In our training program we (over)emphasize finding opportunities where the risk is one unit and the reward is at least five units. Most of the setups our new traders learn (50% I would guesstimate) are opportunities where the risk is literally one to two pennies. If overly abused, these setups can progressively hinder the ability of the trader to pull … Read More
Afternoon Support Equals Morning Resistance
I would like to share with you another little gem from the world of intraday trading. If a stock shows support at a particular level in the afternoon then the following morning this level will serve as resistance if the stock has gapped down. In our AM Meeting today I highlighted some of the market leaders such as AAPL and … Read More
Trade on the Open: MCD
We teach our desk not to fade weak stocks. But there are plays on the Open that look like the stock is weak. Actually they are not. And these plays are given the green light to fade. We had such a setup in MCD on the Open. Let’s discuss. MCD opened near 58.33, could not hold and traded lower. MCD … Read More
The Week That Was: June 1 – 7, 2009
The SPY traded in a pretty tight range this week, not trading much below 93 or above 95.50. Again, we were looking for that catalyst to push us one way or the other, and I thought we were going to get it Friday morning with the much better than expected non-farm payroll number. We’ll see this week if Friday’s weakness … Read More
Where is the Next 50c Trade?
We are in the office watching tape on this Saturday. We just ended Part I one of our review session. An interesting trading topic emerged: when to forgo a scalp. Let’s discuss. There is this notion that day traders just scalp. Wrong. But there is also this elitist belief that scalping is somehow beneath some traders. Not me. … Read More
Trading A Secondary Level
JPM priced a secondary a couple of days ago at $35.25. JPM showed nice strength in the morning and traded up from around $34.40 to $35.25. One of the younger traders on the desk called out “JPM at the high of the day”. Rosie, the trainee who sits to my left immediately responded that JPM was approaching its secondary price … Read More
What Would you Do?
Today our best morning idea was to play $VLO off the $18 secondary offering price. From the daily chart you can see that the stock had just came off about 20% in the last 2 days and figured the underwriters of the offering would help support the beaten up stock down at this level. The play was to buy at … Read More
TIVO- Remember Me?
One of the great things about being a trader is you get to trade whatever you want whenever you want. I haven’t touched TIVO in years. Honestly I cannot remember the last time I traded it. Why would I want to? What is it’s intraday daily range? Ten cents? But I did today. And it offered a few great … Read More
