WFAD #31


Read the previous WFAD#30.


Endo International plc., $ENDP [NASD]
Healthcare | Drug Manufacturers — Other | Ireland

The first trading idea was buying stocks of Endo International plc. ($ENDP) (see pic. 1).

Pic. 1. $ENDP [NASD] Endo International plc., Daily + 60 minute. (Forecast)

The result is shown on the pic. 2

Pic. 2. $ENDP [NASD] Endo International plc., Daily + 60 minute. (Results)

In this case we planned to trade impulse + correction. 
Unfortunately the development of the impulsive move up was not successful. You can see on 60 min chart (pic. 2) that the price opened with breakaway gap on the local top and closed lower than it was one day before. We tightened our stop-loss and moved it higher to protect our profits. 
Market hit in our stop and stopped the trade.

Profit from this recommendation = appr. +4.43% in 7 days (+227.83% annually)

The lesson is =>

  1. Taking small profits is much better than having a loss when you try to hold your trade. Do not be too greedy. 
    If necessary, you can reenter the trade later.


Magna International Inc., $MGA [NYSE]
Services | Auto Parts Wholesale | Canada

The second recommendation was buying stocks of Magna International Inc. ($MGA) (see pic. 3).

Pic. 3. $MGA [NYSE] Magna International Inc., Daily. (Forecast)

The result is shown on the pic 4.

Pic. 4. $MGA [NYSE] Magna International Inc., Daily. (Results)

We sold the breakout of bearish Flag. 
As you remember in the previous issue of WFAD we discussed flags. That time entry was made before the breakout and the results were very different. 
In this case we waited for the breakout before going short and the result is profitable.

If we look at classical books about technical analysis, we can see, that different authors make different advices. Some of them advice to wait for a breakout, others recommend to buy before the breakout. 
It’s hard to say who is right here, but in case of breakout, in most cases you will have a worse risk-reward ratio and sometimes will not have an opportunity to jump into the trade, because price will run away.

Profit from this recommendation = +5.45% in 8 days (+245.25% annually)

The lesson is =>

  1. When the flag is broken, it is confirmed. Want to be sure, that you are dealing with the flag — wait for the breakout. 
    But keep in mind, that the breakout can be false and in most cases you will have a worse risk-reward ratio.