Let’s talk about a way to get bigger in a set up from today.
PSS offered an example of a time to get bigger. 16 was our level on our long term charts. PSS started to work and traded down into the 70 cents area. And then it popped back up near 16. You must get bigger into this pop. 16 was your level. The move away into the 70 cents area was more evidence you were correct. Add and set your stops above 16. You must get bigger into this pop.
Mike Bellafiore
Author, One Good Trade
4 Comments on “A time to get bigger in your position”
” You must get bigger into this pop.” It certainly worked out well, and your rational was because this apparently was a significant level on the long term chart. Perhaps you could explain the siginficance because the stock traded around the 16 level many times, sometimes overshooting it by a point or more in a single day. So my view was that it could trade above 16 again today so I simply kept a modest position.
perhaps we can get @tarhini:disqus _smb in here to explain
Played this exact setup Bella. shorted .99 and 16.00 But like you said, I didnt do enough size. Shouldve put on heavy size b/c my risk was minimal (4-5 cents)…Talked about this trade with Steve on Stocktwits.tv “Live from the floor” today if anybody wants to check it out….
Screwed up the trade a bit (coverin too early, but reestablished but again covered too early) though.
sure, so when a stock is very in play, its good to use long term levels as a reference point, then watch what goes on at the level on the tape and see if the tape is confirming the level’s importance or giving it even more importance than you expected, like 16.00 in PSS.
16.00 on the charts is not a very clean level, but if you watched the stock trade on the open you would have found the level became extremely important, I’d say 8/10 or 9/10. 16.00 held the bid aggressively on the open, dropped, then held the offer. My rationale is that there was someone selling a lot of stock on the open at the level, and a number of will buyers got long 16.00 – 16.18 or so are trapped below 16.00 and need to hit out (all while there is still an aggressive seller)
The level becomes even more significant when PSS starts holding lower. This is when to start selling into pops and finding spots to get bigger – I didnt have much risk $ left on the table to sell into pops so I was using held offers to get bigger – you can see them on the 1 min chart – I was risking a penny or 2 each time.