Technical Picture – Modest Gains

Markets are little changed since my last post on April 5th. Tech is till lagging with weakness in tech titans AAPL and GOOG, as well as disappointing guidance from INFY late last week.

The SPY is carving out an inverse H&S pattern, but earnings will be key.

Companies reporting earnings the week of April 18th-22nd include:

  • Monday: C, LLY, HAL, KEY, AMTD, GWW, TXN, and ZION.
  • Tuesday: BK, CMA, FRX, GS, JNJ, NTRS, BTU, STT, USB, CREE, CSX, HBHC, IBM, INTC, ISRG, JNPR, MANH, STX, STLD, VMW, and YHOO.
  • Wednesday: ABT, MO, AMB, T, ATMI, ELN, EMC, FCX, HBI, FCX, NDAQ, DGX, WFC, AMGN, AAPL, CPHD, CAKE, CMG, ETFC, FFIV, GILD, LRCX, MAR, QCOM, WDC, and YUM.
  • Thursday: BBT, BIIB, BLK, CNH, CY, FITB, GE, MCD, NOK, NUE, PCX, PM, SLB, TZOO, VZ, AMD, SNDK and SYNA.
  • Friday: Markets closed in observance of Good Friday

AAPL has carved out a bearish H&S top. Earnings on Wednesday.

Friday’s Trades – MBI low risk entry as price moves out of the retracement zone.

CTSH – I was looking for a short entry around $ 78.50, but didn’t get a NRB, so I passed. After a minor extension, price formed a nice base at $ 78.50 and took it long back to the ambush zone. Should have shorted the ambush because there was no volume on the rally.

Thursday’s Trades – JBHT – gap and flag.

CAT – Low risk long on break of flagging type pattern. Add on the B&B setup.

Wall St. Warrior

Technical Picture – Tech Leads Markets Higher with Huge Gap

The markets gapped up sharply on the heels of good earnings from tech bellwether INTC +7.8%, as well as VMW, JNPR, and YHOO… Not much in the way of extensions for the indices, but only limited selling pressure off of the mid-morning highs.

After hours we got more favorable tech earnings from FFIV, QCOM and AAPL. Markets are extended very short-term.


There’s a lot of talk about SLV being way overextended, but so far, it has managed to stay within its rising channel. I am waiting for a huge gap open which takes price beyond the upper channel line and well beyond the upper BB, setting up a short. We may get that tomorrow as SI_F is trading at $ 45.62 as I write this post.

This is a chart of AAPL post earnings. The profit taking in the second half of the after hours session is somewhat suspect. Will be interesting to see which support level will hold, if any?????

Day Trades

ALXN – Low risk, long entry ahead of earnings tomorrow morning.

RVBD – Support was holding and I couldn’t resist the low risk setup.

NTES – Failed breakouts yesterday for NTES and SOHU set the stage for today’s weakness. Another NR7 (low risk) setup.

Wall St. Warrior

Russia and China’s Energy Dispute

China’s voracious appetite for energy from anywhere has led most oil-producing nations to attempt to feed the dragon, including Russia.

But a curious situation has developed as regards Russian oil exports to the Celestial Kingdom, underlining that the two nations, which fought for global supremacy over the Communist movement for four decades, remain at best, “frenemies.”

According to Chinese customs reports, last month oil imports from Russia fell by nearly half.

Not so, Rosneft says, stating that deliveries are proceeding through the Eastern Siberia-Pacific Ocean (ESPO) oil pipeline at their normal levels.

Russia is now China’s ninth largest source of oil imports, with Saudi Arabia first, Iran second and Angola third.

In trying to read the tea leaves in the contradictory statements emanating from Beijing and Rosneft, Russian analysts believe that China is sending Moscow a not so subtle signal that it can do without Russian imports.

The Eastern Siberia-Pacific Ocean oil pipeline began deliveries to China last January, at a volume of 300,000 barrels a day. Last month China imported 4.58 million barrels per day, with Russian imports making up a mere 6.5 percent of the total.

