Weinstein Trading and Fading

One trade today

I received a short signal with SNDK and shorted relatively strongly today. This was actually after it went a little above my entry point as I wanted to be conservative at least at first. I did short near the high of the move and it went down and as it came back I covered some and it kept going higher as the day went along. I shorted again and traded it as it moved back and forth mostly staying with the moving price. This cut both ways as it never really had a strong move up that could really be faded and yet slowly ground its way higher. This is about as bad as it gets for fading as it builds a lot of slow growth confidence in the stock and no panic sell offs to cover and take a gain with. I covered a lot of shares into the close so that I would not have a large exposure overnight but it also means my ability to regain equal ground with SNDK will be pretty small even with the expected retrace tomorrow. I also traded it a couple of times in after hours with a net smaller size and a slightly higher basis. All in all I traded it with larger size than I have been recently but I traded it well and was careful to follow the signal so I don’t feel bad about it at all. Perhaps the only move away from the trading plan was to cover a bit more to lower my risk which is good for a gap up tomorrow but also does lower the ability to make a gain with the trade overall. This same thing went on recently with DLTR. It took until today to make a retracement where I would have made the full target even after the trading adjustments along the ride. – 598
 
Quote from Robert Weinstein:

One trade today

I received a short signal with SNDK and shorted relatively strongly today. This was actually after it went a little above my entry point as I wanted to be conservative at least at first. I did short near the high of the move and it went down and as it came back I covered some and it kept going higher as the day went along. I shorted again and traded it as it moved back and forth mostly staying with the moving price. This cut both ways as it never really had a strong move up that could really be faded and yet slowly ground its way higher. This is about as bad as it gets for fading as it builds a lot of slow growth confidence in the stock and no panic sell offs to cover and take a gain with. I covered a lot of shares into the close so that I would not have a large exposure overnight but it also means my ability to regain equal ground with SNDK will be pretty small even with the expected retrace tomorrow. I also traded it a couple of times in after hours with a net smaller size and a slightly higher basis. All in all I traded it with larger size than I have been recently but I traded it well and was careful to follow the signal so I don’t feel bad about it at all. Perhaps the only move away from the trading plan was to cover a bit more to lower my risk which is good for a gap up tomorrow but also does lower the ability to make a gain with the trade overall. This same thing went on recently with DLTR. It took until today to make a retracement where I would have made the full target even after the trading adjustments along the ride. – 598
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Dow up 45 in opening 2 mins. SNDK is on strong weekly up momentum and gapped up with the Dow. No brainer low risk buy and stop under the 2 min on huge volume. The buyers are in big time and this is an island type daily gap.

You can learn to read this kind of move easily but here's the trick: when you have this kind of momentum it over rides a strong short signal. You can have a top quality short signal but the market will swallow it up and run away. There is nothing up with your signal but you don't seem to qualify the setting very well.

Basically this is similar to the last comment I made on SNDK. You could have bought this and spent the day in study and made a packet. It's the soft belly trade and it's a lot easier than what you do. SNDK is now on resistance and when it breaks it, there's big upside potential.

This was a mistake I had to correct. How can my best signal not work at times? When I requalified it within the background of where the greatest momentum was I was able to see that a lower quality signal in neutral momentum would be a safer and more profitable trade.

However, counter trend trading is all clever stuff and the difference between what you are doing and my progression is I learned the easy trade first and then got clever. That made it easier to see where the error was and trade both long and shorts on the move.

Counter trend trading it the top level of the skill ladder but it is taking the crumbs is you don't add in trend trading, and if you don't distinguish the strongest trend from weaker trends your contra signals get steam rolled.
 
Another 20 day breakout I actually thought you made money on that shorting but couldnt possibly see how you wouldve since it didnt really pull back any significant amount.

At least you are out of it. Maybe it will run another couple of days

I ll just copy and paste this again "I didnt want to berate you but like i said earlier shorting 20 day breakout is inviting trouble-sure you can make money shorting for .20 contra trend moves (I did the same earlier in my career) but develop a methodology to catch the trend --you'll make money easily and more of it. It's your choice to make life difficult or easier. But there is a lot of truth to "trend is your friend". There is a time and place for contra trend moves."
 
I have a small rule while fading intraday: internal retracements should be atleast around 50% for the move which I'm fading. If that does not happens, I don't add to initial size and priority is getting out at suitable price.

Yesterday bought ESRX around 1:30 @ .60. Target was to look for a 40+ cent move... small but easy. By that time had taken 3 similar scalps earlier in the day. This time however, it started to go down slowly. I exit half at 96.40, completely by 96.30. So the last trade was losing, however, I had made comfortably earlier.

The internal retracements I think are very helpful... sometimes they wont let a stock retrace at all for full day... squeezes. If a squeeze is happening holding the pos or worse adding to it can be dangerous. Similar clean move started in GVA around 10 yesterday.
 

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Quote from Xspurt:


Counter trend trading it the top level of the skill ladder but it is taking the crumbs is you don't add in trend trading, and if you don't distinguish the strongest trend from weaker trends your contra signals get steam rolled.
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Sometimes I type like a drunk. What my fingers were supposed to type was...

Counter trend trading is the top level of the skill ladder, but it is taking the crumbs if you don't add in trend trading, and if you don't distinguish the strongest trend from weaker trends your contra signals get steam rolled.

Thankfully for trading all I need is a mouse :)
 
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