During the AM Meeting I spent a few minutes discussing the importance of focusing on the “right stocks”. The right stocks are one’s that have the attention of a sufficient number of market participants to cause them to have powerful and clearly defined moves on many different time frames. Too often traders attempt to execute trades in every stock that they think has a good “technical” setup. I also mentioned a nice long setup in RIG that would be triggered if it got above 56.
One of the noobs decided that RIG was the right stock for him but he was in no way married to the idea of being long. He very well could have taken the attitude that “Steve said this” or “Steve said that” and used it as a crutch to not make the short trade that was warranted by the price action he observed. I love that!
He knew that 54 had been support last week. When he saw the weakness around 10:00 o’clock and RIG traded below 54 he got short. He told me that he wussed out initially but was able to get back in and make a 60 cent chop as RIG continued to trade lower.
Nice job of thinking independently and even better job of getting back into a stock that was offering opportunity. Perhaps more good things to come from this noob in the future. I will keep you posted.
2 Comments on “I Love That!”
Independent/flexible thinking, that is, thinking on your trader’s feet, is near impossible to teach verbally so when sparks of it are seen, it is essential to make a big deal out of it! Focusing on an anticipated direction can make it very difficult not to forget all the other things a trader knows (implicit learning takes awhile).
About 30% of SMB morning stock-in-play suggestions (that I notice) go in the opposite direction than anticipated. Those are the ones I usually take as such trades tickle my profound contrarian streak. They usually work, because it is still a stock in play and it will often trend, just in the opposite direction.
michelle,
glad u r getting some value out of the am meeting. funny followup to this trade is i was off the desk when RIG had the huge move above 56 on friday, but the same young kid who shorted on monday made money long on friday.
so important to be prepared.
steve