“I should have set a wider stop.”
“I am such a wuss. I didn’t give my stock enough room.”
“Bella, where should I have set my stop so I didn’t get shaken out of that trade?”

In Steve’s office we were looking at the results in JBL. JBL had been discussed in the AM Meeting. Lots were long but maybe half were net positive for the day. It did pretty much what we thought it would. We had an important level. JBL traded and held above that level and then found higher ground before it broke the uptrend.

That same day I marched the newest class into our training room for a discussion on a very important trading principle. This discussion will be shared Sunday night on StockTwits TV for SMB U hosted by me, Mike Bellafiore. We placed an intraday chart of JBL on the board. I asked, “What important trading principle did JBL teach us today?” No one was getting the exact answer I was searching for. Some got warm. I threw in the incentive of free lunch on me for the correct answer. Big Baby Ben started salivating but could not produce the right answer. Gino’s East gave it his best attempt only to swing and miss. Ivy League Alex….nope.

Those red in JBL were playing breakout trades when the pattern of reward was buying the pullback.

Intraday traders must pick the direction of a stock AND the pattern. Increasing your stop loss will not work for most trades since that will entirely change the risk/reward to undesirable depths. Anyone can just increase the stop loss. But if that leaves the risk/reward for that trade as undesirable then a wider stop is not an option. It is not about being right. A good trade requires you to control your risk.

SMB Florida

Great stuff from Adam Grimes yesterday with his free webinar on his trading preparation. And awesome stuff above from Options Seth that you might want to check out.

Just scalped Yankees tickets for tonight spring training game. Paid the offer and not feeling too good about myself for that. Discipline Bella. Discipline.

Mike Bellafiore
Author, One Good Trade