The problem with "Reactive Trading" often missed

[tech/a]

There will be a few who took the plunge today and did some "Selective" buying feeling pretty good that the Ords has fought back 250 pts.

But how good was their buying today.

Lets take BHP as an example.
If you'd have bought at open today You'd have paid $33.40
Currently its trading at $33.90

So while BHP has made a gain of $3 today
buyers today who are
Averaging down or taking a new trade are no better off than close of trade
Monday.

Now if you were caught in the Sell off,then today is like Xmas!

 

[reece55]

There will be a few who took the plunge today and did some "Selective" buying feeling pretty good that the Ords has fought back 250 pts.

But how good was their buying today.

Lets take BHP as an example.
If you'd have bought at open today You'd have paid $33.40
Currently its trading at $33.90

So while BHP has made a gain of $3 today
buyers today who are
Averaging down or taking a new trade are no better off than close of trade
Monday.

Now if you were caught in the Sell off,then today is like Xmas!

Tech, you have summed it up.....

People have to remember that anyone who bought at around December are all out of the money and severely so....... This kind of momentum isn't just going to disappear.

A good way of seeing this is to review the VWAP...... A lot of the time, in downtrend the VWAP will act as resistance and conversely in an uptrend, as support. I view it as a graphical representation of the psychology of the traders on the day...

Key point - in every downtrend, there are significant rallies... they are an opportunity to cover if short or jump ship if long..... Just my opinion though!

Cheers
Reece

 

[chops_a_must]

There will be a few who took the plunge today and did some "Selective" buying feeling pretty good that the Ords has fought back 250 pts.

But how good was their buying today.

Lets take BHP as an example.
If you'd have bought at open today You'd have paid $33.40
Currently its trading at $33.90

So while BHP has made a gain of $3 today
buyers today who are
Averaging down or taking a new trade are no better off than close of trade
Monday.

Now if you were caught in the Sell off,then today is like Xmas!

I took it as an opportunity to go short on BHP again. Has failed, and is looking like failing at some very important points. Same stops as before. Not sure how it will pan out, but not a big worry.

It's just not probable enough to see trends like this reverse, at least not significantly. In fact, I can't really remember seeing any charts like this go anywhere fast, but more down. The only ones that differ are island reversals... but this is dabbling in the gap so I don't think it is valid.

 

[tech/a]

Chops I know what you mean but partial 50-70% filling of gaps is common in continuing of moves.
But as a short on BHP there are good places to place stops.
Problem is in this volatility GAPPING up!

But its a matter of letting the market prove itself.
Dont think it has to the upside----yet.

 

[chops_a_must]

Chops I know what you mean but partial 50-70% filling of gaps is common in continuing of moves.
But as a short on BHP there are good places to place stops.
Problem is in this volatility GAPPING up!

But its a matter of letting the market prove itself.
Dont think it has to the upside----yet.

The overall market is proving itself to the downside... again... IMO.

And with BHP because of the screwy US markets overnight, BHP effectively missed a huge down day on their bourse. So no doubt it is being subjected to massive arbitrage trading. i.e. buying here, and my guess is it will be sold overseas.

Setting stops is the million dollar question in trading isn't it?. There are a few gaps for BHP to potentially fill, but it doesn't generally take notice of them. Just resent the giving up profit/ limiting losses decision dillemma.

Reckon we are going to get a doji cross on BHP which wont look good on the pop up for longs.

US futures looking terrible again. We'll go close to finishing on our lows. No overwhelming reason to go long again at all.

 

[theasxgorilla]

With central banks stepping in and taking unscheduled emergency action I reckon that holding anything overnight in any direction has to be a very risky prospect. Holding across sessions is often where the big gap moves work to the benefit of a swing trader. In session trading only for me.

ASX.G

 

[Kauri]

If a French bank was getting set to post a massive writedown, would getting set in FX to suit be reactionary???
Cheers
..........Kauri