So, where’s the beef?

Money, apparently.

According to the 2009 Russian-Chinese intergovernmental agreement, oil deliveries to China through the Eastern Siberia-Pacific Ocean pipeline are made under contracts among Russian oil company Rosneft, Russian state-owned pipeline monopoly Transneft, and the China National Petroleum Corporation (CNPC) for 15 million tons a year over two decades. In exchange for guarantees of long-term oil deliveries China provided Transneft and Rosneft with loans of $ 10 billion and $ 15 billion respectively.

But at the beginning of 2011 the CNPC started underpaying for Russian oil, as China demanded a revision of the price formula. It currently includes the price of transporting oil along ESPO’s entire route to the port terminal in Kozmino. But as the branch to China begins at the point of Skovorodino, 1,271 miles from Kozmino, China is insisting that the pricing formula must be revised and that the cost of transportation from Skovorodino to Kozmino must be subtracted from it, with Beijing originally estimating the difference at $ 12 a barrel, underpaying accordingly.

Accordingly, China’s debt as calculated by Moscow is now approximately $ 85 million. In a telling comment on the validity of both Russia and China’s court systems, Rosneft and Transneft have begun consulting with lawyers about the possibility of initiating a lawsuit against the CNPC at the London Court of Arbitration. Earlier this month Transneft sniffed that if the case goes to court, it is prepared to return to China the $ 10 billion received in 2009 and to stop transporting Russian oil to China, unilaterally abrogating the 20-year contract.

Switching gears, China is upping the stakes to begin discussions at the governmental level to resolve the impasse. Chinese negotiators have invited Russian Energy Minister Sergei Shmatko to participate in the next round of talks, which is to take place in Beijing starting at the end of August, when it was originally assumed that only Rosneft and Transneft representatives would be participating in the discussions.

Konstantin Simonov, general director of the National Energy Security Foundation, is convinced that China is indulging in a bit of good old fashioned “provokatsiia,” to use a Soviet word, telling reporters, “The statement by the Chinese customs is of a provocative nature: The Chinese are endeavoring to show that Russia is not fulfilling its contract obligations and is casting doubt on the development of energy relations with China as a whole.”

The reality is that Russia and China’s struggle for Eurasian dominance did not end with the 1991 collapse of Communism. The implosion of the Soviet system left many Russians feeling disoriented and it is worth remembering that the USSR was a continuation of the Russian Empire, which began to expand eastwards into Siberia in the later part of the 16th century.

Many Russian intellectuals bemoan the fact that Gorbachev liberalized the political system but not the economy, leading to the Soviet Union’s demise as China liberalized the economy while keeping tight Communist Party control, leading to the country’s dazzling economic achievements of the last decade.

The rivalry is evident in Moscow and Beijing’s contrasting visions of the Shanghai Cooperation Organization, which Russia sees primarily as a military structure, while Beijing favors increased economic integration. Both nations are engaged in an ongoing “Great Game” for the hearts, minds and economies of the former Soviet Central Asian states, with their rich energy assets. Beijing is making serious inroads there, not least of because of their deep pockets and the locals’ bitter memories of seven decades of Soviet domination.

Last but not least are Russian atavistic fears of the “yellow peril” and its threat to eastern Siberia, still largely devoid of population, large swathes which Russia acquired by the 1858 Aigun Treaty, which ceded the left bank of the Amur River to Russia and the 1860 Convention of Beijing, under which Russia gained control of Outer Mongolia. Both the Chinese Empire and subsequently the People’s Republic of China referred to them as “unequal treaties” until Prime Minister Zhou Enlai acknowledged them in 1969 in an effort to improve Soviet-Chinese relations in the wake of a series of violent frontier clashes along the Amur River earlier that year.

The struggle between the two nations is a fascinating study in opacity. Russia, the energy superpower versus China, the economic superpower. Amidst the energy pricing squabbles and ongoing covert struggle for influence in Eurasia, Beijing and Moscow nevertheless find common ground on one topic – limiting the influence of the United States. If 42 years ago Soviet and Communist Chinese politicians could hammer out a border agreement, what’s a mere $ 85 million among friends?

