can get out even if the market is shaky.
I had 3 separate entries. First was from February 22nd at $81.95, second from March 10th at $80.49 and third from March 23rd at $80.53. All of them were entered using my favorite 10 day hourly setup (see my other blogs).
Look at the IWM daily chart to see that it was trading above $77 support. These trades are designed to take advantage of the short term dynamics of the market but still keep in mind the mid term support and resistance levels.
I started exiting these trades on March 22nd.
Market opened with a gap up on March 21st and went through the upper BB on the 10 day hourly chart.
I noticed that MACD went up fast and reached the high level, CCI was going down all day. On the daily chart MACD was about to cross above the zero line. I decided to exit one of my trades the next day, either at the strong open or at any push up later during the day. One of the trades would be already profitable. Daily chart was looking like pressing against the resistance.
What does it mean for me = I am ready to “start feeding the ducks” (aka selling my stuff to the other traders at profit).
And this is what exactly happened: IWM opened strong on March 23rd. I exited one of my trades at $81.48 (the entry at $80.49). There is a high probability that after getting above the upper BB the stock/ETF will retrace back. The CCI was sloping down and MACD was also sloping down with the histogram ready to cross below the zero line.
My second exit was March 23rd at $81.07 from the entry made earlier the same day at $80.53. And the third exit was on March 25th at $83.03 from the entry made at $81.95.
Let’s look closer at the last exit.
The daily chart shows that IWM is close to resistance of $84. IWM opened strong but it pulled back quickly in first 10 minutes – we may get some action!
My target was to exit this last trade at the best price during that day. I was watching the intraday chart to guide me. The candles reversed nicely at EMA(10) support at 9:45 am. Then it nicely marched in formations of flags until about 11am. Look at the long candle formed on the hourly chart, with good volume. IWM pushed above upper BB on the 10 day hourly chart to $82.82. It may still push a bit higher…
But notice what was happening to the MACD and CCI on the intraday 5 minutes chart: they both peaked and were slowing down. TRIN was neutral around 1. I also watch VIX for intraday trades. I will explain how I use VIX in a future blog.
I exited at 11:50 at $83.03 – MACD and CCI on intraday chart were slowing, and MACD and CCI on 10 day hourly chart were at high ranges ready to slow down. VIX was at the low for the day. For me this is the combination to take my profit.