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Feb 12, 2021 12:19


Early Exit Fade Trade Loss

UBER was in play due to recently released earnings that the market reacted negatively to.
I was thinking this name had the potential to fade all day, slowly bleeding out.

This "Mid-day Fade Trade" is a strategy I'm new to but read about in "The Playbook."

Uber was showing relative weakness to SPY and was approaching LOD. I expecting 59.8 support to break, then confirmation of the downtrend would come from 59.72 LOD breaking.

3 times earlier today it broke 59.8, touched roughly 59.72, then quickly bounced back above 59.8. This was my signal that there was possibly a buyer at those levels.

When this 59.8 level broke at 9:18 (12:18 on TraderVue), there was not heavy volume or a quick bounce. This made me comfortable to enter short with a 3:1 RR.

I'm not sure how I feel about this entry. I need to try more fade trades and learn from the fade trades of other pro traders. My initial thoughts are, my entry was a good place to put on light size, but I wasn't fighting for price. If I wanted to size up, I should've waited for strength on the 1m chart, then 2-3 red 1m candles showing that momentum was lost. I feel like that entry would have a tighter stop and higher win %. My entry was more about, "Make sure you don't miss the move," than it was about, "Wait for confirmation then fight for price when your trade thesis has backing."

My TP level was based on my own reasoning not a technical level of old support or resistance. I figured if it could touch 15.88, that was far enough from this dip to show buyers were interested. That was a subjective opinion, not saying it was wrong or right, just saying it doesn't follow levels like a replicable system does. My TP level was simply 3 times my stop away from my entry, there was no support at 59.48. I just planned on holding until there was a change in character.

I got stopped out when price touched 59.88 for a small loss. I didn't wait for the 1m candle to close because I believed it was far enough away from 59.8 to show some strength.

I got "wicked out" at the high of the move and it would end up fading down to 59.32.

I had to leave to go to the gym so I wasn't looking to reenter and manage a position. But if I was, I'd want to keep an open mind that the thesis is still intact. This mindset would help me reenter short at 9:33 or 9:34 (12:33 on the chart below). I'd get back in short because the prior two 1m candles would support the idea that the recent move to 59.90 was just a higher low for the day and not a reversal.

I could ride the trend down for .50 while risking .10, which would mean my stop is a new high. Ideally, I'd hold this trade for a while, but I'd get out if I saw a change of character, which was seen by the high volume buying at the bottom.

Lesson Learned: There are "Don't miss the move, enter now!" entries. Then there are, "Your thesis has confirmation, you have a tight stop. This is a high win % trade to size up on" entries. If I'm making a fade trade, I need to be thinking, in real-time, "Be patient and wait for strength on the 1m chart, followed by a few red candles that suggest the stock just put in a lower high."

Execution detail:

Date/time Symbol Side Price Position
2021-02-12 12:19:49 19 FEB 21 60 PUT buy $1.630 long
2021-02-12 12:31:24 19 FEB 21 60 PUT sell $1.610 0

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