Source: http://oilprice.com/Energy/Energy-General/Russia-and-China-s-Energy-Dispute-and-the-Struggle-for-Eurasian-Dominance.html

By. John C.K. Daly of OilPrice.com


Slope Of Hope with Tim Knight

Stoke the Furnace: Steel is Heating Up

Written By: DragonFly Capital

Steel stocks have been hit pretty hard since the beginning of August with some dropping over 50% before catching a minor bounce. But many are showing signs of life now. Here are four that are worth following as they are the verge of big runs.

AKSteel Holding, $ AKS

AKSteel Holding, $ AKS, was one of the worst dropping over 50% before consolidating. It came close to testing resistance at 9.57 Wednesday but fell back with a long bearish candle. The Relative Strength Index (RSI) is rolling a bit after moving strongly off the bottom and the Moving Average Convergence Divergence (MACD) indicator is starting t level after a move up. not good enough to just jump in but if it can break over 9.57 it looks good for a long trade with 10.50 and then 12 as resistance higher.

United States Steel, $ X

United States Steel, $ X, also lost more than 50% of its market cap before bouncing last week. Now the MACD is positive and increasing and the RSI has come back near the mid line but is rounding off. After printing a somewhat bearish solid black candle Wednesday the good news is that it did move higher. If it can get over the 32.10 resistance it has resistance next at 33.50 followed by 37 and then 40. Also not one to jump into but definitely one to put on the watch list.

Mechel Steel Group, $ MTL

Mechel Steel Group, $ MTL, is in the 50% pullback camp as well dropping from over 34 to 17 before finding support. Unlike the first two names though it looks good right now. It has a rising RSI and a MACD that is increasing. It printed a near bullish Marubozu candle Wednesday after moving higher Tuesday. It has resistance next at 20 and if it can get through that level it sees resistance again higher at 21 followed by 22.20 and then 23.50.

Olympic Steel, $ ZEUS

Olympic Steel, $ ZEUS, had a similarly bad Spring and Summer before finding support and rising last week. It has a steadily increasing MACD and a RSI that is trending higher. It printed a doji star near resistance at 21.50 Wednesday and if it can resolve higher over the resistance then it has resistance next at an area between 22 and 22.50 followed by 25. Another to move up near the top of the watch list.

As always you can see details of individual charts and more on my StockTwits feed and on chartly.)

Dragonfly Capital

August 31st 2011 Stock Market Recap

The market finally met some resistance today as the NASDAQ climbed above 2600 after an opening upside gap then reversed back to a flat close. Volume was a bit higher and with a spread of economic data due out the next two days we should expect some volatility the rest of the week.

Interesting Reads: CEOs earned more than companies’ tax bills, US government sues to block ATT T-Mobile merger.

Tomorrow’s economic calender:

Stay frosty out there!

Trend Table
Trend Nasdaq S&P 500 Russell 2000
Long-Term Down Down Down
Intermediate Down Down Down
Short-term Up Up Up

(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend

*** I’m simply using the indices’ relations to their 200, 50 and 10-day moving averages to tell me the long, intermediate and short-term trends, respectively.

Original Post: August 31st 2011 Stock Market Recap



TraderMike.net

Traders Ask- What to do before you start your trading career?

Mr. Michael,

I am Alexei, from Paraguay, South America, I have been following SMB Capital for a year and now reading your blogs is a must every day. Recently I have finish reading “One Good Trade”, I have read so many books about technical analysis and trading and I now you heard this a lot but it was by far the best book I read about trading, it is helping me a lot improving my skills and I learn so many things that I wouldn’t if I didn’t read your book. I notice that the book is more useful for some that is working or wants to work in a prop firm but it still was very useful for me. I never knew that reading the tape is so important.

I am going in October to SMB Desk to do the SMB Foundation, I would like to know if can give me some advice before I go and some reading about reading the tape so can be more prepared and take more advantage of my trip.

