Can You Just Play as a Trader?

If POT breaks 112 then I will get long.

If RIMM hits 65 I will start a long term short.

If MON gets above 70 then I will get long and try and stay long till 74.

If AAPL breaks 205 I will whack the bids and play the downside momentum.

All of these are example of excellent trading plans our traders have developed at some point during this month.  This is great work and examples of the continued opportunities in the market.  And then today this happened:

“NE just dropped.  I don’t know why?” alerted Beyda.

“Any news?” I asked.

At 39.60 an offer was tested and held.  Short Bella for 1/3 of a lot.

Then at 39.40 the offer was tested and held.  Short Bella for 1/2 of a lot.

Still later at 39.25 the offer was tested and held.  Short Bella for one lot.

Again the news had not been announced.

39 held the bid and I lightened up.  The stock traded slightly higher.  The 39 bid was tested again and held again.  I lightened up some more.  After two more holds on the bid and near 39 I got almost flat.

And then came the news.  The news has no relevance to the point of this blog.

I had not planned to trade NE.  I did not know the news.  The tape CLEARLY indicated a shorting opportunity.  The intraday trend offered evidence to short.  Our intraday fundamentals indicated that NE potentially might finish at the low of the day.  And I got short.

Yes it is great to be prepared.  And yes almost all of the trades you make require substantial preparation.  But some part of your trading must consist of just playing.  The stock was weak so get short.  This is a pattern that I recognize is an excellent risk/reward.  It was just not a planned event.   And see what happens.  Not every trade must intellectually make sense to you.

Think of college basketball.  A team practices hours everyday.  Plays are taught and practiced.  These plays have names. Coaches scream them out from the sideline to their point guard.  There are two minutes left in a close game.  The play drawn up is to thrown the ball into the low post through your side.  You receive the ball and recognize your defender is off balance.  You instinctively dribble past him, drawing another defender to pick you up and you dump the ball to your cutting teammate for a layup.

Those that need for every trade to make perfect sense are not complete traders.  This was a great shot.  This was not the play drawn up.  But this is just what was offered by the defense and you made a play.  Sometimes this is what happens in trading.  Can you just play?

Best of luck with your trading!
NE trade

15 Comments on “Can You Just Play as a Trader?”

  1. I’d like to see more posts on situations like the above that do not work out, where and why you decide to take your medicine, etc. There are lots of fake outs and wondering if you have hard and fast rules for stops or utilize “feel” when a position goes against you.

  2. I’d like to see more posts on situations like the above that do not work out, where and why you decide to take your medicine, etc. There are lots of fake outs and wondering if you have hard and fast rules for stops or utilize “feel” when a position goes against you.

  3. I’d like to see more posts on situations like the above that do not work out, where and why you decide to take your medicine, etc. There are lots of fake outs and wondering if you have hard and fast rules for stops or utilize “feel” when a position goes against you.

  4. in terms of the bigger picture, there are so many sorters and filters in addition to great stock setups we have done our homework for.

    how can we as traders effectively be in the best stocks at any given time without driving ourselves mad scrolling from stock to stock on our lvl 2 box or charts?

  5. in terms of the bigger picture, there are so many sorters and filters in addition to great stock setups we have done our homework for.

    how can we as traders effectively be in the best stocks at any given time without driving ourselves mad scrolling from stock to stock on our lvl 2 box or charts?

  6. in terms of the bigger picture, there are so many sorters and filters in addition to great stock setups we have done our homework for.

    how can we as traders effectively be in the best stocks at any given time without driving ourselves mad scrolling from stock to stock on our lvl 2 box or charts?

  7. Eric,

    Great question. Your environment is very important. 50 pairs of eyes trained to find the Stocks In Play are better than one. You must create a similar environment for your self or else you will miss some of these opportunities.

    Mike

  8. Matt,

    For all of our trades we have very definitive manual stops. And when we do not know the news we keep our stops tighter and only enter when the tape CLEARLY offers a pattern that is an excellent risk/reward scenario.

    Mike

  9. Bella,

    You are right, having that kind of environment is a huge advantage to constantly being in the most in play stocks.

    What advice would you give to prop traders who are on a desk where this type of information sharing is not available? Is your intra-day alerts product what your traders use to share this information?

  10. Bella,

    You are right, having that kind of environment is a huge advantage to constantly being in the most in play stocks.

    What advice would you give to prop traders who are on a desk where this type of information sharing is not available? Is your intra-day alerts product what your traders use to share this information?

  11. Bella,

    You are right, having that kind of environment is a huge advantage to constantly being in the most in play stocks.

    What advice would you give to prop traders who are on a desk where this type of information sharing is not available? Is your intra-day alerts product what your traders use to share this information?

  12. Eric,

    I would start a culture like this where I was at. All on the desk will make more money. This is in the interests of every trader on the desk.

    Why can’t you be the person to make things better at your firm?

    Bella

  13. Great point. I remember it from your stocktwits show not too long ago. Thanks!

  14. Great point. I remember it from your stocktwits show not too long ago. Thanks!

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