A Close Call Wednesday

I couldn’t run my scans, which left me kind of out-of-sorts this morning. I relied entirely on a combination of trade-ideas, jaiku, and wallstreak for ideas. I ended up making two trades, for two wins. But, the first one was a very close call!

URI Trade

First, I spotted URI, leaning on 34. If you check the daily chart, you’ll see 34 represents a new high it’s been trying to make for 5 days or so. Knowing that, I should have demanded more volume before getting in. But, it was early in the trading day, and the markets were on fire. It was at least ahead of QQQQ, in volume terms.

This was a breakout play, rather than a simple scalp… I planned to hold this one a little if need be. When I say ‘breakout’, I mean there wasn’t much of a setup intraday (kind of early in the day for a serious setup to form), and I was mainly playing the momentum of the overall market as we passed this daily number.

Well, we got past 34 and fell right back into red territory. Not the best feeling. I started feeling the lack of volume, and immediately reduced my position by half when the price was within a couple cents of my entry. So, at this point, I had taken a small loss, but I felt much safer:

• if the stock never found its legs, I’d take less than a 1R loss, and I wouldn’t have to dump so many shares into a falling stock
• if the stock did go my way, the win on the remaining shares would outstrip the loss I had realized so far

Here’s the 1-minute chart with the outcome:

The stock seemed to get slammed down every time it peeked above 34, so I eventually sold at the top of the channel at 34.07. This turned out to be a very good decision, because it topped out at 34.10.

(I’m disregarding that wick that drops below my stop… either it’s a bad print in the chart, or it happened so fast that I didn’t notice it during the trade itself…) If you have the discipline for it, that’s one of the great things about using mental stops, by the way… momentary crazy price swings and out-of-band prints don’t take you out of the trade unnecessarily.

So, when all was said and done, I made a 0.5R profit. Whew!

GPRO

The next trade was much less remarkable… here’s the 5-minute view of it:

This was a stock that bubs pointed out. He didn’t take the trade, but I think it was a good setup. On the chart above, I’ve pointed out the series of higher lows leading up to 51.50. It’s not an ascending triangle, quite, but the idea is similar. I just took a quick scalp on it. As you can see, I could have gotten a little more profit had I been a tad more patient. But, holding for a long time would not have been a good idea. This market favors the quick! 2.81R