I can’t wait to go and start learning with SMB.

Bella

So what can you do before you start training at a trading firm?

1. Read. I would get my hands on these books:

a. Trading in the Zone
b. The Daily Trading Coach
c. Yes, One Good Trade
d. Technical Analysis in Multiple Timeframes
e. Mindset
f. The Talent Code

This is by no means an exhaustive list just a push in the right direction, with many great trading books not mentioned.

2. Read blogs. Start finding people who can help you grow as a trader in your trading style.

3. Find a mentor outside your firm.  We all need mentors.  People who have been through the wars and can offer a different perspective that has your best interests in mind.  Is there someone you have developed a relationship with that can help you grow as a person/trader?

4. Simulation Trade. Find a good trading demo and start practicing your trading. For the reader above find a demo that offers Level II and start using this indicator with your simulating trading.

5. Live a life that brings you happiness. Most would recommend to find balance in your life. I would offer another standard for consideration. Live a life filled with all the things that make you happy.  Make a list of all the things that make you happy and ensure a large proportion of your day is spent doing those things on your list.  This will improve your trading.

6. Save your money. The longer you can survive the learning curve the better your chances of success.

7. Decrease or eliminate your time spent with people who are negative, cynical, unmoved by facts and unable to make daily progress.

8. Start asking out that girl(s) you have been too shy to ask out. Your upside for that young lady saying yes is way more than the downside. Get used to seeing the world as a game of risk/reward.

For the developing and experienced traders out there, what would you suggest?

Bella
One Good Trade

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SMB Capital – Day Trading Blog

Charts to Watch (by Goatmug)

I’m posting charts I’m watching.  I won’t add much in the way of commentary as the charts speak for themselves.

MOS – $ 72 to $ 73 area is tough overhead resistance.

MOS 

LNKD

LNKD 

PPA – Short at $ 17.75

PPA 

GLD – Any chance this could retest 162? 

GLD 

TLT – Pretty amazing 10 year trend line.

TLT 

Getting into the swing of things since going on vacation has been tough, but I think I’m back.  Check in at the blog often to see new stuff at www.goatmug.blogspot.com


Slope Of Hope with Tim Knight

Don’t Discount Daily Charts When Day Trading

The daily charts are where nearly all my trades originate.  Whether I’m looking for a single-day move or one that lasts several weeks, I always at least take the daily chart into consideration.

Day traders often forget the value that the daily chart can bring.  The conclusion is that it’s only suitable for swing trading or position trading, but the truth is that the daily chart can offer some good signals for entry and exit as levels are cleared or reached.  Even better, those same levels can often add to your confidence in a day trade and help you stay in it.

Let me offer 3 examples from Tuesday’s session where the daily charts played important roles.  On Monday night in the member area, I listed only 3 plays for Tuesday’s session, with each of them being day trade candidates.  I’ll break them down one at a time with the initial setup, and then a look at Tuesday’s intraday chart where the daily level played a significant role.

First up was QIHU, which looked poised for a push higher after establishing both a higher low and a higher high in recent weeks.  The pullback over the previous several sessions provided a clean descending trend line which I used as a pivot for getting long at $ 23.60. Here was the original setup:

Chart courtesy of TeleChart

QIHU pushed past that trend line and never dealt with it again, running initially almost 3% higher before pulling back but still holding above that same trend line:

Chart courtesy of TeleChart

Next up was GLNG, which had corrected and then settled into a multi-week narrowing consolidation pattern in the form of a symmetrical triangle.  These patterns can break either way, and with a strong market and the upper trend line being challenged, I was looking long on a trend line break through $ 32.15:

Chart courtesy of TeleChart

GLNG triggered an entry as it cleared the $ 32.15 level, showing a nice initial pop followed by a pullback to test the breakout zone.  To heighten the validity of the $ 32.15 level, the low of the pullback was $ 32.18, just 3 cents above it.  From there, it ran again in the afternoon to clear the morning highs and get 4% beyond the morning trigger.  Not bad for a few hours and no pain:

