Shared by
ckz8780
Intraday short breakdown. This was not ideal since it didn't have the big flush in the morning but it was an earnings breakdown so I figured I'd give it a shot. Below the low at $47.05 in actually worked perfectly down to around $47.50 but then squeezed. Given the fact that I had lost on three other shorts today already I should have just taken the $130 profit I had and called it a day but I decided to go for the home run of $46.04. Lost $30 however it should be noted that the reward potential on this was $300 so it was a 10:1 r/r. Over time that strategy will make a lot of money.
Execution detail:
| Date/time | Symbol | Side | Price | Position |
|---|---|---|---|---|
| 2012-12-04 12:15:50 | DRI | sell | $47.040 | short |
| 2012-12-04 13:48:58 | DRI | buy | $47.140 | 0 |
Comments
ckz8780
Yeah, the main reason I didn't take profits on this was it was going to be one of my "Twelve Trades of Christmas" for my blog. I was going for $46 cause that would have made it a $300 trade. The other reason was I got pulled away from my computer before I could set a trailing stop on it. the trade definitely worked, I made over 45 cents on it ($135), just didn't have an opportunity to get out. It's one of the things that sucks about having a primary job and doing this as a secondary thing. Not a big deal though, $30 is nothin! :)
Oh and yes I have read that book. Awesome book.
derekrucki
Ahh I see that is unfortunate that you got pulled away like that! How do you like to trail these trades? I sometimes use above the 10day MA as a stop or just use the high of the previous 5min candle but still dont really have a set way using stops on this kind of trade.
well typically once I get up a bunch I will just set my stop at break even. I find that big stocks like this ($20-60 range) tend to move very cleanly between round numbers in intervals of 50 cents. If you look at the 5 min chart for DRI you'll see there was a big flush at $48.00 (9:55am), then a bounce for 15 min and another big flush below $47.50 (the low of the 10:20am candle) to $47.03 in the 10:35am candle. Then it settled around $47 for a while and started bouncing around between $47 and $47.50. after that last pop to $47.56 at 11:40am guess where it broke down. $47.05 at 12:20pm. That's where I shorted (first few seconds of that candle). Now, once it breaks $47 obviously it's gonna re-test so I always give them a bit of room above the round number (30-40 cents usually) but really it should not come back above that round number by too much. If it does, it usually means the breakdown will not be as powerful or that it is exhausted and will either get stuck or start squeezing. In this case it held $47.00 and stayed under the 5 min 20sma so at that point I wait for the next round number to break before moving my stop. I adjusted my stop to $47.14 on this one from $47.28 when it hit $46.58 cause I figured it was toast once it broke $46.50, but that's right when I got pulled away and had I seen that bounce I probably would have just taken profit. Whew that was a long explanation lol
So the short version is, on these plays if there is no support anywhere in sight on the daily I wait for them to break the next round number before moving my stop. $47 breaks down, I'll give it my original stop, whatever that was. If $46.50 breaks, I'll move my stop to like $47.01, $46 breaks I move it to $46.51, etc etc
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I saw you tweet about this while I was in class and I was watching the chart. I agree you got to be taking these setups, even if they dont work out the r:r is so good on them. Market kind of started to rally a little bit at the same time this play went against you but I think most of that was due to all that NFLX hype that impacted a few companys so im not too sure why this one didnt work for you. PS have you read The Daily Trading Coach by Brett Steenbarger? I am currently reading it inbetween studying (not trading right now) and I already know it will have a substantial impact on my trading. Give it a look if you havent yet! Cheers