Here is a trade I do not make anymore

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A new trader, TO, sat in my office just under my print of Derek Jeter diving head first into the stands, without regard for his body, to catch a foul ball. He is a recent graduate who spent many hours neglecting traditional studies for his first passion trading. TO has followed us for a few years and now trains with us. He suggested and interesting new blog post, “How about your write about a trade you do not make anymore and why?” Well I have one from a recent trading past.

CTL was In Play recently. It was gapping down with a broken 6 month chart, below all recent support. CTL opened made a strong downmove and then retraced to 35.10, where a seller held the offer. This is a short to me. CTL quickly traded down to 34.25, where there was too much buying. This would be a good spot to lighten up for the shorts.

Then some traders noticed a stubborn buyer at this 34.25 level. CTL was not trading lower anymore. I heard, “Is CTL now a long?”

Arggghhh. Who the heck just asked that? Does the kid listen during our post-Open recaps? How many trainees have I called out recently for fading ultra weak stocks in a weak market? How many times have I said focus on trading with the trend? During that post-Open recap (which we should start broadcasting) I spent an extra twenty animated minutes on not fighting the trend. Actually it might have been closer to forty.

Time passed and the stubborn buyer continued with his stand at 34.25. We were now getting into an unusual hold of a level territory. This can offer an exception to trading against the trend. But this is a trade I cannot make anymore.

Why? Intellectually I can make sense of the trade. But it is too stressful. If 34.25 drops the bid and I am not in for size it is too painful for me to miss crushing this move. It is also just too complicated for to keep in my head when I can trade against the trend and then be ready to flip.

It is easier for me to just find weak stocks and get short and strong stocks and get long. This is how I want to spend my emotional and intellectual capital. Look I can intellectually think through how to trade that opportunity above but it is not worth it to me anymore. At the end of my month, trading the weakest stocks with size and the strongest stocks with size is what determines your performance. Missing thirty cents with a few shares on a few plays is not going to significantly influence your monthly results. So why not reduce your trading stress level, make your trading less complicated and chill with your trending winners.

What trades have you eliminated from your trading game?

One Good Trade

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