This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
First Quantum Minerals Ltd (TSX: FM) is some sort of mining company that trades on the TSX. The idea for this trade came from watching RobTV.com.
1. Why did I take this trade?
Some analyst on RobTV.com put in a plug for First Quantum Minerals Ltd (TSX: FM) last week, so I looked at the chart for this company. I saw that the resistance @64 was a significant level of resistance dating back to 3 months ago. So last week, I added FM onto my watchlist with an alert level of 64. It fired off yesterday morning, but being unfamiliar with its price action, I decided to let it go, and wait for the second chance. The second chance came in the afternoon. I bought on the second break above 64.
2. What was the initial stop?
The initial stop was @63.60 63.70, about 0.5% below my entry, and also at an intraday support level.
3. Why did you exit where you did?
Buyers were exhausted by mid-morning and the slide back down started. I exited @67.86, when it broke below intraday support for the second time.
4. Is there anything you would do differently?
Yes, I should have recognized sooner that FM moved almost 2x its 20d ATR, so the buyer exhaustion was inevitable. Had I recognized that sooner, I could have sold sooner to capture another dollar of profits.
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
February 15th, 2007 at 12:15 pm
What was your stop? I’m so nervous to trade overnight that I have to use a gigantic stop and tiny position size. :(
You are playing a lot of minerals lately. Do you go top down, choosing candidates from a strong sector?
February 15th, 2007 at 4:25 pm
@Prospectus: my initial stop was @63.60, sorry for the typo. I look for volume and orderly behaviour in the tape, as well as a bit of trader’s intuition in deciding whether to hold overnight or not. I collect mining companies from various sources and put them into my watchlist, and after a few days, re-evaluate to see whether to keep or turf them. I also keep a couple perennial favourites in a chart that I periodically monitor. I tend to be attracted to the hotter sectors (eg. Uranium), although I won’t pass up a good looking chart, that’s the bottom line.