Thursday, January 17, 2008

I Need To Short More Often

Shorting stocks is fun! I made a great trade in BIDU today that netted me about 17 points (documented on Wallstreak). The trade pretty much saved my day from the disaster in UA.

Last night I shared a list of stocks that I thought could fall hard, and BIDU was on the list. When the market was higher at the open I saw that ABK & MBI were cut in half again, and I knew we were going lower. BIDU had broken a critical support level ($300), and I was ready to get short.

The small circles in the chart represent my entry and exit points. I got short around $297, and covered around $279. Hindsight, I left money on the table, but I am happy with the outcome.

I wanted to highlight the trade, because this is how I want to trade from now on. I want to look for critical support levels, and when broken, I want to short.

No more bottom fishing, no more holding stocks! I want to be in and out trades, but only the ones where I can identify a broken trend --no more guessing!

My friend Johnson on wallstreak gave me some advice today. He said don't be a hero, just wait for the trade to come to you. Normally, I do let the trade come to me, but lately I've been forcing too many trades.

I have had a rough start to 2008, luckily I got a huge win today! I am changing my trading strategy, buying the dip just doesn't work anymore.


Dinosaur Trader said...


Yeah, in a bear market, something like 3 of 4 stocks will decline. No need to fight the trend.

Smart to keep a watchlist though, for when things do turn. Right now, that feels like it's a long long way away.


Market Monk said...

Dude, you are doing great. Welcome to the dark side, lol.


NickHo said...

I'm glad to see your new approach to trading. I sensed over the past couple corrections that you were getting emotionally attached to a couple stocks. This sounds much more objective and a better fit to your trading personality. Good luck!

Johnson's Blog said...

Agree with the others RC - It is so key to ditch the superman costume and just crank out steady gains. In looking back at my biggest mistakes in 07 one stands out- I held through a fed minutes release. I could have sold for a 20k gain a minute prior to the release but instead sold for a 20k loss about 2 minutes after. I tried to be a hero and I lost 40 grand in like 3 minutes.