Jan 29, 2008

ICUI - Short... FME!!!!

Some days limiting losses works well... others it hurts like a knock to the nads. Today, I entered ICUI short off a break of the 11:30 bar low. Very narrow entry, reduced risk and the previous bar had long upper tail. Only thing was that the overall volume was pretty thin, but the relative volume was very good. Now, I noticed the ask/bid spread was fairly wide on entry (.08) which bothered me at bit.
 
Well, got into the trade, placed my stop and, at one point, price exceeded my stop but it didn't trigger. Anyway, price was really fluctuating with wild spreads and I didn't like it at all so I exited.

 
I was trading to save a loss rather than to make a gain. I need to work on this. Once exiting for latte money price immediately dropped. I mean, as soon as my order was filled price dropped like .20 (just the cushion I was looking). Long story short, price moved about a buck down from my entry.
While it hurts to not capitalize on what turned out to be a correct call I had pretty decent rationale to get the hell out.
 


8 comments:

PRD trader said...

Nice trade 007,i was very cautious today & that was good for me ,i took more then dollar gain but as i was careful i entered only 200 share.Good to see u r back with stock.

QQQBall said...

we are in the FED window, so congrats on being wary. the market is just f-ing with you - the next time to you try to hold something like that they will kneecap you. :)

OONR7 said...

thanks prd but... I actually exited BEFORE the move. Sorry I didn't make that clear in the post (I just adjusted).

greytrader said...

Interesting example.

I have spread displayed right beside last price in QT. For stocks under 100$, I discard anything with more than a 3-4 cent spread.

For ICUI, my stop would have been 12 cents away from my entry. With a 8 cent spread, that is only a measly 4 cent cushion before taking a 1R loss... and that is without slippage which could easily be a multiple of 8 cents.

I have noticed that when Jamie trades stocks with large spread, his stop is usually the high/low of a previous range of candles iof the entry candle. One could add 7-10 cents to the high of the entry candle in the case of ICUI, giving it more room. I am sure Jamie can enlighten us :-)

Jamie said...

GT,

Good observation, I use the outside bar to set my stop as opposed to the trigger bar. This often saves the trade for me.

In the case of ICUI, bars 2,3 and 4, have a high of exactly $31.50 which forms a bullish base, after which price spikes. The bulls are trying to defend this number as support. That defense is what causes the head fake on the first breach. Happens often and that's why I started using the outside bar as my stop.

Hammer Trader said...

OO: Why not wait until the price drop below the ORL and get an entry, for example 12:45 bar.

I picked RF on break of 6th bar, but didn't get much out of it.

Hammer Trader said...

And how did the futures trading go today?

QQQBall said...

graytrader. ive found that when i take trade long near ORL, or short near ORH, an .11 stop works pretty well - and that is not dependent upon price of shares. since crooks are habitual, ill sometimes go .13 as MMs still think in terms of tennies (1/16th) and 1/8th.