Each day into the Close our intern Krysten asks me to share a trading idea for our Twitter feed. Today I told her that I was short AAPL below 138 but would cover above 138.15. AAPL had failed at the 138 level earlier in the day and had a significant down move. I was risking 15 cents to make potentially $1.

About fifteen minutes after I put on the short position AAPL began to hold the bid above 138.10. I covered my short and got long. I am somewhat reluctant to give Krysten a trading idea each afternoon for Twitter because I recognize that not everyone who follows our tweets is a professional trader who can capitalize on the important inflection points we identify. My job as a professional trader is to be mentally agile so that I can make money regardless of the direction of the market or the stock that I am trading. So when AAPL traded above my stop price of 138.10 and the price action indicated it was probably going to trade higher, then I got long. Other factors I considered were that AAPL had broken its intraday downtrend and it was trading above its afternoon high.

Within a few minutes of getting long at 138.16 AAPL traded up to 138.50, which has been a huge inflection point during the past two weeks. I sold my long and in fact got short. Once I saw that an offer couldn’t hold below 138.50 I covered my short. I got long again when the next up leg began. The next up leg was so powerful and on such heavy volume that I decided to hold 2,000 shares until the market closed. All of the evidence on my screen was indicating that there was a huge buyer that would not be satisfied until AAPL traded through its morning high of 139.13. As I write this blog AAPL is trading up in the after hours at 139.75 and I am still long 1,000 shares. Chop!

Another interesting point about the money I made long AAPL is that I probably would have missed the entire move if I hadn’t been willing to take the short position at 138. Observing the price action in AAPL while I was short gave me confidence to get long when it traded through my stop price. So the 15 cent loss I took on 1,600 shares allowed me to make about $1.50 on 2,000. I’ll take that tradeoff any day.

Trading is not about making market calls and being reliant solely on the accuracy of your biases. Trading is also remaining mentally agile and quickly absorbing that the market is sending a clear signal for the next move in your stock. Like today in AAPL above 138.10. Jesse Livermore wrote,“There is only one side to the stock market; and it is not the bull side or the bear side, but the right side.” Remember it’s called trading.

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