{"id":508,"date":"2009-04-13T16:35:34","date_gmt":"2009-04-13T21:35:34","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=508"},"modified":"2009-04-13T16:35:34","modified_gmt":"2009-04-13T21:35:34","slug":"loading-up","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/loading-up","title":{"rendered":"Loading Up"},"content":{"rendered":"

<\/a>One of our better traders stopped into my office today to discuss WFR. \u00a0He was curious where I started buying into its upmove on in the AM. \u00a0The conversation shifted to loading up in WFC. \u00a0We discussed good places to load up in WFC on Thursday. \u00a0Let’s discuss.<\/p>\n

Developing traders often assume that the best place to load up on the short side is closest to the top. Developing traders assume that they ought to be lightest near the bottom of the downmove. \u00a0This is not necessarily true. \u00a0As traders our job is not to catch every penny of a move. \u00a0Our job is to find excellent trading set-ups<\/a> where our downside is 1, our upside is 5, and our win rate is at least 60 percent. \u00a0This is our job. \u00a0This is what we do.<\/p>\n

To the developing trader it may seem counterintuitive that our risk reward may not be best at a higher price when we short. \u00a0 For example, a developing trader may assume that WFC offered the best shorting opportunity at 20 on Friday. \u00a0A developing trader may assume that the second best shorting opportunity was at 19.60 before its downmove to 17.50. \u00a0This is incorrect.\u00a0<\/p>\n

With WFC on Friday the best short was $1.75 lower. \u00a0 The short that offered an excellent risk\/reward with a win rate of 80 percent was at 18.25. \u00a0Shorting WFC at 20 on the open was not a good trade. \u00a0WFC was still in an uptrend. \u00a0We do not short stocks in intraday uptrends, unless they are met with huge longer term resistance levels. \u00a0I did not like the short at 19.60 either because WFC was still in an uptrend.\u00a0<\/p>\n

I did short WFC at 19 but this was not a place for me to load up on the short side. \u00a0WFC had a huge battle at 20. There was still a great deal of buying at 19. \u00a0WFC had gapped up and a one point downmove was not necessarily an indication that it had turned. \u00a0Often stocks this strong, drop a point, then there is some more buying, and the stock resumes an intraday uptrend. \u00a0Even though the intraday chart shows that WFC is in a downtrend at 19, you still must be cautious. \u00a0As an experienced trader I have learned that the downmove does not necessarily mean the stock had reversed. \u00a0<\/p>\n

But at 18.25 WFC is clearly in a downtrend. \u00a0And at 18.25 there was a seller who would not lift. \u00a0And WFC was below 18.50 where there was a huge battle. \u00a0This is a short I will sink my teeth into. \u00a0This is a short where I will be aggressive. \u00a0And this is $1.75 from the top. \u00a0But this short was the best of all that were mentioned because it offered an excellent risk\/reward, with an unusually high win rate.<\/p>\n

As a developing trader understand what you do. \u00a0Understand your job. \u00a0Your job is to find high win rate trades with excellent risk\/reward opportunities. \u00a0Your job is not to pick tops and bottoms. \u00a0You job is not to stress about catching every penny in a downmove. \u00a0You are a trader. \u00a0Traders simply make trades that mathmatically generate profits over thousands of trades.<\/p>\n

CNBC is full of excellent prognosticators. \u00a0Hedge Funds and Mutual Funds are littered with outstanding long term traders. \u00a0You are a short term trader. \u00a0Your job is to trade to your strengths. \u00a0Load up where your risk\/reward is best and not necessarily near the top or bottom.<\/p>\n

Best of luck with your trading! \u00a0Don’t forget to follow us on twitter<\/a>.<\/p>\n

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One of our better traders stopped into my office today to discuss WFR. \u00a0He was curious where I started buying into its upmove on in the AM. \u00a0The conversation shifted to loading up in WFC. \u00a0We discussed good places to load up in WFC on Thursday. \u00a0Let’s discuss. Developing traders often assume that the best place to load up on … 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":[4676,30,18],"class_list":["post-508","post","type-post","status-publish","format-standard","hentry","category-general-comments-2","category-mike-bellafiore-bellas-blogs","tag-day-trading","tag-prop-trading","tag-smb-capital","no-post-thumbnail"],"yoast_head":"\nLoading Up | 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\/loading-up\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Loading Up | SMB Training\" \/>\n<meta property=\"og:description\" content=\"One of our better traders stopped into my office today to discuss WFR. \u00a0He was curious where I started buying into its upmove on in the AM. \u00a0The conversation shifted to loading up in WFC. \u00a0We discussed good places to load up in WFC on Thursday. \u00a0Let’s discuss. 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