Practice Trade
First of all, this wasn’t supposed to be a practice trade, I meant to trade this stock live. But I’ll get to that later.
Based on the trading analysis I did on Monday, I took this trade in the opposite direction I expected to take trades this week, but I don’t think it was forced or an impulse trade at all. Here are my notes from that morning:
I know, I’m only taking shorts today. So I shouldn’t even be looking at this. But I am, and here’s why: 1) While equities’ chart patterns don’t seem to be holding on to the gains from this morning, price also isn’t pushing down as aggressively as I thought it would — and thus I’m not coming across a lot of opportunities and 2) over the past month, this has been mostly inversely correlated with the S&P. With that inverse correlation in mind, looking at the 3D chart right now, price is right at a strong key level, with a good amount of room above to run. This would be a breakout play, which I don’t love, but it’s not a base, so that’s better. I can actually argue a cup-and-handle here, on the 2h chart. I’m going to run numbers here and I think pull the trigger.
Entry – 3/16/2023 – $244.60
Exit – 3/20/2023 – $254.50
Price was very strong. There’s not much more to say about it. It quickly hit 1R, and I moved my stop to a prior-resistance-now-support area above my stop before the close on Thursday. Friday, price continued strong all day, I moved my stop up along the SAR a few times, and about an hour before the close, moved it to the immediate support area that was created during the last couple of hours of the trading day.
Entry – $244.60
Target – $260.00
Stop – $241.50
R:R – 4.97
When I got to the charts this (Monday) morning, I saw that price stopped me out at that level for an awesome, $9.90/share profit. I’m just kicking myself that I did this in my practice account and not my live account. Continuing to live and learn.
The last thing I’ll say about this is that, looking again today, and drawing lines at my entry and stop, I like another aspect of it. Sure, my entry was on a “breakout” but my stop was at the highs of the range, instead of the lows; if that makes sense. In the past, I’ve taken trades where, for example, my entry would be where my stop was in this trade — and my stop would be at the support level below that; and in doing so, I feel like I’m either faked out, or my stop is triggered because it’s a popular area for stops, and price reaches that level just before shooting up into would-be profit.
I’m glad I didn’t do that with this trade, and hopefully I’m getting out of that habit. I think I am. There’s also the fact that this was a practice trade, and I can’t say for sure what would have happened if it was live, but I’m going to just pat myself on the back for this good decision, and well-managed trade, and keep working and growing.
Thoughts on the Practice Trade
I logged in to my practice account last night, and must not have switched it back when I logged in this morning. I didn’t notice my mistake until after I set the entry order and heard the trade trigger. I don’t understand why I can switch between live and practice accounts on the fly in the web app and the phone app, but not the desktop app, but that doesn’t really matter. I should’ve been paying attention.
Second, maybe it’s best I wasn’t in this trade? I’m not sure, exactly, what happened or how it would have ultimately shaken out, but look at this chart in ThinkorSwim:
This is the 2h chart, and when I look down at the 5min/1min charts, it looks like the move actually happened after the close, but I’d like to know what that means. Was there a post-market trade that happened that caused that, and I wouldn’t have been affected regardless? Or since I would have had a trade out there, it would’ve triggered? My order in the practice account didn’t trigger, and a little before the close I moved my stop up to a support area at $250, so I have to imagine it was the former. And, actually, continuing to look at the chart right now, it looks like it makes a large drop and then recovery at the close nearly every day:
But this is the practice-trade chart in ThinkorSwim Web, and I’m not seeing that in the desktop app, so I don’t know what’s going on. I’ll do more research when/if I ever get affected by one of those post-market moves.