BA- A Good Chance to Trade Lower

Jun 24th, 2009 | By | Category: General Comments
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Our desk did a nice job of trading BA today on the short side.  Below 42.75 BA offered an excellent risk/reward opportunity short.   Let’s discuss why this level was so likely to work.

Often traders are in the wrong stock.  Or often traders determine levels in stocks that are not significant.  BA was not the wrong stock today.  42.75 was not the wrong level.  It moved off of this level.  It moved cleanly.  BA moved significantly.

And as traders there were characteristics of this set up that we must remember.  We will see set ups like BA again.  It is important as traders to brand in our trading brains the set ups that are most advantageous.  Today in BA, short below 42.75 is one of them.  Why?

1) BA had significant news yesterday.

2) BA moved significantly intraday yesterday.

3) There was a ton of intraday volume done at 42.75 in BA yesterday.

4) There is no support for BA until 40.

5) The market is weak overall without support until SPY 88.50.

6) CHEX was a huge seller who kept stepping down in BA today.

7) BA kept making new intraday lows after battles.

After the close our desk met to discuss this set up.  Traders in this play should relive this trade with as much detail as possible.  You should rewind this trade tick for tick in your mind.  These are the trades that work.  And we must spend most of our review on our best trading set ups.

Don’t be so hard on yourself when you make mistakes as a trader.  If you want to be hard on yourself, then make sure you remember as many details as you can about trades like BA above.  Could you have added more size?  Did you cover too quickly at times?  Did you hold your core for most of this move?  Make sure you are ready to trade this set up the next time it is offered in the market.

Best of luck with your trading! Don’t forget to follow us on Twitter!

BA 2-day 06-24-09

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  • Daryn

    I was thrilled to see this post today… at least I knew I was looking for the right trades. What would you say to a trader who watched this trade setup and then somehow managed to walk away with a scratch…and by scratch I mean not a single dime. I got short at the .72 and was in the money almost right away. My initial stop was at .81 and the trade was working nicely. However I brought my stop down too quickly (right to my entry point) and covered my short at .72..one freakin penny from the move high. My thinking at the time was that I simply did not want to let what was potentially a .20 winner turn into a loss. Well, I prevented that alright and in the meantime I missed the trade of the day. Very frustrating to say the least and to make matters worse I failed to re-enter as I moved onto other opportunities. I seem to miss these moves all to often as I take quick scalps. This was a case where I planned to play for the larger move and did not take the first .20 the trade offered me, then a bounce occured and I was shaken out of a great trade! Love you blog…keep up the great work!

  • Daryn

    I was thrilled to see this post today… at least I knew I was looking for the right trades. What would you say to a trader who watched this trade setup and then somehow managed to walk away with a scratch…and by scratch I mean not a single dime. I got short at the .72 and was in the money almost right away. My initial stop was at .81 and the trade was working nicely. However I brought my stop down too quickly (right to my entry point) and covered my short at .72..one freakin penny from the move high. My thinking at the time was that I simply did not want to let what was potentially a .20 winner turn into a loss. Well, I prevented that alright and in the meantime I missed the trade of the day. Very frustrating to say the least and to make matters worse I failed to re-enter as I moved onto other opportunities. I seem to miss these moves all to often as I take quick scalps. This was a case where I planned to play for the larger move and did not take the first .20 the trade offered me, then a bounce occured and I was shaken out of a great trade! Love you blog…keep up the great work!

  • AJ

    I’m very new to trading so pardon me if this question is too base.

    As I’ve been following BA the past few days, I’ve noticed in the book a 3 sets of 100k orders that are staggered outside of the market. They move continuously to stay outside the market.

    I get the feeling that staggering outside may qualify as some form of manipulation, but I don’t know. Could you possibly talk about what may be the cause of order patterns like that?

    Thanks!

  • AJ

    I’m very new to trading so pardon me if this question is too base.

    As I’ve been following BA the past few days, I’ve noticed in the book a 3 sets of 100k orders that are staggered outside of the market. They move continuously to stay outside the market.

    I get the feeling that staggering outside may qualify as some form of manipulation, but I don’t know. Could you possibly talk about what may be the cause of order patterns like that?

    Thanks!