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Warrior Trading Blog

Bouncing Back +$3.2K! | Mike’s Trade Recap

mike_5.2

Hey, what’s up guys? I am back in the green after yesterday’s loss on Apple. We had a trade this morning out of the open on SQ for a short that started off a little bit … On SQ for a short that started off a little bit tricky, and I actually stopped out once and had to dig myself out of a hole, but once we got the trade started it turned out really nice. We were able to lock up just over 3,000 dollars. So, back in the green and cleaned up yesterday’s loss which was really good. It’s always good to bounce back after a tough day. We’ve got one more day left in the week and we know it only takes one trade to reach our goal, so we’re going to stay strong and see what we can produce tomorrow, but for now stick with me and I will review our SQ trade out at the open this morning.

All right, good afternoon guys. Time for a recap here on today’s trading. Ended up back in the green today. Nice to bounce back, and cleaned up yesterday’s loss on Apple. Yesterday we took a trade on Apple and we stopped out down about 2,200 bucks. Today we were able to get back at it with SQ. We were able to lock up 3,200, so we were able to clean up yesterday’s loss and we’re in the green now about 1,000 between the last two days of trading, which is okay. It’s better than being flat, better than being red. Definitely a little bit more of a challenging week here coming off of a really good week last week. This weeks been definitely more challenging. Haven’t really seen much action to take advantage of, but that’s okay. That’s just how trading is. We were talking about yesterday … About how it’s important to be able to be comfortable with a loss that you’re taking. You can get that loss back in one single trade. Like I said yesterday, that 2,200, it’s no fun to be down like that, but I know that I can comfortably make one nice and easy trade and get that loss back relatively easily.

Now that said, it started off a little bit challenging here on SQ. At first I thought today was going to be another red day recap, but we were able to reposition ourselves after the first stop out and I was able to get back in the green and lock up a nice trade. So, let’s talk a little bit about what happened. We had this on our watch list this morning for a break below the speed line. So, looking at this in real time we had a very nice, a very well defined ascending support line. I call these lines that are intraday, relatively short, I refer to them as speed lines. Whenever I say that term that means I’m referring to a intraday trend. You can see here that it doesn’t get much better defined than this.

Right into the open we’re testing this line, and basically the approach on this was that if it broke this I would look short [inaudible 00:03:04] I moved down to pre-market lows first, and then down towards just above 65 as the next target. As we came into the open we had 100 day moving average above us. We had a very nice pivot here at 69, which we were respecting after the gap down yesterday. Then this morning, again, we were retesting it. So, the fact that we were breaking back down, breaking below this speed line, breaking back below the 100 day, breaking back below the pivot, and the market is somewhat flat out of the open I liked the opportunity for this to go short. Now, it started off a bit volatile. There’s no question this was a little bit of a tough trade to get started. I had to dig out of a hole. I actually stopped out on my first trade for about 1,000 dollar loss, and then I came back at it and was able to, again, dig us out of the hole and get us back to a relatively nice day.

Now, one thing I want to talk about here for a moment is double tops and bottoms. I talked about this yesterday, how I probably should have been a little bit quicker on the trigger in recognizing the double bottom that I was short against. Let’s just take a look at that for a second so everyone understands what I’m referring to. So, yesterday on Apple when we took this trade it started off really good. It had the look that we wanted. It started to fade, but what happened was is out of open here when I was short, I got short right in through here, we hit a low, and then we came back up to retest. We double topped. That’s fine. I was okay with that. Then we started to turn over here and we double bottomed. We double bottomed. If you double top and can’t break a low you need to watch out. I should have recognized that a little bit earlier, but I held through this move to see if we could get a rejection off this trendline. Didn’t work. I ended up stopping somewhere around here and took that 2,200 dollar loss. So, in light of that, all right, I made sure I was going to be very cognizant of what was happening in the price action today.

Look what happened on SQ. So SQ out of the open, we got the initial pop, we failed. All right, that’s what we want to see. Then I waited until we had a little bit of a retest right here. So, if you look at this as we were looking at in real time, here’s the first sell. Here’s a relief move. Moving over, we start to fade. I got short right here at 69.10 as we were starting to roll over. Started to look good, right. I had the pattern exactly how we wanted it. We rejected the resistance. We moved down. Now we’re putting the lower high or a pivot move and we’re starting to resolve. That’s the type of trade setup that I’m looking for. They work way more often than they don’t. Unfortunately, this thing virtually just whipsawed around a point.

Before I knew it we were at 70 bucks and I just said, “You know what? I don’t want to be caught in a situation like yesterday so I’m just going to stop out.” Unfortunately I had to take about 1,000 dollar loss. At that point I was kind of frustrated and that … The first few minutes into the day here I’m already ending red again. I don’t want to go out like that. I’m going to stay focused, and see if I can get another opportunity on this because we had a really good technical set up. We know SQ can move. So, what happened was as we came back up and I stopped out at 70, look what happened. All right, we touched this 100 day moving average, but we also double topped, all right. So, I was quick to recognize after yesterday that we double topped here.

Once we double topped and we failed, and we started to pull back below VWAP, that’s a point in time where I said, “Okay, well we’ve double topped. We rejected the 100 day. We’re failing, and I’m going to try this again.” That’s a very predictable technical set up here, so I got short at 69.40s as we started to come through the VWAP here … 69.40s and 50s and then it started to fade. It looked good, and then as we were coming to 69 again here I said, “You know what, this is probably the point where it’s going to break,” so I added to it. Now I had 2,000 shares and then it popped off of 69 again and I got …

I was a little bit worried that we were going to be stopped out again, and take another loss, and it was going to be another tough day, but I sat tight with it. I remained patient. We [inaudible 00:07:22] putting another lower high, and we started to resolve, and break that relative low. Then at that point I knew we were going to be okay. All right, so we started to fade here and this is where I started to take in some profits as we got down through 68.50s, as we got through this low right here, 68.40s. Then I took more off as we got near the pre-market low which was down here at 68.50s once we went through that. Now, I held the balance … I took more at 67.10. I took more there. Then my stop was going to be back above 68. So, we started to kind of trend sideways. I saw this first higher low get put back in. I was on high alert for a 68 break and then I would get out of the trade. I was really looking for it to get down to 65, trying to follow it down, but I noticed that we put in a higher low here and we were starting to consolidate around that pre-market low. Got the 68 break, I’m out. All right, so that’s where I locked up the 3,200.

So again, definitely a tough trade to get started. This type of move right here is tough. There’s no question about it. It’s just going to be those situations where you have to be able to weather the storm and definitely don’t panic. That’s something that you never, ever, ever, ever want to do. Just be patient. The reason I went with this is again, we were below all the resistance. It would be a very poor decision not respecting my instruments if I would stopped out here because we were still well below all of the major resistance that we were planning the trade off of initially. So, if that’s the case and you find yourself, you’re stopping out, but the stock is still in trend … You need to adjust your risk management approach because if you’re doing that you’re going to cut yourself short every time. Again, I didn’t stop out here, again, because if we double topped we were making a lower high against a pivot. Again, that would have been a situation where I was just totally neglecting my instruments and my whole plan. You have to trade the plan because we know the plan works most of the time.

All right, so that was the trade on SQ, guys. Very nice move on this. Good day. We’ve got one more day to close the week strong. We know we can do it. It just takes one trade, so we’ll see what tomorrow brings. Hopefully we can wrap it-