Chart courtesy of TeleChart

Last but not least was FSL, a little stock which had huge potential.  It had just pulled back to test and hold the early-August closing low, and in recent days had stabilized just above that level.  On Monday it saw expanding volume but only minimal progress as it edged past a descending trend line.  I set a trigger for $ 11.25, which would be a multi-day high, to get long.  Here’s a look at the pre-trade setup:

Chart courtesy of TeleChart

FSL triggered late in the day with a massive thrust higher once it cleared the $ 11.25 level, vaulting straight up to $ 12 to offer a very fast 6.6%.  The move was fast and furious, but a quick payoff once the level was cleared:

Chart courtesy of TeleChart

A couple lessons from these trades

A level is a level. Doesn’t matter if you found it on the daily chart or some other timeframe, the odds are it’s going to be evident across multiple timeframes.  Recognize and respect that, because it could pay quite well.  All 3 of these trades were winners, and each of them respected the level originally found on the daily chart.

Keep an open mind.  Perhaps your preference for day trades is a 15-minute chart or a 30 or a 5-minute chart.  That’s great.  But keep an open mind about how trades might originate.  Don’t resign the daily charts to something only multi-day traders consider.  You’re missing out on several great opportunities per day by ignoring the daily charts.

Hopefully you found this walk-through helpful.  If you want to know what I’m trading tomorrow, stop by the site and begin your trial to our stock pick service.

Trade Like a Bandit!

Jeff White
Producer of The Bandit Broadcast

Follow TheStockBandit on Twitter or Facebook to keep up!


TheStockBandit.net

Notice, Explore, Execute

This morning we noticed that shortly after the open CF hit my new low of the day ticker. Hmmm…a market leader getting sold right away into a gap up in the SPY and continued strength in the SPY. I took “Notice”. A little later we see it again, this time joined by MOS, AGU and some others from the sector. It’s time to “Explore”. We now start to drill down into the action on the tape. We see a buy program fire up in the SPY but no juice to the upside in this sector. These high beta stocks usually react with a vengeance if you are on the wrong side of a program. So we have the SPY to new highs but this bunch languishing. It’s time to “Execute”. Yes it was time to short these with well defined risk and really start to gauge the reaction if and when a sell program comes. The heavy reaction to a buy program that put the indices at highs gives the confidence to go for it.

Notice the things that don’t quite fit, explore them then execute the trade. If you do this often enough using the information the tape provides you will exploit a few of them. Look for a screen cast later on this post.

Jeff Davis @Shaq48_Trading shaq48@gmail.com

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SMB Capital – Day Trading Blog

Aaaaaaa……

This will be my last post until after the close (if I have a moment in the interim to put up a guest post, I will), because I am ungodly busy shorting the living hell out of the market.

I offer you my ideas for today – only the A’s, because that’s as far as I’ve gotten! Surely this alone is worth the subscription fee you guys pay each month for this site. Or, if you somehow managed to break into Slope for no charge, click a few ads for good karma.

0831-a


Slope Of Hope with Tim Knight

Updated Stock Scan on Most Overextended from 200d SMA

With the recent sharp downturn in the stock market, we have a new list of most “over-extended” and “under-extended” stocks from their 200 day Simple Moving Average.

Let’s take a look at the current scan results of most extended S&P 500 stocks, starting with most over-extended:

To recap briefly, the purpose of this scan is to identify potential trading opportunities depending on your individual style of trading.

There are two schools of thought on this type of list:

1.  Overextended Stocks are overextended for a reason, and the expectation is the recent strength – or weakness – will continue.  Thus, this calls for trend-following/retracement style strategies in objectively strong/weak stocks.

2.  Overextended Stocks have “gone too far” and will soon snap-back to normal.  Thus, these stocks may be ripe for “Fade” or reversal strategies.

That being said, Cabot Oil and Gas (which has shown up on prior similar scans – adding credence to the “Trend Following” strategies) is the most over-extended stock in the S&P 500 from its rising 200 day SMA.

