Plays to Add Size

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One of our traders, CBA, made a chop in HON into the Close. And even better CBA got me into the play as well. I like that excellent communication at SMB Capital. CBA is a conscientious trader. He watches tapes of his trading over the weekend (I saw him this very Saturday watching such tapes in our office), keeps a detailed journal, prepares well, works hard to eliminate his weaknesses, etc. He is too conservative. So we have been working with him to selectively become more aggressive.

And there was one place where CBA could have added some more size in HON into the Close. But what is even more important is as a trader to have a system to add more size. What plays are you willing to add more size and live with the consequences even if your trade results in a loss? I have a list of these trades for myself. Do you?

CBA called out a huge bid that was stepping up in HON into the Close and was long. This is probably the simplest trade we teach. The huge bid started at 49.89, stepped up to 50, and then to 45.09. ISLD held the bid at 45.15. And then the huge bid stepped up again to 45.15 while the offer was 45.23. Sitting next to CBA I suggested that he bid heavily at 45.17 or 45.18. I am not sure what else you want to see from a stock. But this is a time where you should add size.

So after the Close CBA and I replayed the HON trade and I explained why he should have added size. But what is most important as a new trader is knowing the plays where you will add size. And when those plays occur to in fact add some size.

Mike Bellafiore
SMB Capital

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