Yesterday I posted Important Intraday Resistance Level (BIDU). Tapetrader followed up with this excellent question:

Bella:

I have a question regarding holding BIDU.

At 1pm it was the lasttime BIDU touched the 72.5 lvl. What followed was sideways consolidation for a long period of time, and some spike ups and what looks like higher highs.
Even though 72.5 is a solid lvl, what are the reasons for not taking off the majority of the position when the stock struggled at 72.0.

What is the optimal amount of time and space to hold bidu, it looks like the trend gets broken several times. Is this a trade that you should simply hold for a certain timeframe (eg hold until the close, either it works out or it doesn’t).

I don’t see too many reasons for holding unless you project a market selloff into the close. I’m interested in your thoughts.

Tapetrader

Bella Responds:

1. I covered 1/4 of my position at 72 and 1/4 at 71.70. I held the rest.

2. There is no right answer to this question. It is entirely possible that the cover at 72 made sense to you, a 1/2 cover made sense to me and we were both correct for our trading system. In fact one of our better traders didn’t cover anything at 72 or 71.70 and that made sense to him.

3. The market was at a resistance level and there was a chance we would crack. That was one of the reasons I did not want to get flat at 71.70. When the market is as volatile as it has been you want to anticipate a bigger move and position yourself safely for such an event.

4. BIDU was in a bullish flag pattern. And the tape showed weakness at 72.50. And there was a huge offer at 72.50. And the market was at resistance. You see consolidation and I see weakness and resistance.

5. Most importantly, really great question!  Thxs for contributing.

Bella