It’s also extended from its rising 20d EMA and (currently) forming a reversal candle outside the upper Bollinger Band.  That type of set-up favors short-term fade strategies that may create a buying opportunity on the pullback to its respective moving averages.

Let’s take a look to see what I mean:

There was a similar short-term fade/scalp opportunity into the July spike highs with little reversal candles which preceded a sharp sell-off back to prior price levels.

The subsequent bounce set-up a simple retracement pro-trend buy-in at the $ 65 level.

This is an example of how you can use this type of “overextended” scan list to play both strategies – pro-trend retracements and counter-trend fades – depending on your risk tolerance.

I highlighted the two stocks – MMI and NSM – that are overextended based on a gap.  Large gaps tend to skew the results of this scan, and it’s preferable to play stable trends that don’t show such wide price gaps.

Otherwise, CF Industries (CF) and Range Resources (RRC) top the most over-extended list.

Do you see a pattern with the Sectors?  Basic Materials stocks top the overextended list, which clues us in to broader sector/industry strength that you might want to explore on your own with similar charts.

With the bullish extensions above, what are the bearish under-extensions at the moment?

I went through and checked and none of these are showing significant gaps, and in fact, all are showing relatively similar price trends on their daily charts.

With unemployment as high as it is, it’s perhaps no surprise that Monster Worldwide (MWW) tops the list, and is followed by two Technology companies (AKAM and JNPR).

These companies – perhaps again unsurprising – have appeared on similar scans I’ve published on the blog.

Genworth Financial (GNW) and US Steel (X) round up the Top Five Most Under-Extended List, which encourage you to study the charts for potential opportunities depending on your style of trading strategy.

Scans are simple starting points for narrowing down the broad lists of stocks into manageable lists for trading set-ups and ideas – and this type of over extension scan is helpful in doing so.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

Corey’s new book The Complete Trading Course (Wiley Finance) is now available!


Afraid to Trade.com Blog

Trader’s Ask- How should I decide when to increase my tier size?

Hi Bella,

If you don’t mind, I have a question for you. How long should a trader trade at a given tier size before they move it up? I don’t want to jump in larger too fast, but I don’t really know what an optimal time frame is for advancing, and I’m sure it varies from trader to trader. Is profiting $ 100 on 100 share tier size, with a max position of 100 shares per trade, an acceptable daily average? I know its not a 1:1 ratio no matter the tier size, as 1,000 shares, for example, could affect the order flow, where 100 shares probably wont (in most stocks anyway). I also realize that just because you average $ 100-$ 200 per day trading 100 share tier size that doesn’t necessarily mean you will make $ 1,000-$ 2,000 per day on a 1,000 share tier size (not to mention if 1,000 shares is your max, you shouldn’t just jump right into 1,000 shares on a trade).

I’m sure it varies and I have heard different philosophies, but if I’m being honest, I value SMB’s input more than others, so anything you can throw out that I can use to help gauge myself would be great. I am doing well at my current level, but I don’t want to get too cocky and jump into trading more size until I’m sure I can trade 100 shares with success, consistently. I just don’t know how long ‘consistently’ is…

Bella

You are correct that trading 100 shares is very different than trading $ 1000.

Let’s take a step back and put this question into context for the new and developing trader. Doing so makes all the difference for how a new trader attacks his start. There is one camp that has its traders start slinging around 1000 share lots from Day 1. Our teaching philosophy is to start new and developing traders with 100 shares and then bump up the hardest-working and performing traders very quickly, while still having them focus on what is most important- building their trading foundation.

I cringe when new traders talk money in their first 8 months. You are not in this game to care about any small sums of profits you might make when you are not anywhere near your peak. When you start what is most important is to develop good habits, trading skills, leverage your strengths and build your playbook. One of the skills that you will have to develop is trading with more size. But this is just one of many skills that you must learn, granted an important one. Too many new and developing traders overvalue trading with more size over even developing the most basic trading skills, like reading the tape. This is a path to a short trading career.

