I have a longish lunch every Thursday, which usually keeps me from trading (since I don’t trade the open). That’s just as well today, because the only thing really “hot” on my watchlist was Rock-Tenn Company (NYSE: RKT), and it gapped above my trigger price. When I got home and looked at the stock, I thought it was too ugly a day to look for it to re-test its highs (like I did with TMA yesterday). I did see a box play set up to the downside, though! I didn’t take the trade, because I don’t like to go against a stock’s overall trend. But, I was curious to see if it would work, since you can supposedly play whichever breakout happens.
Turns out, the trade would have gone very smoothly, and it came within 2 cents of the target price before closing at EOD about halfway to the target. Not bad for a trade that triggers after 3PM EST! I am really liking this box play… in case you can’t tell. For more about how the trade works, see for instance this box play post about another trade.
This chart shows it run back into the box briefly, after the trade was on. My scottrade charts don’t show that at all, and I don’t remember seeing that when I was watching the trade. Either way, there was never much fear of getting stopped out. If it weren’t for pesky round number 31.50 right between me and my target, I bet it would have gone even smoother.
I’m not cherry-picking examples… the three trades I’ve posted are the first three I’ve found, and I even took two of those trades. I am as curious as anyone else about the failure rate, due to the 1:1 Risk:Reward. We shall see… :-)
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| RKT |  |  |  |
January 25th, 2007 at 4:41 pm
These box plays seem to be working well.
January 25th, 2007 at 4:54 pm
Yeah, but only for three days so far. I’ll tag all the trades I actually make in StockTickr, so after a while I can get stats on just the box plays. Hopefully they will have a positive expectancy in the end.