Since I started writing about my day trades, I notice I’m becoming much more in tune with recognizing patterns, and which way the stock is bound to go. No day trading pattern is perfect. There’s always the chance of fakeout moves. Market makers are aware of technical analysis and trading patterns used. They know where stops are placed. Today’s online stock trade in WEBX – WebEx Communications Inc., is an example of a trading pattern that takes practice to learn.
The daily chart of WEBX shows a short sell pattern today. The stock stalls at it’s 20 and 50 day moving averages. Those holding the stock long, wake up to a gap down. Pulling up a 5-minute chart to watch the action shows the stock bouncing. The 7th candlestick then triggers a short, as WebEx put in a lower pivot. I wait on the short though. The daily chart is showing support in this area.
The 8th bar is the key here. When the 9th candlestick breaks higher, we have a failed pattern. Bulls are in control of WEBX. I take the long at 36.99 with a stop below the failed 7th break bar of 36.70. I set a target of 2R, which is 37.60. I went to an hour stock chat with a professional Forex Trader yesterday. He cuts his targets by 10% after making them. He says it has benefited him over the years. I decided to try it and changed the target to a firm 37.54.
I don’t know if it was good karma or something else, but the choice worked out well. I really had my intuition working on this day trade. You can tell when you’re in the zone. It pays to stay patient for those trades that get you excited.
