Highlighted Trades - 04/02/2024
Today was a bit more active for our system. We saw 10 trades (3 long, 7 short) across 5 unique tickers.
Our most profitable trade of the day was on UHS - where we made 0.16%. We saw no re-entry opportunities here. Overall, I like this trade, but I wouldn’t say I love it. It’s not shown on the graph, but the MACD differential was decreasing and negative for a couple of candles prior to our entry - which is a great sign. MACD increased pretty steadily during the life of the trade, before going positive after our exit. That’s a good sign that re-entries would have been a bad idea (though there isn’t a hard rule about that). The bearish momentum is undeniable, to the point that I would have considered going in a candle early if you saw it ahead of time. This trade met all of our requirements, and lacked any of the major red flags we look for. There were ways we could have turned a greater profit here, but that’s always going to be the case. Ultimately, it seems like this trade just didn’t work out.
Our biggest loser of the day is a bit more interesting. We lost a total of 0.66% across 3 total positions, with the worst individual trade losing 0.25%. I think both re-entries here were fairly avoidable for one reason: sideways momentum. Prior to our first entry, we can see pretty consistent bearish price action, but by the time we take our first re-entry, the price has largely stagnated, which makes it easy for us to get rinsed on stops and re-entries. Sideways momentum is difficult to evaluate algorithmically, and so is a red flag we encourage users to be on the lookout for. While this trade lost some money, I’m confident that an experienced trader would have been able to cut losses pretty substantially.
Lastly, let’s examine a short on AMP. The initial entry is interesting because it exemplifies a trend that we’ve noticed several times in recent analyses. Kijun-Sen being flat is a warning sign of stagnation, and poor conditions to trade with this system. Going into the position, Kijun-Sen is indeed completely flat, but the trade works out anyways, and there’s a good sign of this prior to our entry. The bearish momentum is strong, and heading to a new low. From this, we can infer that, assuming the momentum continues, the Kijun-Sen will shortly begin to move in response. And as we see after our entry: it does. Stagnation is a real trade-killer with this system, and something we always want to be on the look out for. At the same time, it’s useful to know when our warning signs cease to be useful. In moments of high directional momentum, especially when we’re getting close to a new high/low, the Kijun-Sen’s flatness becomes less noteworthy as a warning sign.
That’s all I have for you tonight. Thank you for reading - and happy trading!
