Developing traders overvalue being “right” with their trades.   Many mistakenly believe that you have to be right with your thesis to make money in a trade.  Oh so young, so naive 🙂 Consistently profitable, experienced traders can make money when they are right and when they are wrong.  Heads I win.  Tails I win.

A spot on example of this principle is FUQI.  I found a play where I was going to probably win if my trading thesis was wrong or right.   As I mentioned in a previous blog I was shorting FUQI based on Intraday Fundamentals.  The news was so bad that usually a stock with such news closes near the low.   Also the steady downtrend on the open increased the odds of FUQI closing near the low.  This was the pattern that I anticipated for this trade.

FUQI broke the intraday downtrend at 12.  Quickly traded up towards 12.60.  And then I saw the tape change.  The offers stopped getting taken at 63c.  Bids dropped like they had not into the upmove (squeeze?).   And offers reoffered at 60c a place where there had already been a battle.  Game on!

A little after 10 AM I put some out at 59c. Filled, short one lot.  I offered for some more.  Filled, short two lots.   I whacked the 58c bid, short three lots.   My intraday technicals told me not to short.   I ignored them.  The tape gave me some evidence the next move was down.  And my intraday fundamentals screamed, “Bella if you ever want a Trade2Hold short in FUQI this is your chance Bud.”

Now most developing traders would need to be right with this trade.   FUQI would need to find a new intraday low to profit.  Not me.  The odds were overwhelming that FUQI would at least find 46c even if it was going to trade higher.   So I took off half of my position there.  I locked in a profit of $200 and I held the option on 1.5 lots of finding the new intraday low.

If my theory was correct about FUQI finishing near the low I would win.   If I was wrong I was still going to be net positive with this trade, closing out at 66c.  If you are interested in becoming more consistent with your trading results consider this trading technique.

For those interested, FUQI did finish near the low and I made a chop!  For those not interested, now you are starting to learn to think like a trader!