50.50 was the important technical level we were hawking in ETP. Stock In Play. We have our level. ETP opens below, does tons of volume just below the level, and then holds above 50.50. Long right? Easy right?
Well if only trading were that easy. Yes we want to be long. But can we stay in the long while responsibly controlling our risk? This is always our challenge. And we must control our risk before anything else. So some newer traders set their stops below 50.50. This is the right area for these stops.
But there was more than one way to set this stop. There was a way that gave back all your profits. And then there was the GMan way, where you profited handsomely in ETP.
Look, I’m not going to tell you this is the easiest trade. GMan has thousands of hours more of screen time than most. But if the 50c area is your stop there is more than one option than hard stop 49c. Since ETP spent so much time above 50c, and since 50c was an area where so much volume was done, there was another option. You could set the stop for if ETP held below 50c.
This does offer more risk for some trades. But in this case it kept you out of the temporary shake below 50c. Ask if I employ this selling stop for this pattern 1000 times will I make more money? Amazing Andy set his stop for 49c because he feared a quick drop to 35c. Good analysis. This was possible. But GMan calculated that this was remote. Most times he would be able to sell into the next upmove and get the same 49c hard stop price. And he would be able to stay in the stock if it showed the shake. So he choose his exit strategy of waiting for selling below the 50c.
Just an exit technique for you to consider. This is not trading 101. This is advanced trading stuff. So decide for yourself what is the best exit strategy for you.
Author, One Good Trade
But wouldn’t you still need a “line in the sand” or hard stop so to speak? I mean, what if the stock kept grinding down lower without showing you selling/holding on the offer below 50.50? What price would make you get out no matter what?
Yeah, I’m trying to hold lately to my trades on the first dip below the mental stop to avoid a shakedown – gonna cost me soon
You cant risk a penny. True support is 50.3 the low of the day and the 200 sma. most traders wouldnt have flinched with a dropped bid for a second
IF I were in this play, I probably would of gotten stopped out as well, but if i keep my eye on this stock in the radar, I would notice 50.60 another level in which bids held, secondary entry above 60c.
I agree, even if shaken out the stock offered plenty of opportunities to get back in.
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