Monday, December 31, 2007

MasterCard, Oh MasterCard Incorporated (NYSE: MA) !

One of my favourite stocks to trade.....

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One thing that I have noticed with my trading is that I tend to talk only about my winning trades. The reasons are probably all pyschological, but that has got to change, so now, I will shine the spotlight on my not so great trades as well.

I've been watching MasterCard Incorporated (NYSE:MA) for a couple of weeks now. Over the course of these past two weeks, MasterCard has been putting in a classic ascending triangle pattern. It has also shown up on one of the screens in Alan Farley's website.

Conventional wisdom says that the typical way to play an ascending triangle pattern is to wait for the breakout (above the red zone), and buy the breakout.
Well, the way that I like to play it is to buy on the reversal of each higher low. In other words, I buy each time it tags the (upper sloping) blue line in the above chart. The reason I like to play it this way is because it keeps my risk low, super low.

Anyways, that was the theory. Today, I didn't have patience to wait for it to tag 211, so I went ahead and bought when it broke above 214 (my actual entry was 214.12). But I also knew that there was the possibility of it dropping down to 211 and still not violate this pattern, so I only bought a half position. If it does pullback below 212, I will then go long on my other half position if there is a buying surge that takes it back above 212. I will be watching the 10d EMA line as my guide (which is currently at 210.6).

With MasterCard, because my first entry was not ideal, this trade could turn out to be one of those not so great trades. Especially if the market tanks in the first week of 2008.

Long MA @214.12, initial stop=210, target= 224

I am still long POT @143.1, no change to the stop@142.5

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