Hey Mr. Bellafiore,
I hope all is well with you since we last spoke in the middle of the summer. I have two quick questions for you, that I hope you can answer when you have a spare moment. These questions are both based on your personal trading style.
1.) Is there ever a point in the day where you stop considering/looking at the pre-market activity on the charts? For example, if my charts are turned on to show the pre-market action for a ticker like JNS, it will look like the stock still has a lot more room to run towards the down side. From this chart and price action, I might consider a re-short around $14.70’s and cover into the fade all the way down to $13.85. However, when I view the standard market time on my charts, I become hesitant at holding onto the short position when I see bottoming action around $14.30’s. If you don’t understand what I mean, I can show you a screenshot, which may make it easier to describe. (edited and cut)
@MikeBellafiore
I was very hesitant as well to hold the $JNS shorts. You sound just like me. During our Trader Development meeting today, I made this very point.
I explained that I was short JNS and why. And that I was very uncomfortable with the short. My reason was different. I was uncomfortable because $JNS had a huge news catalyst behind it. Bill Gross is the King of Bonds and he was now on their team. Yes the stock was still up 30 percent with room to pull in but the news catalyst was still whispering over my right shoulder:
Hey Bella get out of this short now. JNS just teamed with the King of Bonds. Take your money and run.
I covered 1/3 of my $JNS position near that double bottom of 14.40ish. I had taken profits into the downmove prior so that I was only Tier 1 there. I had stops in above the last important consolidation area of 14.75ish.
The trading principle for me is crystal clear: With a positive news catalyst you must take profits on your shorts.
I hope that helps.
“You can be better tomorrow than you are today!”
Mike Bellafiore is the Co-Founder of SMB Capital and SMBU, which provides trading education in stocks, options, forex and futures. Bella is the author of One Good Trade and The PlayBook. He welcomes your trading questions at [email protected].
no relevant positions