$RIMM in Play

Coming into today Research in Motion(RIMM) was on my radar.  Some news had come out in the pre-market about the pricing of its tablet computer.  The news basically said that the tablet would be priced below $500 which would make it a cheaper alternative to the iPad.  The pre-market wasn’t showing much in the way of price action but I had RIMM on my watch list to see how it would react to this news. 

Immediately on the open RIMM showed some strength, basically trending higher for a $1.50.  The first level I was watching as potential resistance was 56.60 which was the highs from 11/08.  We broke this level in the first 15 minutes but this was where your skills as a trader must come in.  First of all the stock had just run for over a point so odds are pullback or sideways consolidation was to be expected.  Second the open in this market lately has been a chop zone with a lot of volatile sideways action.  For about 2 months now, in our morning meetings at Keystone, we have talked about the better opportunities presenting themselves after the open around 10-10:30am. 

After the open I knew I wanted to get involved in RIMM.  The market was showing weakness especially in the tech sector and RIMM was staying relatively strong.  It was only a matter of waiting for RIMM to consolidate and finding a good area to manage risk.  I entered during the hour-long consolidation pattern and added on to the trade when it broke the high of 56.81. 

As you can see for the rest of the day it was just a matter of how much you made on this trade.  Personally I missed about .70 in middle of this trade because I covered the entire position around the resistance at 58.00 instead of holding a piece.  I got back in on the next break out but left some money on the table.  Coming into tomorrow I am expecting RIMM to still be in play as this is usually a stock that trends for a few days after a news related break out.  The 200ma is at 59.50 but above that could see a trend into the 61-63 area.  Best of luck in your trading and have a great night. 

Kyle

FOCUS for stock trading

I think in the past few weeks that I’ve been at Keystone, the one  resounding theme has been “focus”.  You can go into the morning, fresh and prepared (having already set your game plan for the day) and then have it all thrown against you because you lost focus (for even 2 minutes) while in the game. 

I think the past few weeks have been extremely helpful in helping me to understand what to focus on while I’m trading.

FX has been a driving factor of the markets and focusing on the USD and the EUR moving  has been extremely helpful in reacting to moves.  Making sure to focus on currencies, and broader market indices (VIX, SPY, DOW, ETF’s, etc…) at all times, have allowed me to have a greater understanding on the way certain stocks move.

It’s not to say that things are always going to play out the way you “expect them to” (green on the screen) but you could definitely limit your downside over the long run making an effort to understand and focus in on all the moving parts while in the game. That’s what I learned at least…

NEVER PREDICT, REACT!

Today’s meeting and insight on the trading day yesterday brought a lot of ideas full circle for me. Pete mentioned that a lot of traders including myself were confused with the market yesterday especially during the morning sell-off after the gap up. As Pete began explaining that essentially, the market is going to do what it wants and you cannot have any emotions about it, I began to remember the famous Mr. Market metaphor by, of all people, Warren Buffett.

Interesting how this fundamental investor provided one the best insights on Prop. Trading and specifically trend trading. Simply put, if you did your home work, you have a game plan, a price level, an ISL, an IPT, a break even point etc…, you are very well prepared but the market is not looking rational to you, step back and do nothing.

Mr. Market does not always give you the right price says Warren, he also does not always give you the right set-up. It’s OK.

Don’t get upset, mad, frustrated, simply look for the opportunities Mr. Market is giving you, or wait. It is very easy to feel like you need to do something, and I know this has been said over and over, but we need to keep reminding ourselves that doing nothing is also a position. Sometimes, by sitting back, and calmly cycling through your stock you may start to see things differently than what your perfect picture of the market looked like coming into the day.

You may start to see swing-low opportunities in a strong market week opening situation. You may start to see relatively strong stocks in a non-broad based market. You may even realize that, hmm… I rather not take these trades because the risk/reward is not there.

Patience is a virtue and it pays to be patient!

-Lee

Being Patient $$

As many of you know trading can be a very frustrating occupation.  The market gives itself many opportunities to try our patience with our ideas.  I know from experience that the most frustrating thing is ending your day knowing you had good ideas but you didn’t make what you were supposed too.  Solving this problem is one of the most important aspects of becoming a consistently profitable trader.  The first thing to look at is are you executing your ideas?  I have known problem executing my ideas so the thing I have been working on is the management of these ideas. 

As I went over my trades and ideas and talked to some veteran traders about what I was finding and came across a big flaw in my trading.  The flaw was that I was confusing my time frames and not letting some of the longer term ideas sufficient time to play out.  What I mean by confusing my time frames is that I was taking some trades based on the daily and hourly charts, but I was managing them on the lower time frames.  Basically I was asking the stock to move in my direction in the first 15 minutes I was in the trade.  This is the definition of forcing my will on the market. 

Now trading on the lower time frames is not a bad thing.  Many traders make a very good living by scalping and taking .15-.30 out of the market at will.  But this kind of trading is not what I am good at.  My best trades are trades that I have researched on the daily and hourly time frames.  The most important thing about these trades is that they make sense to me and this is where my conviction can come from. 

The problem I have been having with my trades is that I was exiting too soon.  The idea was still valid but I was exiting because of a quick move against me.  I realized that I need to have more patience with these higher time frame trades and also take more time in evaluating them during the day and the subsequent days to see if the idea remains valid.  Best of luck next week and happy trading. 

Kyle

Trading a Sector $LVS $MGM $WYNN $$

Over the past few months the market has been basically directionless.  This lack of direction from the markets has made trading with conviction a little difficult.  Trading day in day out has been more of a stocks pickers market and has forced us as traders to focus on a bigger list of stocks.  The reason for this is because of news, and or volume, specific sectors may be in play on a certain day.  When these specific sectors are in play you can’t miss out on the opportunity because opportunities to make big money in this market have been limited. 

Yesterday we had a perfect example of a sector that was in play for the day, it happened to be the gaming sector.  Las Vegas Sands (LVS) has been on my list for a while now.  It is a readable stock that generally has good volume.  It has been on my list as a long because it has been holding the previous breakout above 32.70 and doesn’t have any resistance till around 39.  My plan going into the day was to watch for strength on the open and get involved above 35.90. 

This plan changed a bit on the open because of the relative strength on the open from the gaming sector.  I got involved on the first pause around 35.70 so that I could build a position above the breakout level.  Because of the relative strength compared to the market my probabilities for the trade went up so it was my responsibility to allocate more capital  to the trade. 

I ended up holding this trade for most of the move and captured most of the move with full position size.  These have been the types of opportunities that this market has been providing.  Find where the money is flowing into or out of each day.  Good luck today in your trading. 

Kyle