Before the open we identified 55.80 as an important level in RIMM. I will let you decide how important this level was to you. But I will make an important trading point. If you love a level then you have to be willing to trade off of this level a few times. RIMM is an excellent example from today.
Many traders were short because RIMM was below 55.80 the lows from the five day chart. RIMM has sold off from 70 recently and been very weak. On the Open 55.80 held, but then RIMM did not trade well through 55.80. It just was not that weak. Next came a move above 55.80 and lots being stopped out. But now comes the trading that separates the 4k day from the negative.
RIMM failed above 56 and then came back below the 55.80 level. This level held again. If you love this level then you have to reshort. And doing so would have made your day. Yes I get that pyschologically you are less willing to do so because earlier you lost shorting this level. But the right thing to do if you love the level is reshort and hold.
Your job is to do the right thing and not what makes you most comfortable. Eating pretzels on the couch is also quite comfortable but that never made anyone money as a trader.
Mike Bellafiore
Author, One Good Trade
2 Comments on “If you love the level you have to reshort”
Great post Bella. It is a tough trade to master. I have to admit most/all of the time I would NOT have done this. No doubt it is one thing that separates a 4K per day trader from others. Thank you for pointing out another example of a play I need to have in my playbook in order for me to be the best I can be.
I have to admit, I was also short on the open but got caught in that rip up to 56…Reshorted nearer 56 BUT poor execution (improper stop) and improper management made me cover.