Now having said the above you must constantly keep pushing yourself outside of your comfort zone. Advice I often share with new traders is to find a set up that made the most sense to you intraday and obsess how you could have responsibly traded that opportunity bigger. This is the road to trading bigger profitably.

I like your approach of being profitable at 100 shares before heading higher. Generally, I suggest using ten days of trading data before making a determination to trade bigger.  With some diligent traders less data is acceptable.  It sounds like you are well past this point and time for the next leap bigger. I have found that there is little difference in trading 100 and 300 shares for most stocks. I have found that most traders who can trade 100 shares consistently profitable can even probably trade 600 shares well.

For traders that I mentor I am most concerned with the work they are doing to build their foundation. I will look at their trading data for signs of consistency, managing risk, and the ability to make money. You want to see only one day (out of ten) where the trader was stopped out and at least three days where they exceeded their intraday stop limit by 3xs. But if they are not watching tape after the market closes then they are not getting bumped up. If they are not keeping a trading journal then they are not getting bumped up. If a trader is working on building his playbook, working on his trading game everyday, and his results are decent then I will push that trader everyday to get bigger. I recommend getting bigger with plays that make the most sense to you.

There is no exact science to how a trader should be bumped up. It is part work, part performance, part stepping outside your comfort zone and part individual mentoring.

Bella
One Good Trade

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SMB Capital – Day Trading Blog

Improve Trading Efficiency with Bracketed Orders

Several weeks ago, we posted a blog about how to simultaneously set up a target and stop price when executing an initial stock order.  Good news – this process is now more seamless thanks to the bracketed orders feature we recently introduced.

What’s a Bracketed Order?

Less complicated than it sounds, a bracketed order simply “brackets” two prices (one stop price, one limit price) around an initial order.  That way you can choose the levels at which you want to exit a winning or a losing trade.  And when one order is activated, the other will automatically be cancelled.

Examples

For a buy order, an investor could buy XYZ stock at $ 50, set a sell-to-close stop order at $ 40 (theoretically limiting losses to a maximum of $ 10) and a sell-to-close limit order of $ 100 (submitting an exit order if and when the stock doubles in value).

On the flip side, for a sell order, an investor could sell XYZ for $ 50, set a buy-to-close stop order at $ 55 (forcing an exit of the trade at a $ 5 loss) and a buy-to-close limit order of $ 40 (prompting an exit of the trade at a $ 10 gain).

How Do I Do It?

From the ever-present quote line at the top of the platform, you can click on either the bid or ask price and select the “Sell [XYZ] Stock with OCO Bracket” or “Buy [XYZ] Stock with OCO Bracket” option, respectively.

After selecting one of these options (for the sake of example, let’s go with the “Buy” bracket), the ticket will auto-populate with your default quantities.  The first tab – (A) Order 1 – will be a traditional buy order.  From here you can adjust your price type, price, and duration.

Typically, bracketed orders have a duration of good-til-cancelled (GTC), unless the trader expects his stop or target levels to be hit in very quick fashion.  Note that “Day” is the default choice under the duration drop-down menu so “GTC” would need to be selected by the user.  (Regardless, all three orders will need to be set to the same duration). You’ll also notice that the order summary portion of the ticket is already full of information – you just need to customize it.

The (B) Order 2 tab will already be filled out as a sell limit order, with a pre-filled price of one dollar more than the stock purchase price.  Set this price to whatever you wish and adjust the duration in accordance with the first order.

The (C) Order 3 tab will also be filled out, as a sell stop order with a pre-filled price of one dollar less than the stock purchase price.  Again, you may choose to adjust this price and the duration. Again, all three durations must be the same.

Hit preview.  Depending on where you set your stop and limit prices, you may see an error message in the “Order Messages” field indicating that Orders 2 and 3 are away from market (this is by design).

