I didn’t plan to write another Q&A but I got deluged with email asking me to show a play on the short side, so here it is. When something cracks as badly as IIJI did there’s a good chance of a violent snap-back, which is a risk you have to be aware of. But IIJI just continued to collapse, so you had that going for you, which was nice (written with Carl Spackler in mind).
One sensitive soul wrote in to ask if I wasn’t giving away the keys to the kingdom with these how-to posts. The answer is that good trading is 10% methodology and 90% psychology. People defeat themselves. It doesn’t matter how often you repeat basic trading principles when almost no one will practice them.
Questions:
1) Why would you be paying attention to this stock yesterday?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock yesterday?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?
Answers:
1) Because it was unusually active, and very volatile.
2) Down. You’d be looking short.
3) Short at 5.59 on a sell stop below the 11:30 bar.
4) Tighter: 5.68. Looser: 5.76. (These are buy-to-cover stops.)
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could cover half, carry half, or just close it all at once.
No comments:
Post a Comment