Computer Associates, 30-minute Chart
Questions:
1) Why would you be paying attention to this stock on Friday, October 10?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock on Friday, October 10?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?
Answers:
1) Because it was unusually active, and very volatile.
2) Down. You'd be looking short.
3) Short at 24.66 on a sell stop below the 11:00 inside bar.
4) Initial Protective Stop: 24.89. (max. 0.93%)
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could cover half, carry half, or just close it all at once.
Look at that beautiful range contraction into the 11:00 AM bar, giving you the opportunity to get
short with less than 1% at risk. This is a position where you could really load the boat since you'd
be risking less than $250 per 1000 shares shorted... a great chance to take a multi-thousand share position.
VA Software, 30-minute Chart
Questions:
1) Why would you be paying attention to this stock on Friday, October 10?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock on Friday, October 10?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?
Answers:
1) Because it was unusually active, and very volatile.
2) Up. You'd be looking long.
3) Long at 5.00 on a buy stop above the 11:00 inside bar.
4) Initial Protective Stop: 4.81. (max. 3.80%)
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could sell half, carry half, or just close it all at once.
By contrast, the LNUX long had an overly wide initial stop at 3.80%, but the expansion up bar at 11:30
gave a great opportunity to tighten the stop up to $4.88 bringing the risk down to an acceptable 2.4% Remember,
money management is the holy grail.
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