From Bad to Great- A Trader’s Steps to Improve Performance (Examples)

BellaMike Bellafiore's (Bella's) Blogs3 Comments

Yesterday we blogged how one of our underperforming traders improved his results.  Some of our Readers asked for examples and our trader obliged:

Hey Bella,

I’ve attached 2 charts – one breakout trade of SLB on 9/29 (10min candle chart) and one breakdown trade of AEM on 9/21(15min candle chart). The line on both charts indicates high/low for previous day. The moving average used is the 5ema. Below are what my thoughts would be on what I am seeing on the charts prior to taking the trade

1. SLB Breakout

  • first candle strong, closes near high, and clearly above previous days high
  • second candle pulls back leaving upper tail/wick indicating possible reversal but in relation to overall morning range pullback is only about 20% off highs
  • third candle nearly erases the upper tail/wick of second candle, closes at high, and is an inside bar indicating consolidation near highs of the morning opening range
  • third candle literally sitting on the rising 5ema moving ave providing support
  • would look to get long above third candle/morning high
  • watch the tape for confirmation

2. AEM Breakdown

  • first candle trades down through previous day low and even though it leaves a long lower wick/tail the pullback looks to be standard 50% retracement off lows of the morning range and candle closes below previous days low
  • second candle leaves long upper wick/tail and closes at low indicating weakness
  • third candle bounces off the low again and leaves long lower wick/tail but is unable to trade back above 50% of morning range or close back above previous days low (possible resistance now)
  • fourth and fifth candles close near lows with fifth candle closing on the low; also both candles are inside bars indicating consolidation near the morning range low
  • fifth candle near downsloping 5ema providing resistance
  • would look to get short below fifth candle/low of day
  • watch tape for confirmation

3 Comments on “From Bad to Great- A Trader’s Steps to Improve Performance (Examples)”

  1. Great post.
    Do you use the 5ema as your resistance/support level?

    Where do you place your stops?

    Do you place your stops below resistance/above support? If so, How many points below resistance/above support?



  2. Aris/Josh,

    If I have not been watching the stock for a bit prior to the breakout then my default stop would be placed when price trades through the high/low of the candle that I enter off of. So for SLB my stop would be below the low of the third candle and for AEM my stop would be above the high of the fifth candle. However, if I have been watching the tape prior to the breakout then my stop would be based on what I see on the tape.


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