Reading v.s Thinking AAPL

AAPL
This is an extremely important post, that I will write in very explicit details, simply because it is absolutely very healthy for me becoming a better trader and for those who have a patience to read it. If a wanna be a trader has no patience to read this through, and read it 5 times over and over again, better stick to the clock in job and abandon trading forever , or until you grow some level of patience.

Important note: This doesn't mean that this is how a trader have to day trade to make money by day-trading, and by no mean means this will make you income if you just do this. All I am explaining here is may way of  trading by implementing my rules that work for me. Implementing rules is important not because they will make you guaranteed money , but because trading by rules  allows me to see the success of the strategy, how well it works or it does not, so I can twick the rules appropriately in order to optimize my performance. Many will laugh at my approach to recognition of the candles and their location in reference to the Simple Moving Averages, and all those technical stuff that "never  work".  Many will say: " Oh, I believe only in patterns, triangles, flags, head and shoulders, cup and handles, pennants, 1 2 3 tops and bottoms or ABCD formations..." and all that stuff  is totally fine. The problem I see in those abstract formations is mostly that I can see any of those patterns in any stock at  any time and can  justify a reason to get in a trade. I find it very hard to define a trading plan by abstract formations sold in many books and trading videos. And I never made money trading that way...I mean I did make a lot just to lose more keep doing the same thing : recognizing patterns. If you can clearly define them, more power to you please write a comment and share it so I can improve too..after all I am sharing what works for me don' I?..

So why I traded AAPL. 
I mentioned in my tweet from last nigh click here that I will watch AAPL as potential short that may drop to 90 a direction where the path of less resistance is.
This is AAPL daily chart note the declining 200 50 and 20 SMAs that give me short bias on bigger (daily time frame)

AAPL daily is  below all SMAs that are also all  declining.

This morning markets were diving SPY  QQQ  FB all in red below PDC  ( Prev Day Close) while AAPL  stood for a while in green above the PDC area. This is how SPY  QQQ and AAPL looked like in the first half hour of the session.

SPY

FB

AAPL

From here I was shorting pops on 2 min chart getting filled at ask covering at the bid, placing orders as rapid fire  ahead and above/below  the market explained in this post click here. Many ask me how do I know whether I should short or go long, and the reason here was explained above : The markets were tanking and I had no clue AAPL will tank too, but I speculated and decided to short. Normally AAPL trades very choppy so being afraid I may miss the move down was not an issue  ( at least not today but that changes often  since I am still far away from being mentally strong enough ).

 Now here is the moment when I made most of the gains: I explained this type of entry yesterday in my twits from my phone while I was not trading calling myself a FURU. 

See these twits so you can understand the AAPL trade that let me have the "easiest gains today".

Keep in mind the GES trade was a long trade but the same rule is for the short trade AAPL today but the opposite. 

GES set up a nice 3 candle pull back into a rising 20 SMA click here . The alert was given ahead of the time that the long entry will be triggered above the break of the high of the last narrow range candle at or above the 20 SMA. This is the reached 1:2 risk reward an easy trade with 1c spread. click here .Time frame used was 5 min shown better here :

GES 1:2 risk reward long

3 candles drop into rising 20 SMA, narrow candle with exactly known high and low, risk reward 1:2 

Here is the AAPL same type but short trade using 2 min chart 

AAPL three candles pulling up into declining 20 SMA narrow candle with exact no guessing or thinking high and low, good risk reward 1:2 , no need of thinking

AAPL the risk reward in full effect

Now we as traders can argue nights and days what works what doesn't. The point here is simple: 

What ever I can define with clarity is what works for me. 

I personally find that fundamental analyses  for me do not work. How do I define an entry based on fundamentals of a company? Particularly for a day trade ?  LOL    Even better: how do I define risk based on fundamentals of a company? Do I wait to exit a losing trade when the earning report next quarter will be bad? But that is anther universe to even talk about now. 

Let's narrow it down: how do I define an entry and risk based on technical analyses? Can I define it by heads and shoulder break out ? A B C D break out? Which level is the D? I can always make in my mind any level to be "D" and any level to be the high or low of descending triangle. I am not saying in any way that that is a bad way to trade. I am just trying to find an easier way for me to define my trading rules. I need to define a rule that when it happens I do NOT HAVE TO THINK or  TO QUESTION MYSELF : Is this the level ?... No,  Shall I wait more? Shall I see more confirmation? and so on and on ......If I have to think, it is usually too late to do anything. But that is me, I would rather READ the price action and execute per what the price is telling me,  as the only one true instrument I can trust when I trade. I can not trust my thinking let alone the thinking of somebody else's opinion on Twitter or CNBC. So If can not trust my own thinking, what do I do? I do not think. I read the price action and ignore my thinking. Easier said then done but at least I am trying very hard every day.  I am sure there are successful traders who do way better implementing their thinking, I call them lucky. But "luck ain't running in my veins ".. LOL ...

 In this AAPL example I did not have to think much. Simply because the price levels were there , the candle's high and low and  the 20 sma are UNDENIABLE facts that I need no questions to ask myself or to reassure myself weather I shall take the trade or not. The break of the 2 min candle low was the trigger , the high of the same candle was a risk, the touch to the declining SMA was there as confluent factor signaling end of the pull up, so I know the risk and I knew the possible target I am aiming for in this case risking 1 to make 2. Another great thing about AAPL is that it trades on very liquid volume every single day. Easy fills good spread.  I can always go short no need to be worried about borrows and all that obnoxious stuff when trading the Timmy's penny stocks. So I always watch AAPL why not after all. 

To conclude this post:

The above explained set up is just one of the many ways I trade. Nothing is written in stone. Any trader can have own rules to follow, I will only suggest to trade the same way  per the same rules in order to be able to assess the profitability of the strategy so necessary adjustments can be made 

I did give away some profits later,  it was just choppy market, but did much smaller size as we all know after the first 1 or 2 hours, the  trading is much harder. Almost every trader I have spoken to, have lose money after the great trading in the morning. It is hard to resist but gotta try,  real hard to stay disciplined.

Feel free to write a comment and ask any questions, I am happy to talk about trading almost always. 

Salute 

@DaChopa