The Trade That Never Happened

This morning I was reviewing Tuesday’s price action in APOL and found a long setup that I liked. On Tuesday while trading APOL I became somewhat enamored with the 35 level as it worked twice for me during the first 15 minutes of trading. But the truth is after 9:45 34.80 established itself as a much more important level for support on the tape. Each time APOL traded to the 34.80s there was a significant amount of buying. So today I planned to get long APOL as it approached 34.80 and not before.

I set an alert for 34.90 and it was triggered after APOL sold off hard from 36. It appeared 34.80 would be hit shortly. I entered my bid at 34.82 fairly confident I would be long in the next few minutes. APOL traded down to 34.86 and stopped. My bid was not executed. When I looked at APOL again it was at 35.20. Why did I not just pay the offer at 34.90 when I noticed it stopping at 34.86? This was not the trade I had planned and was an adjustment I was unwilling to make. Yesterday, there was a ton of buying in the 34.80s but twice it spike lower to the 34.60s. Even though it was clear buyers were accumulating into the 34.80 level the level itself was violated multiple times. My trade was to get long into 34.80 with the expectation that it would trade lower but hopefully not through my stops.

I often chastise our traders for not paying the offer or hitting the bids to enter a position when they cannot get the “perfect entry”. The situations I am referring to are in stocks that have shown great strength or weakness and have traded cleanly. APOL was a whippy mess yesterday. However, it did show me a price where I was willing to take some risk again for a move back up to 36 intraday and possibly a swing higher. But I was not willing to “pay up” for shares after the whippiness I had seen in the stock.

So the trade never happened. It trended up for about $1.50 from 34.86 without me. And I am fine with that.