Beauty in simplicity: TBGI

I like to keep things simple. 

Whenever people ask me how I make my plans, on my buying and selling points, they would always be surprised by how simple it seems. Usually there are just one or two trigger points that I watch out for. 

You can see it in the charts I post. Minimal lines. Just one or two boxes at most. Sometimes none at all. Seeing too many lines just gives the impression of clutter and gives me a mental image of limiting a trade. Not giving it room to make it's move.

Yes, my plans are simple. But that does not necessarily mean that it is easy to implement. There is a big difference in the two. 

Take for example my recent TBGI trade. 

This entered into my personal scanner when it was making a tight range as shown in Figure 1.

Figure 1

My plan was just to buy when that yellow box breaks. So on Aug 2, I bought at around .58-.59 and had to cut when it didn't follow through at the end of the day.                  

So I adjusted my plan as shown in Figure 2. This time I moved the buying area to .60 since that was the high of Aug 2. 

Figure 2

So on Aug 3, the stock made a nice strong move again. I followed my plan and bought my shares at the .6 breakout point. All in one big tranche if I remember correctly. There was sufficient volume per fluc to accommodate a good enough size.  

Figure 3

When it closed strong but below the recent high of .66 I made a mental note to sell at .66 on the next day. That is unless it made a strong move and made a breakout above it. Happily it made a gap up move and I just switched tactics to trail stops. Keeping in mind that there was a bigger resistance at .84, I wanted to see if it had enough strength to reach and break it intraday. 

If it only made a breakout of .84, I would have added a new milestone of having a 7 digit day change in one port. But alas, it wasn't meant to be. I sold most of my shares at .78-.79. Not bad for a two day hold. 

Caution is Essential

The past few months there has been a drought in breakouts. The usual breakout trader would be very very hard pressed to make some money. 

However, the market has given several wonderful bounce play scenarios. Granted, the bounce plays we are currently experiencing are very different in structure from the usual bounce plays. Those bounces came from a recently concluded super play or parabolic play vs the ones now which are in a downtrend. So the two bounce plays have vastly different rules on how to play them.

The previous paragraph highlights one of the more important things that most traders overlook when buying or selling stocks. The proper identification of plays will help to temper expectations. Bounce plays in an uptrend will always have more strength vs bounce plays in a downtrend. The same is true for breakouts. This is key in making successful trades.

Here are some recent examples:

DD 6/22/2018

This previously much loved stock has fallen into hard times in the past year and a half. It has been stuck in a slow downward spiral and has been looking for a significant bounce. For chartists, one reason for this could be because the prices were far from any strong supports. (Figure 1)

Figure 1

Now on this particular week, it suddenly picked up it's freefall to oblivion. It broke down from S1 and was going to hit S2 and maybe S3 as well. My sensors were screaming for me to place some orders since the opportunity was too good to pass up. 

Since S2 and S3 were also very near psychological supports of whole numbers, 21 and 20 respectively, this could be a good signal for bounce players to get in. During the morning, S2 seemed to have held and was showing that just maybe the selling was over. Several tranche buys were deployed near S2 and conveniently eaten up.

Figure 2

At the end of the morning session, the price rebounded very well and was moving according to plan (Figure 2). Since it already went up by a good percentage I set my initial tranche sells at 24, 24.5 and 25. In the afternoon session, only a partial shares of 24 were hit and the price seemed to be going back down. In normal instances, I would have held and waited EOD to see what would happen. But since the little robot's school already started again and her schedule has me away from the keyboard from 2pm to 3pm on this particular day, I had to make a change in strategy and changed my exit to a tactical one. 

Again, my confidence in these kinds of bounce plays is not that high yet so I cannot risk leaving my positions open especially when I cannot monitor them. So I sold it all at a much smaller gain than the one posted above. 

MWIDE 07/18/2018

This stock has been in a choppy uptrend and finally made some waterfalls since June. On this particular day, much like DD, it increased it's breakdown speed and even made an iZS on the weekly. However, it was seen to hit a particular support area as seen in Figure 1.

Figure 1

For me, this was a good place to put in my first tranche buy. Also, one scenario that my central processing unit came up with was it might make an iZS intraweek but close above the 100ma by end of week. Not a bad return if that does happen right? 

What more if it reaches the 20ma daily? Or even the 50ma weekly? Those are just some of the scenarios that were in my plans. Pretty good RRR I'd think.

Unfortunately, like the DD trade, I had to sell early because of the little robot's schedule. Though I wasn't able to maximize the profits on this trade, everything still went according to my scenario planning as seen in Figure 2.

Figure 2

Some people might say that I should have taken the risk and held on to my positions in the event that my plan did push through as what happened in the two instances. Yes, that could be true, but in the current market and my current situation, I was more inclined to err on the side of caution. 

These were new plays that were being incorporated into the system and the learning part was the most important thing for me. Any potential profit lost was acceptable since my processors need to get the required reps first to fully integrate it in my system.

Added bonus is having the peace of mind that I wasn't risking a lot while I couldn't monitor the stock movement properly.