As a trader our quest is to make trading opportunities our own. We are all different. We process information uniquely, have a different tolerance for pain, trade specific set ups better than others, etc. As intraday traders we must have Trades2Hold, longer term intraday trades in our quiver. But it is up to find these best ones for us. Today in RIMM the market offered a trading opportunity, Trade2Hold, for you.
The day after earnings 70.30 and 71.65 were important intraday levels. To refresh your memory RIMM leaked below 70.30 and then tanked. But at 68.60 a buyer held the bid. This became a very important level in RIMM.
On the day after earnings traders become very interested in a stock. Volume rises. You learn more about the potential direction of the stock over the next month than ordinary trading sessions. The Big Boys battle and you can see who has control of the stock and in which direction that is.
Since the day RIMM reported 68.60 was an alert set on my trading platform. Then today it went off. I had been keeping an eye on RIMM before this. I did notice the weakness.
RIMM blasted below 68.60 without hesitation, a sign of weakness on the tape. I hit the bids and started a short position. RIMM slowed so I covered. The offer did not lift, as I spotted a panic sell program led by FLOW, so I reshorted. RIMM slowed and then I covered again. Normally I do not cover below such an important level quickly but the downmove had been steep, RIMM has a tendancy to reverse, and I needed more consolidation below the important level to hold the position.
Well I finally got that. RIMM could not trade above 68.27. This was below the important level. I got the consolidation I needed. The next support level was not until 66.20ish (depends on your trading time frame), with a distinct possibility of finding 65 based upon the steep downmoves. Trade2Hold.
As I write I am still short. Perhaps I will get stopped out of this trade. Perhaps RIMM will find 65 today. Honestly I really don’t care. My job is to make these trades when I spot the opportunity. I cannot control the results. What I have done is found this Trade2Hold set up that makes sense to me. And I have incorporated it into my trading with success.
So if you think this trade might work for you have at it. If not, good job of considering it for your quiver. This is the type of exploration as traders we must do.
Best of luck with your trading! Don’t forget to follow us on Twitter!
Short RIMM
5 Comments on “Trade2Hold”
Great trade in CXTS today! In at 40.35 out around 41..What are some of the factors to consider when distinguishing a trade2hold from a normal scalp play? Does it have to be in play for the day or can you just base it on price action? When I review my trades at the end of the day I often find that had I just held my core position from the open – close I would have made far more than scalping in and out.
Great trade in CXTS today! In at 40.35 out around 41..What are some of the factors to consider when distinguishing a trade2hold from a normal scalp play? Does it have to be in play for the day or can you just base it on price action? When I review my trades at the end of the day I often find that had I just held my core position from the open – close I would have made far more than scalping in and out.
Trades2Hold are stocks likely to continue trending for an extended period of time. Scalps are plays in a stock that is temporarily mispriced.
Bella, rimm’s action yesterday was alittle surprising to me — tanking in pre-mk to around 66.7, then trading up a point, back down to 67.17, and then trending up for the rest of the day. If is stock is very weak in pre-market, does that indicate that it will tend to be weak during the day? The extent of the surge at the open surprised me. Luckily I scaled into my short and was able to capitalize on it, but was out of the money for a while on it.
Bella, rimm’s action yesterday was alittle surprising to me — tanking in pre-mk to around 66.7, then trading up a point, back down to 67.17, and then trending up for the rest of the day. If is stock is very weak in pre-market, does that indicate that it will tend to be weak during the day? The extent of the surge at the open surprised me. Luckily I scaled into my short and was able to capitalize on it, but was out of the money for a while on it.