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Thursday, June 5, 2008

How to catch a falling knife

I posted the idea here at 08:51 AM and links to the chart.

Five minutes later at 08:56 AM
FSLR bought 242.50
4 pts stop. 10 pts profit.

I was lucky, but let's analyze the trade which has a reward/risk ratio of 2.5/1

Trust me, I wanted to buy FSLR at the open. But I keep telling myself, wait for it, wait for it, and don't chase it. FSLR breaking the previous close was not a good sign, but not breaking yesterday's low was a good sign. Notice the lows for the previous days - 251, 251.80. I figure FSLR might have a hard time closing above this.

And yes, I eat my own cooking.

Not all my trades are this perfect, but you get the idea.

Updated: This is an example of an order entry and not an actual trade.

Another udate: Why FSLR was a short at 262