But it rhythms…
I caught the first rectangle for a nice profit. I decided not to take the second buy signal. Rectangle patterns with a duration of 6-8 months are the best trades to take.
Category: Investing
Scam Wick
Binance U.S. is a large cryptocurrency exchange. If you were trading Bitcoin on this exchange, here is what happened to you:
I am going to step out on a ledge here and state the obvious. Binance and company were on the other side of this trade. They got their long positions filled below 9K. Within seconds, they had a 700% gain. This is criminal behavior. They have claimed this is a technical glitch. Fair enough. This happens from time to time even with respectable exchanges. But they are refusing to correct and undo the orders filled and have remained silent on weather they were on the other side of the trade. I only trade Bitcoin futures offered by the CME. There is a lot of fraud in the crypto space. Buyer beware.
US Stocks- Plan Going Forward
I am going to be more selective for chart patterns in US stocks. This will include the following:
1. Horizontal breakouts with a focus on rectangles and ascending triangles.
2. Clear boundaries with decisive breakouts.
3. Given we are in a US bull market, my focus will be on the long side.
4. Breakout to all time highs or 52 week highs.
5. Patterns that have more than a 12 week duration.
6. My maximum risk per trade will be less than usual.
7. I will be very quick to cut losses. In fact, I will probably not hold any losers going into the weekend.
I have seen two charts thus far that meet these requirements, CALX and SIVB. Both have already broken out and I will be looking to go long next week on a pull back.
Sell in May
I have had a terrible run of trading US stocks since May of this year. Going into May, I had a whopping 147% gain. Since May, I have had a series of losers. This has brought my gains from +147% down to +33% year to date. I do not feel comfortable with my trading account having swings of this size.
My focus going forward is to shift back to futures and currencies. I feel more comfortable with these markets. I will still feature US stocks, but I will be much more selective and my risk per trade will be very low.
Thirteenth Losing Trade In a Row
HTA makes the thirteenth stop out in a row.
This represents a 6% draw down on my nominal capital from its peak. My only regret is the amount I risked on HTA. I realized I was on a losing streak and wanted to play catch up on one trade. This is a bad mentality to have while trading. The market may be changing around the edges. My trading plan does not work well in choppy markets. My record for most losing trades in a row is over twenty. Losing streaks come and go. You just have to make sure you have chips left when it ends. During periods like this it is best to risk less on each trade and be more selective.
Micro Bitcoin Futures
The CME has launched Micro Bitcoin Futures. Since bitcoins exponential rise, it has been impossible for me to trade bitcoin because of the large leverage. Now with the micro contract, I will be able to trade bitcoin without losing sleep. My first line of business might be shorting bitcoin since it appears to be putting in a H&S top.
A break below 45K, I will take a short position. A close above 60K will indicate a failed H&S top and I will take a long position.
Riding the Trend
If my target is reached in a given trade, I will take off a sizable portion. Usually 50% of my position is liquidated. In the case of Six Flags, I took off a lot more. The rest I will let run as long as possible. I move up stops at my discretion.
As it pulls away to begin its next up leg, I will place my stops right below the last low. Once trends start, they can last a very long time. My goal is to catch as much as possible using house money. As a trend follower, I know I will never catch the very bottom or the very top. Catching 60% of a move is good enough for me.
Stock Trades- First Quarter Review
| STOCKS YEAR 2021 | ||||||
| Symbol | Position | Date Position Opened |
Price Position Opened |
Date Position Closed |
Price Position Closed |
Percent Change |
| CQP | Long | 2/24/21 | 40.3 | 3/25/21 | 40.3 | 0.00% |
| GDX | Short | 3/1/21 | 31.46 | 3/15/21 | 33.68 | -7.06% |
| INSW | Long | 2/12/21 | 19.64 | 2/23/21 | 18.57 | -5.45% |
| ITB | Long | 1/20/21 | 60.3 | 2/23/21 | 60.3 | 0.00% |
| LEG | Long | 3/3/21 | 45.89 | 3/4/21 | 43.64 | -4.90% |
| LEG | Long | 3/8/21 | 47.89 | 3/23/2021 | 47.38 | -1.06% |
| MMM | Long | 1/28/21 | 183 | 2/11/21 | 178.82 | -2.28% |
| MRK | Short | 2/26/21 | 73.58 | 3/15/21 | 76 | -3.29% |
| MSFT | Long | 1/25/21 | 227.5 | 3/2/21 | 227.5 | 0.00% |
| NFLX | Long | 1/20/21 | 584.92 | 1/27/21 | 560.95 | -4.10% |
| NVDA | Long | 2/11/21 | 608.5 | 2/23/21 | 568.42 | -6.59% |
| ONEM | Long | 1/19/21 | 47.71 | 2/26/21 | 47.71 | 0.00% |
| RIDE | Long | 2/10/21 | 28.93 | 2/12/21 | 27.1 | -6.33% |
| STNG | Long | 2/9/21 | 14.81 | 3/19/21 | 20.03 | 35.25% |
| XOM | Long | 1/27/21 | 45 | 3/5/21 | 60.11 | 33.58% |
| Total Realized Profit/Loss Stocks | 27.8% | |||||
9 losing trades, 4 break even trades and only 2 winners. Trading is all about low risk ideas. My reward/risk setup is such that all I needed were two winners (STNG and XOM) to show good profits. Getting stopped out does not bother me. It is part of the business. My advise- learn to live with it.
Bitcoin- The 200K Possibility
Bitcoin is doing another parabolic move. This one might take it to 200K.
These types of parabolic moves are unheard of in financial history. Parabolic moves are unsustainable. They eventually end. It seems that Bitcoin has one every few years. The amount of money printing that has occurred is creating all types of speculative manias. Make no mistake about it. Bitcoin is a speculative mania.
My brokers have updated the initial margin requirement for Bitcoin to 175K. The 30 day ATR (Average True Range) for bitcoin is about 3200. This means, per contract, you could expect about a $16K price swing in your trading account per day.
Trading Bitcoin futures is a quick way to blow up your account. I have no intention of touching it.
Six Flags Review
Six Flags is still my largest stock holding. I sold off a lot at 34.8 but still kept a sizable portion. I like to review big winners.
First, I thought Six Flags is a quality company. It was not going anywhere. I think the COVID-19 panic pushed it to an absurdly cheap level. However, I like to wait for a breakout confirmation that I am right before going long. I do not want to sit in a stock that goes sideways for years. I also do not like to buy stocks that are going downward. A breakout to the upside is needed first. Just because I think something is cheap, does not mean it wont go cheaper and stay cheap for a long time.
On April 27th 2020, we had a breakout above 16.5. That was signal that it was time to go long. I placed my stop at 14.2. That was my risk. It did a retest of the April 27th base twice. Overall, it created a massive descending triangle (not something I like to trade). Within this descending triangle were a few H&S patterns. Out of that it broke out and never looked back.