WFC has treated me very well lately.  On Thursday it sold off hard on the Open and then after some consolidation continued lower.  Easy short play.  On Friday after a nice gap down it filled the gap and closed at the high with furious buying.  Easy long play.  This morning I had a decision to make on which stock to trade on the Open.  It wasn’t a difficult choice.  I traded WFC.  Whether you are a newbie or a seasoned veteran you shouldn’t be afraid to milk a stock for everything its worth.

There are multiple reasons that you should stick with a stock that is working for you.  One, your brain has “muscle memory”.  The more you trade a particular stock the more comfortable you will become with the way it moves.  This allows you to be very aggressive on the best setups.  Two, stocks that trade cleanly on unusual volume tend to be good for a few days.  And finally, each time you venture into a new stock there is a real dollar cost to learning how the new stock trades.

Don’t mistake what I am saying to mean that you should find one stock that you trade well and trade that stock exclusively.  This makes no sense.  You will make less money in the long run.  It is ALWAYS better to trade a stock that is In Play rather than an out of play stock that is familiar to you.  We have discussed why this is the case extensively in previous blogs.

It turned out that WFC offered several great setups today that I was able to capitalize on.  The main trades I made were the following:

1) Long from 26.80 in the premarket based on a huge support level from Friday

2) Long on the breakout above 27.64 in the late morning

3) Short below 28 after the volume spike at noon

4) Long several times in the afternoon at 27.15 based on a range trade between 27.15-27.45

Unless I can find a new In Play stock tomorrow that offers great risk/reward I will go back to the well one more time. 

I have noticed from some of the recent comments on our blog that readers are interested in hearing stories of trades that have gone badly.  The next time I take a rip of greater than 1K I will blog about the trade.  Hopefully we can both learn something from my pain 🙂

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