Stock Trade Example
Page Two For This Example Trade
Now let’s continue with our stock trade on a day by day basis. With this example, we will look at individual stock charts with the current day being the last candle on the right of the chart. This is so you can get into the mind of a TAZ Trader on each individual day.
First, let’s set the stage for this stock trade.
Our trade started on Day One with our entry on the day of the hammer pattern at $39.46. Our stop loss order for this stock is below the low of the hammer - under $39.00.
This swing trade continues...
Stock Trade – Day 2
On day two, ARI goes up to $40.00 but comes back down to end the day unchanged. The market continues to sell off but this stock is holding steady. Excellent! It still has relative strength. The significance of this day is that there is now a swing point low in place. See the last three candles? You have a low, a lower low (the day we got into this stock trade), and today is a higher low.
Stock Trade – Day 3
Again, ARI is having trouble getting through $40.00. This is normal. Stocks often run into resistance or pause at round numbers so we won’t get worried. We will remain disciplined and stick to our plan. Our stop is still under 39.00. We can’t move our stop to break-even yet or we will surely get stopped out. We wait for a move above $40.00. The market continues to sell off, but ARI is still hanging in there. It is almost as if this stock is waiting for the market to reverse…
Stock Trade – Day 4
Finally! The market reverses and ARI breaks above $40.00. Now we can safely move our stop to break even. Assuming that we do not have any overnight gaps against us, we cannot lose money on this stock trade. Now it’s time to kick back, relax, and watch the buyers take over the stock.
Stock Trade – Day 5
Today is a great day to be long ARI! There is a nice convincing move and close above $40.00. The stock closes at the top of its range. We are trailing our stop under the lows of the candles. Today that stop is just under $40.00. We have now locked in a small profit so if we get stopped out, it will be a profitable trade.
Stock Trade – Day 6, 7, 8, and 9
For the next several days, ARI trades sideways. It is running into resistance, this time at $41.00 – another round "pretty number". I don’t expect this trade to last much longer, but there is no reason why we should try to predict what is going to happen. We have no idea what is going to happen with this stock. We are still trailing our stops under the lows of the candles. If we get stopped out we will have a nice profit.
Stock Trade – Day 10
Breakout! I really can’t believe it. I thought for sure that we would get stopped out of this trade. We have been in this stock for ten days now. For swing trading this is an eternity! Should we sell and take profits? No. We will continue to trail our stops until we are taken out of the trade. No emotions, no guessing, we just wait until our stop is hit.
Stock Trade – Day 11
Another nice close today. Volume has increased from the previous day which is great to see. It’s amazing that buyers continue to come into this stock. What are they thinking? Are they nuts? It’s a little late to be buying this stock now!
Go to page three of this example trade...