Be sure to confirm your order summary before executing.  It should read similar to this:

Order Summary

  • Buy 100 NFLX Stock, at a Limit price of $ 290.00, Duration: GTC
  • IF that order executes in full THEN send the following two orders. If one executes in any part, then attempt to cancel the remaining order (while continuing to work the first order)
  • Sell 100 NFLX Stock, at a Limit price of $ 340.00, Duration: GTC
  • Sell 100 NFLX Stock, at a Stop price of $ 270.00, Duration: GTC

So basically, this saves you a couple of steps and a bit of manipulation.  We hope it makes your experience trading on OptionsHouse that much more efficient and easy to manage.  We’d love for you to let us know what you think after you try out this new functionality!

 

 

 

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  1. How does a stop order work on an option order?
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  3. What is a stop order?

OptionsHouse» blog

Improve Trading Efficiency with Bracketed Orders

Several weeks ago, we posted a blog about how to simultaneously set up a target and stop price when executing an initial stock order.  Good news – this process is now more seamless thanks to the bracketed orders feature we recently introduced.

What’s a Bracketed Order?

Less complicated than it sounds, a bracketed order simply “brackets” two prices (one stop price, one limit price) around an initial order.  That way you can choose the levels at which you want to exit a winning or a losing trade.  And when one order is activated, the other will automatically be cancelled.

Examples

For a buy order, an investor could buy XYZ stock at $ 50, set a sell-to-close stop order at $ 40 (theoretically limiting losses to a maximum of $ 10) and a sell-to-close limit order of $ 100 (submitting an exit order if and when the stock doubles in value).

On the flip side, for a sell order, an investor could sell XYZ for $ 50, set a buy-to-close stop order at $ 55 (forcing an exit of the trade at a $ 5 loss) and a buy-to-close limit order of $ 40 (prompting an exit of the trade at a $ 10 gain).

How Do I Do It?

From the ever-present quote line at the top of the platform, you can click on either the bid or ask price and select the “Sell [XYZ] Stock with OCO Bracket” or “Buy [XYZ] Stock with OCO Bracket” option, respectively.

After selecting one of these options (for the sake of example, let’s go with the “Buy” bracket), the ticket will auto-populate with your default quantities.  The first tab – (A) Order 1 – will be a traditional buy order.  From here you can adjust your price type, price, and duration.

Typically, bracketed orders have a duration of good-til-cancelled (GTC), unless the trader expects his stop or target levels to be hit in very quick fashion.  Note that “Day” is the default choice under the duration drop-down menu so “GTC” would need to be selected by the user.  (Regardless, all three orders will need to be set to the same duration). You’ll also notice that the order summary portion of the ticket is already full of information – you just need to customize it.

The (B) Order 2 tab will already be filled out as a sell limit order, with a pre-filled price of one dollar more than the stock purchase price.  Set this price to whatever you wish and adjust the duration in accordance with the first order.

The (C) Order 3 tab will also be filled out, as a sell stop order with a pre-filled price of one dollar less than the stock purchase price.  Again, you may choose to adjust this price and the duration. Again, all three durations must be the same.

Hit preview.  Depending on where you set your stop and limit prices, you may see an error message in the “Order Messages” field indicating that Orders 2 and 3 are away from market (this is by design).

Be sure to confirm your order summary before executing.  It should read similar to this:

Order Summary

  • Buy 100 NFLX Stock, at a Limit price of $ 290.00, Duration: GTC
  • IF that order executes in full THEN send the following two orders. If one executes in any part, then attempt to cancel the remaining order (while continuing to work the first order)
  • Sell 100 NFLX Stock, at a Limit price of $ 340.00, Duration: GTC
  • Sell 100 NFLX Stock, at a Stop price of $ 270.00, Duration: GTC

So basically, this saves you a couple of steps and a bit of manipulation.  We hope it makes your experience trading on OptionsHouse that much more efficient and easy to manage.  We’d love for you to let us know what you think after you try out this new functionality!

 

 

 

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Related posts:

  1. How does a stop order work on an option order?
  2. New Charts for OptionsHouse Trading Platform
  3. What is a stop order?

OptionsHouse» blog