One of our traders, The Original Jersey Shore, was long big at support in CEPH at 58.50 (Trade 1). He got stopped out. After the close he stopped into my office to discuss. He did not get long above the top of the range after consolidation above 58.57 (Trade 2). If you are in 1 why not 2?
Shark was loving his longs and the 42 level in MAR (Trade 1). MAR disappointed above 42.20 and did not trade above 42.30. It finally breached the intraday low of 41.98ish. Before that it failed to hold 42.02 which MAR had done impressively. I asked during a Tradecast if he got short below 41.98 (Trade 2). Answer….No. If you are in 1 then why not 2?
Mike Bellafiore
Author, One Good Trade
4 Comments on “If 1 Why Not 2?”
Because we get tired and we are human and confidence at T+1 depends on what has happened at time T.
i have this problem often because i think at that moment that the stock will gain or fall the most funny is that they do but most of the time i enter to fast.
The development goal of the trader is that confidence at T+1 would be based on technical merit of the trade, not on psychological confidence because the prior trade didn’t work as planned.
I wonder if, in the world of algos and HFT, we shouldn’t trade the obvious setup 1 anymore. Instead wait for the fakeout as a setup.