{"id":231,"date":"2008-12-01T18:47:16","date_gmt":"2008-12-01T22:47:16","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=231"},"modified":"2008-12-01T20:38:33","modified_gmt":"2008-12-02T00:38:33","slug":"thats-not-the-way-we-do-it","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/thats-not-the-way-we-do-it","title":{"rendered":"That’s Not the Way We Do It"},"content":{"rendered":"

Today I overheard one of our new traders talking about fading GS around 71.20.\u00a0 GS had stopped going down.\u00a0 So this youngster, aka the Red Dragon, got long.\u00a0 And I heard what he was doing.\u00a0 I offered that I would prefer for him to continue trading GS on the short side until the downtrend was broken.\u00a0 Since apparently I just work at SMB, the Red Dragon didn’t listen to Bella.\u00a0 Oh this was a mistake on so many fronts.<\/p>\n

First, you almost never get long a weak stock.\u00a0 Second, GS still had a lot more potential downside risk.\u00a0 Third, there wasn’t any real buying at 71.20 identifying a reversal.\u00a0 It was just a function of time that GS was not below 71.20 as opposed to there was support.\u00a0 And most importantly, since Bella runs the trading desk it is a good idea to listen.\u00a0 Buying power now set to zero for the Red Dragon (ok just kidding here).<\/p>\n

When I review a trade like the Red Dragon made I consider whether this technique would be profitable if I made 1000 like trades.\u00a0 Fading a weak stock like GS because temporarily it could not trade below 71.20 is not a trade that will be profitable if made 1000 times.\u00a0 I don’t like this trade.\u00a0 I will only fade a weak stock, such as GS, and get long, if<\/p>\n

a) 71.20 would not drop after being tested with significant volume or<\/p>\n

b) I noticed the selling pattern CLEARLY change or<\/p>\n

c) it has hit an important technical support level.<\/p>\n

GS traded much lower than 71.20.\u00a0 Most problematic about this fundamentally poor fade trade made by the Red Dragon is that he missed the short when GS traded below 71.20.\u00a0 He was so consumed with exiting his long that he missed an easy and profitable short.<\/p>\n

Looking forward to the day when the Red Dragon consistently beats me on our leader board.\u00a0 But he isn’t gonna get there until he rids his trading of these fundamentally poor trades.\u00a0 That GS trade above….\u00a0 That’s not the way we do it.<\/p>\n

Intraday Alerts in GS<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Today I overheard one of our new traders talking about fading GS around 71.20.\u00a0 GS had stopped going down.\u00a0 So this youngster, aka the Red Dragon, got long.\u00a0 And I heard what he was doing.\u00a0 I offered that I would prefer for him to continue trading GS on the short side until the downtrend was broken.\u00a0 Since apparently I just … Read More<\/a><\/p>\n","protected":false},"author":144,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,10],"tags":[22,4676,30,18],"class_list":["post-231","post","type-post","status-publish","format-standard","hentry","category-general-comments-2","category-mike-bellafiore-bellas-blogs","tag-day-trader","tag-day-trading","tag-prop-trading","tag-smb-capital","no-post-thumbnail"],"yoast_head":"\nThat's Not the Way We Do It | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/thats-not-the-way-we-do-it\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"That's Not the Way We Do It | SMB Training\" \/>\n<meta property=\"og:description\" content=\"Today I overheard one of our new traders talking about fading GS around 71.20.\u00a0 GS had stopped going down.\u00a0 So this youngster, aka the Red Dragon, got long.\u00a0 And I heard what he was doing.\u00a0 I offered that I would prefer for him to continue trading GS on the short side until the downtrend was broken.\u00a0 Since apparently I just ... 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