I was walking the trading floor, making my rounds, when a trader motioned for my opinion.
“Bella what do you think of SLW?”
“Looks weak intraday. Where is the next support level?”
The trader searched his longer term charts and muttered,”40.”
Guess where the stock was near? 40.40 but heading towards 40.
I asked, “Are you going to get long the 40 level?”
“Should I? I was thinking of shorting it below the 40 level.”
I walked away towards another trader.
“Is 40 a long?”
Quickly I responded, “I would get long 40.”
I tweeted today:
smbcapital SMB Capital
there is a difference between knowing 40 is a support level in $SLW and being able to trade the opportunity. trading is a skill! $
Today after the close we are scheduled to watch tape of how SLW traded around this 40 level. Because trading is not about knowing 40 is a level. Though almost all underperforming traders obsess about knowing their levels.
But can you trade this level? There is the slip below the level. How did you handle that? There is another slip below the level. You walk away? You add above 40.60? 41? You hold for most of the move? Do you have a system you are working on to capture most of these intraday moves?
I want to put a poster up on the floor: SLW 40- Opportunity for the skilled trader.
Mike Bellafiore
Author, One Good Trade
6 Comments on “SLW 40: Opportunity for the Skilled Trader”
How was 40 a support level? Another after the fact trade with fictitious reasoning.
got sliced and diced myself today but after the fact I can see the vix chaged direction there and the spy had a tick divergence
yes only to up ones skill level
I think the point is tht if you really have conviction about the level – you cant be spooked by 10c or even 20c – unless it drives through it…. i.e. here it was choppy around the level so it gave you some indication it was stalling. When I have conviction on a level, I look to get involved on first sign of support at an ok price, add if it comes back a bit but holds the level, and add again on confirmation. I keep the stop < level until it really gets off the ground because if you got conviction – you dont want to choke it.
At the end of the day, its going to go or stop you out.
As for how was it a support? The charts provided an area of interest and the behaviour gave you confirmation. Look at the massive volume at 40 and the corresponding price spread. Likely a transfer from weak to strong hands. There are no absolutes in trading just planning, execution and feedback.
always fascinating to me when an anonymous poster makes such comments. if the blog is not educational for you then move on. stop wasting the time of those who want to constructively communicate with one another about trading.
it gave a nice entry at the Monday lunchtime support @ 41.15 area. While it did break it and went to 40.98, it didnt close there on even the 5min and gave nice green candle (5min) plus its a volatile stock so whips like that are expected. I took 1/3 position on around 41.30 with sl @ 40.90, I didnt add (another 1/3) until it broke yhod and paused above it as wasnt that comfortable until it broke that level.
It wouldnt have been on my radar apart from this blog post so nice one Mr Bellafiore.