JPM Trade on Jul 14, 2020 09:31 from CapitalMastery: Tradervue User Stock Trades.

Summary

JPM released positive earnings, and spiked out of recent resistance levels, and so I was definitely thinking continuation to the upside, especially since by the time market had opened, JPM has sold off from $102 pre-market high to $98.50, which in hindsight, should have been a sign of weakness. If it were selling off in pre-market, then it's likely because it's spiked into resistance. That said, even if I had noticed that, I probably still wouldn't have been thinking short, but would have given me a reason to be more cautious on open.

JPM flushed down into $98 support on open, and after appearing to hold, I went long instinctively, and even added on the next candle as price continued to move up. Unfortunately, it rejected against the $99.50 pre-market resistance level, and reversed hard. Since I wasn't expecting this, and since I really hadn't thought through what I would do if the stock went against me, I froze, and ended up riding it down to $96.64, nearly $3, before adding to my position to average down. Fortunately, JPM bounced almost immediately afterwards, and I exited into strength on a big 1min green candle into the 20ma/VWAP.

While I did make money on this trade, I do not like how I handled the initial part of the trade, as I didn't have an exit strategy, for if the stock traded against me. I should have stopped out below $98, since I opened a position on the premise of that level holding. This would have enabled me to avoid $2 of downside, and re-enter a position around $96-$97, once the bottom was in, and added another ~$100 to the trade's PNL.

Alternatively, since $96 was also a level, it's perfectly reasonable that I stayed in the trade, given that I only had a starter position, and was able to add once the $96 level held. When looking at the trade this way, I executed it flawlessly.

The problem however, is that I didn't clearly plan this ahead of time, and instead had to wing things on the fly. Fortunately, it worked out, but had $96 not held, this could have been a terrible trade.

Did Right

• Had a premeditated plan for this trade, with levels, before market opened. (just lacked an exit strategy)
• Opened the position with starter size, and waited for price action to confirm before sizing up.
• Added to my position once the bottom was in, and once the $96 level held
• Exited into strength on a push into the 20ma and VWAP

Did Wrong

• Entered without a real entry trigger, and before price action could really confirm itself. If I'm going to begin using the 1min chart on open, I need to wait for several bars to print before making a decision on what the chart is telling me.
• Entered a position without having a full exit strategy, as I had no planned stop, which unsurprisingly led to me freezing when the stock went against me. The reason being, that I really wasn't sure at what price the trade was considered failed. Additionally, the stock slammed down quickly, within a single 1min bar, and so not much time to think, which is why stops should be planned ahead of time.
• Exceeded my max size for this trade by 1 lot, while not a huge deal, I don't want it turning into a bad habit. Guidelines should be considered set in stone, until I officially size up, based on my performance.
• Exited my entire position, all at once, instead of taking a partial, and waiting for an exit trigger to dump the rest. If I do exit my full position, I should at least be looking for a place to re-add, especially since my thesis was proving right so early in the day.

Improvements

• Have a well thought out exit strategy before opening any positions. At a minimum, I need to know at what price I'm wrong, and should get out of the trade, as well as where I should look to take profits. Whole and half dollar marks, near 20ma or vwap, or always great options. Either way, I just need to think about this BEFORE getting into the trade, so I don't freeze when the time comes.
• Wait for an exit trigger to dump my full position. If I do get a great opportunity to take off a good chunk of profit into a spike, I should look for a place to re-add, as long as the trend remains in tact.
• Always stick to my max size guidelines, as this will save my butt in the long-run; don't be fooled by the short term gains.