I bought AAPL on the Open today. One of my favorite trades in the first few minutes of the Open is entering a position on a quick dropout to the prior afternoon support. I make this trade in a stock that is trending higher on a multi-day time frame in the hope of getting an excellent risk/reward entry.

AAPL close above 421 yesterday which I viewed as bullish. This morning a judge ruled that AAPL was guilty of price fixing the e-book market a few years ago. As I shared on StockTwits this information was well known, and even if it wasn’t it will have no material impact on AAPL’s earnings. As luck would have it this story was really being played up on CNBC, which i figured would get me the dropout I needed to 419 or lower for an excellent risk/reward long entry.

This idea was discussed in detail in our AM Meeting and shared on SMB Real Time where you can see me enter and exit positions in “real time” thus the name 🙂

This is a tough trade to execute for many short term traders. Momentum is against you when the trade is initially entered and there may be a feeling of a lack of control. But if you have done your homework and observed price action and define your risk before entering the trade you should be confident in your ability to execute. Sometimes the best risk/reward trades are a bit uncomfortable.

Steven Spencer is the co-founder of SMB Capital and SMB University and has traded professionally for 17 years. His email is [email protected].

Steven Spencer is currently long $AAPL