The One Penny Difference

FDX broke down technically below 82.71-82.65 intraday.  83 was a prior important intraday level.  The sellers won that battle.   FDX found 81.80 in a nice downtrend after the technical break.  And then we had another excellent opportunity for a technical trade.  We had another A trade.

When a stock breaks a technical level like at below 82.71-82.65, makes a nice down move, and then returns to this level we almost always want to reshort.  I reshorted into the upmove towards this technical break level.  I entered 83.01 and 83.11 as my stops, playing for a downmove below the intraday low of 81.80 for 1/2 and the rest for a longer term swing trade.  I missed getting stopped out by one penny.

Late into the close I saw some support at 82 and closed out 3/4 of my position, changing my original plan based on observation.

The tape helped me find these important levels.  83 was the most important price on the open on the tape.  After FDX started an intraday downtrend it was 82.71 as the BMOC of price.

Trading is a game of probabilities.  Sometimes the trading Gods smile down on you.  My job is to execute.  I cannot control good fortune like this.  I am not as good as I was today.  I am not as bad as when circumstance calls for too many stops to be filled.

Mike Bellafiore

Author, One Good Trade: Inside the Highly Competitive World of Proprietary Trading (Wiley)

5 Comments on “The One Penny Difference”

  1. The high after the second breakdown was 82.98, not sure how you get 1 penny from 83.01 and 83.11 stops ?

  2. love these posts on your trades and thought process. really adds value to the community. thx.

  3. Sylvain,

    We had a few prints at the whole. Interesting. Thxs for the comments.

    Bella

  4. Hi Mike,
    Since the stock plunged after the earnings release, don´t you think 84 (intraday low from the 14th) or even 84,5 (low from the 15th) as good retracement levels to test, even before the opening?
    Thanks,

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