I made some chops trading RIMM afterhours yesterday. More importantly I learned important levels. A ton of volume was done at 41 and 41.40 was a huge seller. Today my game plan was to aggressively buy if RIMM traded above 41.40. I was wrong.
I had expected RIMM to fly after it held above 41.40. It didn’t. There was a ton of selling at 60c and 65c and 70c and 75c. RIMM never traded above 41.80. When I bought aggressively above 41.40 I was playing for a big move. And that was what I was expecting. Again I was wrong.
When you are developing your game plan before the Open you must consider how to protect yourself if you are just wrong. So when RIMM was not flying above 40c I lightened up. When it went higher I would buy some more. When it was not flying at these higher prices then I lightened up again. I was very long when RIMM was ticking up. I would have been in an explosive upmove with size. But also I would have been out of RIMM if it tanked and avoided a rip. I held a core position but I sold my second and third lots when the stock did not do what I had expected.
So as a I write I am positive for the day. I was completely wrong with my game plan but I did not take a huge rip. A good intraday trader can make money even when their bias is wrong. No one cares what I think about the correct price of a stock. What is important is price action. If the stock is flying then I am correct. If the stock is not flying, then I just might not be correct. And I must lighten up.
I have built my trading system backwards. How do I make money without risking losing money? Defense first. After all it is my money. If my trading account is negative then I have lost MY money. And I am not interested in losing MY money. I am not interested in ever exposing myself to a huge rip. There are plenty of trading opportunities that offer me little risk and a good reward. I just wait for those plays. And I always ask: what is I am wrong?
BTW if RIMM holds above 41.80 I will aggressively trade it from the long side. But I might be wrong.
Best of luck with your trading!