Jea Yu has been involved with the equities
markets for over 10-years. He
specializes with intraday trading in the U.S. equities and futures markets.To receive a free 7 day trial to Jea Yu's
Underground Trading Pit,
click here or call 1-888-484-8220 ext 1.
Stop losses are an
essential part of the trading game. There are two reasons to take a
stop loss, to buy more time for a little more transparency and to avoid larger
losses due to premise changes. Anytime a trader takes a stop loss, it tells him
one of two things. Either his premise for the trade was wrong or his stop was
too tight. It is very important to take notes and learn from stop losses. Here
is a great example of how we scored nicely from a stop loss.
On 11/14, we took (SHLD | Quote | Chart | News | PowerRating) LONG at 113.75 on
dual 8 and 13 min mini pup breakout formations (mini pups are when the lead %d
stochastics stalls on the rise as the laggard %dslow stochastics continues to
rise to form a wedge like breakout). This is an extremely strong high
probability trade setup. Ironically, no matter how much buying came into the
stock, the 113.90 level absolutely would NOT break. We eventually had to take
stops out at 113.60 to avoid a breakdown on the exhaustion.
Dual 8 and 13 min time frame mini pups are
extremely strong breakout patterns. We always will take these on the long side
for the impending breakout. However, when these patterns can not breakout and
exhaust, they become just as strong candidates to play the short side for a
breakdown.
On 11/15, SHLD gapped down and then bounced back
up to the prior resistance levels 113.90 x 114. We immediately took SHORTS at
113.90 at 9:32am off the open since we knew first hand how strong that
resistance level was the prior day. SHLD eventually leaned down hard from
exhaustion level to tightening through 112.50 and bottom at the 111.70 pivot
level. This was a very nice score for our traders and we would not have been so
cued in on the trade unless we had firsthand knowledge of the massive resistance
from the day before.
Never be too stubborn in taking stop losses.
Taking stop losses can help you make more money because of the knowledge that
you gained from the stops. As I always say "Who better knows how strong a stock
is than someone who is short and who better knows how WEAK a stock is than
someone who is long?". Find the knowledge and act upon it.
As I stated in my last report, the 60 min NASDAQ
e-minis has been on a consolidation going on three days now. The important level
to watch is the 1668 break levels. This will trigger the next leg up towards
that 1683 level. (AAPL | Quote | Chart | News | PowerRating) and (SIRI | Quote | Chart | News | PowerRating) have formed daily pup breakouts to
be watching on the futures breakouts with daily upside targets at 63.95 and 7.41
respectively.
Be aware and be assertive. Good trading all!
Jea Yu
