First Energy (FE) Stock Trade
As always the first thing I look at before entering a trade is the market it self. What did SPX do today? It seems to be in a range. It hit support (highlighted in yellow in the chart below) and is currently on its way back up. Time enter into long positions.
Finding a Trade
After running my scans, I found First Energy (FE). The 6 month daily chart shows a nice uptrend, making higher highs and higher lows. The volume doesn’t tell me anything definite, but it seems to be increasing on rallies, and decreasing during the declines. A good sign. It’s just coming off support, and the lower shadows (circled in the chart below) mean lower prices are being rejected. Today, it’s closing higher than the previous day’s high. Plus there are no upcoming earnings.
What’s more, looking at the 3 year weekly chart below, it’s recently broken out of resistance (highlighted in peach in the chart below). Gotta love that. This looked like a good buy.
Managing the Trade
My stop should be just below the previous dip (see the white arrow in the chart below). It seems like a pretty safe bet and I don’t expect it to (crossing my fingers and hoping it doesn’t) get hit.
I’m willing to risk 1% of my account, $250, and with the stop at $36.25, and a buy price of $37.95, I calculated the number of shares to be about 150.
$37.95 – $36.25 = $1.70
$250 / $1.70 = 147 shares
I’ll lose about $255 if I hit my stop. I haven’t decided yet if I’ll sell at the top of the swing, but I’ll see how this unfolds in the next few days.
I decided to sell FE on 12/6, 8 trading days after I bought it. Why, you ask? The market was doing weird stuff. If you look at #1 in the SPX chart below, there was a doji right before a hugemungous drop.
FE didn’t fall too far (thank goodness), but the shooting star did indicate a reversal. Normally, I would sell here (eek, breaking my rules), but after such an unusually large fall, I thought it would recover a little the next day, just so I could sell at a slightly higher price. If it didn’t, my plan was to ride out the next dip and sell the next time it hit resistance. Hey, at least I had a backup plan.
Upon observing the chart again, I originally though it was making higher highs, but if I was only looking at closing prices, it looks like there’s actually a resistance at about $38.80 (where I highlighted the area in yellow).
The next day, it dropped and popped back up, and I sold at $38.80 with a gain of 2.24% and a profit of $127.50. Not a lot, but I was happy with it.
I’m glad I made profit, but I’m not completely happy with the trade because I broke my rules. If I sold at the end of the trading day at the #1, I would only have made about $90, which is not significantly less.
However, the next day, it continued going back up. But that’s part of the game I guess, the reversal candle is just warning that it could possibly reverse.