Trading for Dummies, Q&A #73

eResearch Technology, 30-minute Chart

Questions:

1) Why would you be paying attention to this stock on Monday, November 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 Monday, November 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 41.68 on a sell stop below the 11:00 inside bar.
4) Initial Protective Stop: 42.50. (max. 1.97%)
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.

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I'm becoming a closer follower of intraday sentiment. Of the Abnormal Characters, 9 out of 10 were "poppers" and only ERES was looking weak. Since the broad market was weak I went with ERES, and ignored the fliers like DKEY and EGHT.

Don't bother asking me how I construct the intraday sentiment stuff... it's a trade secret. I can't give everything away. Maybe if I start a real-time service I can share those things, but it's gonna cost big if I do it.

Anyway ERES gave a nice inside bar to sell 600 shares beneath with initial risk at 1.97%. The stock closed at $39.25 giving a gain of 5.83% from entry, for a reward to risk ratio of nearly 3:1.

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Screen capture of my intraday Watch List:

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