Hi Bella,
I have done a lot of thinking over the weekend about my trades, especially the ones that I don’t catch short when they consolidate below a certain level for quite some time before the next massive down move. As you know, most of the traders on the desk did great with this type setup in PLL on Friday, except me. I don’t recall where I got stopped out, but I do recall it wicked above to 13 cents above the $57 level multiple times, then finally making another consolidation below. I did reevaluate and yet there was another opportunity to take the trade, but why didn’t I get back in this trade? First, I thought I am close to being stopped out for the day for taking on so many small rips and I didn’t want to take on any more risks. Second, the market started to rally, squeezing the SPY over 126 and some. What I am asking is how much do you let go against you in this trade? Do you give this type of trade a bigger stop or try to ride this trade out with as much pain as you can if it starts to squeeze again? Do you consider this an easy setup to identify with still some whipsaw factors involved? Should I look to trade PLL the second day? I want to be a good trader and not get shaken out. I know this isn’t easy.
Am I thinking correctly?
Bella
I am having a nice Sunday, having spent the day with my Dad and wife. This question admittedly pisses me off. And has caused my week of suffering back pain to reappear. Let me go grab an ice pack for my back and get back to this question. Imagine me now with my voice raised please.
You do not let stocks trade against you! There is no such thing as being able to handle pain as an intraday. That is some ridiculous thought misunderstood by all unsuccessful intraday traders. You are not John Paulson. You are not swing trading. You make a trade on a short term frame, with a definable stop before you enter the trade. If your stock hits your exit price, then you exit. Hit the damn cover button and reevaluate. Where is the pain in that? There is no conviction tested. There is execution.
Now that does not mean you do not look to reenter with a new and different trading pattern. I have blogged in the past about the wicks in trending stocks that must be covered and then reshorted. But I was clear that you need to cover and reevaluate.
Feel the pain of getting uncomfortably bigger in a set up that makes the most sense to you and is working. Feel that pain. Feel pain getting bigger in a stock that trades against you or pain in letting a stock that trades against you a little more against you and you will soon find new work. That certainly can be painful.
The wicks in a trending stock below support are worth considering reentry. The increase of program trading causes the intraday trader to make more decisions on reentry than in the past. Many new traders are challenged about when and how to reenter. I admit this can be a tough decision for a newb but one the market asks you to overcome.
Keep asking the right questions.
Bella
One Good Trade
no relevant positions
9 Comments on “When to Feel Pain as a Trader”
What was the game plan on this trade? Entry, exit, target, tech sup level it broke($57.00)? Id like to understand this play more. If 57 broke then short or if held above 57 with the market rallying get long? Thanks
I made money getting short PLL when there was a held offer @ 57.60 while SPY was making new highs. I believe that is the initial entry point, but from what I can tell this trader missed it and was looking for another entry. After a quick drop to the low 57’s or so, it came back up and saw the seller step down to 57.50 (a good entry), and then once it broke down below 57 is where the trader seems to have had his problem with entry. I traded PLL poorly, taking most of my profit around 57.10 on the initial drop from 57.60, and failing to recognize that the seller stepped down to 57.50 where I could have put more size back on for the drop below 57.
Zach,
Thanks for a detailed response. After seeing that seller drop at 57.50 and the price dip below 57, what was ur hesitation to re enter short with a tight stop above 57? It did consolidate/flatline for awhile so u prob were looking at better trading opportunities, correct?
Zach,
Thanks for a detailed response. After seeing that seller drop at 57.50 and the price dip below 57, what was ur hesitation to re enter short with a tight stop above 57? It did consolidate/flatline for awhile so u prob were looking at better trading opportunities, correct?
The play in PLL was fairly simple in my opinion. It had a catalyst causing a fairly large gap up on the open which leads us to conclude it might not trade correlated to the SPY. 57.60 held the offer which was the first clearly defined short. (I was unfortunately wicked out of this trade while I was grabbing lunch where I missed the opportunity to re-short) After missing that initial downmove, I moved on to other stocks but kept looking at PLL for a favorable entry which to me was the 57 level. I got in at 98c with a stop at 3c with an initial soft target of 50c and the more probable target of 20c. It consolidated for a bit above 50c but I didn’t see a clear buyer so I held my position and bid 26c to get out above the quarter.
The opportunity I feel I really missed out on was getting short again once the seller showed up at 57.50 again. I missed the trade due to a combination of looking at other trades, and also that I know my stats for Friday afternoons are not outstanding. Either way, I saw the seller at .50 and didn’t take the trade, and that is why I feel I traded poorly even though I had excellent initial entries of .58 and .60
You played that pretty well, nice trade! What made u think 20c was the probable target? Was this a key level during the pre-market?
Thanks!
20c was the pivot level for PLL. There weren’t any clearly defined levels in the premarket so I was basically looking for it to trade to its pivot.
Thanks!
20c was the pivot level for PLL. There weren’t any clearly defined levels in the premarket so I was basically looking for it to trade to its pivot.