Most new traders should not be trading GS. GS is a very difficult trading stock. The spread is 30c to 50c. It reverses often intraday. There are programs that make it difficult to hit new lows. Trading with size is near impossible. Only the very best of set ups are profitable.

GS is broken. And it has been since it traded below 100. I have never traded a stock that is broken yet so consistently lacks panic selling. Maybe it is coming. But the downmoves are so orderly. The downmoves are so controlled. New lows are often met with strong upmoves. I find it hard to understand how buying the new lows for this broken stock is a profitable trading strategy. But someone out there must think it is because there is so much buying after a new low. GS just offers very unusual trading patterns.

Today after a solid open I returned to my trading desk just before 3. I shorted some GS into a strong upmove from 70 to near 71. GS traded up to 72. Huh? The stock was in a clear downtrend. GS looked like it was getting ready to break 70 again. And then quickly GS traded up 2 points. The upmove was so unusual that I wondered aloud if there was breaking news. There wasn’t. It was just GS being GS (definitely not as much fun as Manny being Manny). Ripper. And so I gave back my gains for the day in about ten minutes.

GS finally sold off again. And I caught some of that move. And eventually I made a series of good trades to put together a profitable trading day. But GS is hard. The profitable trades that I made were all very advanced fade trades that I will not teach new traders. They are just way too hard to explain. Frankly I am not sure if I can even explain them. It is just after a decade plus of trading there are some moves that ought to be faded. And so with GS I faded such moves.

I am not sure a new trader should give up on GS. There are three reasons why GS should still be watched by the new trader: 1) There might be a huge downmove coming. There must be funds so far out of the money with GS that liquidating may occur. You are going to want to be in that sharp downmove. 2) Watching GS on the way down will help you trade it when it starts its upmove. Watch the way GS trades lower. Watch the way the offers lift during squeezes. Watch the way the bids drop when quickly hit. If you watch these patterns you will notice something different when GS starts to reverse. And this knowledge will allow you to get long quicker and more confidently into the reversal. 3) There is still money to be made if you wait for the best set ups. But you have to in fact wait for the more important intraday support and resistance levels in GS to emerge and then trade off of those levels. Other plays are not profitable for the new trader.

If you are a new trader you should not be trading GS with much size. Can you bid to exit if the stock trades against you? If you cannot bid to exit a short that trades against your exit price then you are trading with too much size. And you should only be waiting for important intraday levels off of which to trade. You cannot try to be in every move. This is why most lose trading GS. There are a few set ups intraday that are worthy of risk and everything else is just the Specialist New Home Addition Show.

GS is very hard to trade intraday. But think about the above. Think about these adjustments. If they don’t work then move on. You know there are thousands of other stocks out there.

Good luck with your trading!