Internet Security Systems, 30-minute Chart
Questions:
1) Why would you be paying attention to this stock on Wednesday, October 22?
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 Wednesday, October 22?
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 16.53 on a buy stop above the 11:00 inside bar.
4) Initial Protective Stop: 16.19. (max. 2.06%)
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.
ISSX jumped sharply at the open then coiled into the 11 AM hour, providing a nice set-up against which to execute. Initial risk
was very manageable at 2.06%. The stock closed the day at $16.96 giving only a 2.6% gain from entry, or an inadequate
1:1 reward to risk ratio. But given the fact
that the market fell about 2% from Tuesday's close, I was just happy that ISSX held up and I wasn't stopped out in this
long position.
DuPont Photomasks, 30-minute Chart
Questions:
1) Why would you be paying attention to this stock on Wednesday, October 22?
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 Wednesday, October 22?
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 26.87 on a sell stop below the 11:00 inside bar.
4) Initial Protective Stop: 27.42. (max. 2.05%)
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.
DPMI was a much "easier" trade in the sense that by being short on a day when the broad market was very weak,
you kind of had the wind at your back. DPMI coiled into the 11 AM hour and then dropped sharply lower. The stock
closed at $23.65 giving about a 12% gain from entry, providing a reward to risk ratio of around 6:1, which is fantastic.
Screen capture of my intraday Watch List:
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