Back in early 2006 we established what have become known as the SMB Fundamentals. They are a list of 7 trading principles that SMB believes should be followed for every single trade. Fundamental #7–Replaying your important trades–trades that offered a ton of opportunity—help you mentally prepare and execute at a higher level when faced with a similar trading scenario in … Read More
Not Much In Play—Be Very Selective
This is a time to be cautious as a short term trader. Volume is light and there is not much In Play. The SMB Radar is our insurance policy during slow market times to make sure we focus our energy on the stocks with the best risk/reward setups. When I look at the Radar during the day and most of … Read More
Trading Lesson #2: Don’t Trade Cash Takeovers
Trading Lesson #2: Do not trade stocks that are purchased in an all cash transaction. There is very little intra-day movement. Here is the chart for BCSI on December 9th 2011. It spent almost the entire day in a 5 cent range. Not exactly a treasure trove of opportunity for directional traders. Steven Spencer is the co-founder of SMB Capital … Read More
The Risk of Closing a Position That is Working For You
I was watching DRI trade on the Open today. To say that the price action was “whippy” would be an understatement. It seemed to be touching every price and there was no way I could possibly control my risk. So I waited. After 10:00AM I initiated a short position at 43.25. I saw some selling a couple of minutes earlier … Read More
Shifting My Bias
I shorted BIG in the late morning today. It gapped down on its earnings release and then proceeded to consolidate below 36.70, which in my view is an important long term support area. My initial short was when a buyer dropped at 36.20. It quickly dropped about 30 cents and then traded right back up to the 36.20s. I shorted … Read More
Trading Lesson #1: Buying A Strong Stock At Prior Day’s Afternoon Support
New blog format: Short trading lessons with charts for illustration. Trading Lesson #1: Second Day Play–Buying A Strong Stock After It Pulls Back To Prior Afternoon’s Support Area INHX was on our radar yesterday after another fresh news drug catalyst. As you can see from the two charts below INHX is trending higher on multiple time frames. Here is the … Read More
Using Prior Days’ Price Action–NFLX
Prior to the Open of Friday’s shortened trading session there was not much in the way of fresh news catalysts. So my first trading choices were second and third day plays. For those of you who are new to the SMB Blog you can use the “search” feature on the blog to review posts explaining how and why we trade … Read More
Fear–Not So Much
(This post was written on November 2nd) I spent a good amount of time during Tuesday’s AM Meeting discussing how when fear comes back into the market you need to adjust your trading style very quickly. I was particularly demonstrative on this point as my experience has shown me over the years that traders, especially less experienced traders, are very … Read More