Trading Lessons are a feature here in The Bandit Hideout where we take a look back at a trade and see what we can learn from it. It might have been a winner which paid us nicely, and we’ll want to know what it was about that play that worked so well for us. Or it might be a trade which performed poorly for us, thereby offering us another valuable lesson which we might can apply going forward in hopes of avoiding a repeat mistake.
Whatever it is, the aim is to use the old ‘hindsight is 20/20’ adage to our advantage. We can learn a lot from the past! There’s no reason to ignore it when it can help us improve as traders.
Trading Lesson for 1-8-2010:
This week, I took a swing trade in LEAP. It had finished 2009 acting well, and was coiling just beneath a trend line. The expectation was that a push north of the trend line would free up the stock to begin another leg higher, and with a logical stop loss not far away, I liked the risk/reward profile for the trade. And although the move it was of the pop-and-drop variety, it still netted a 4.5% gain.
I’m going to take you through this one in video format, so I hope you enjoy it. If you have questions or comments or anything to add regarding this play, please feel free to share it down below!
Trading Lesson Video – Click to Watch!
Remember, watch for volume to confirm any major behavioral shifts you’re seeing in price. When that doesn’t happen, it’s probably a clue to tighten things up a bit just in case.
Good Video Thanks. On monday I did not enter as you did since I normally won’t take a trade right of the bat even though this was a swing set up. I also was concerned what this first week of the year would bring, though I was (and am) basically positive for at least the next week.
So, having said that I did enter a 1/2 position at 18.23. What I watched for was a consolidation after the initial pop. At the same time this was at/near your first target so I knew that there was resistance, to become support, in that area. I was probably also watching the daily VWAP and the R1/R@ levels. All the starts seemed to align and of course it them went up. I took slightly less than 1/2 off at 18.80 (was R2 and/or near you T2) It went further and I had an 18.85 stop based on a lower low on (probably) the 3M chart. After the pop it obvious quickly fell and I was out at the 18.85 (in one of those rare times when I got a good fill on a stop/alert order).
All in all, nice trade….thanks.
As was, BTW, RDN though there I got freaked out and didn’t catch most of the trade (though still did very well).
Hey Jon,
Thanks for sharing your thoughts here, they are always appreciated. Nice to see how you managed the trade as well. I like the fact that you stuck with your style, though it differed from mine, and made good use of the trade. The whole idea here is that I’m sharing what I’m doing, and you can follow if you like, but ideally each trader here finds setups of interest and then seeks ways in which they can fit those into their individual plan or style. The entries and exits don’t have to match mine, so I like your independence and the way you made some jingle in these trades (RDN included) on your own terms.
Keep up the good work!