Trades

[timjustice]

That looks like a good candidate for a bear rally short. One thing we'll talk about in length is the idea of a trigger.

MT says to get in either through an intraday trigger or below the candlestick low as a trigger. In this both would work fine.

Great job!

[blancoarismendi]

So i took a position in the stock AES as a possible short opportunity. The stock is in an obvious bear trend with the 20ma<50ma<200ma. Looking at the chart it looks like the stock is pulling back and is very close to the 20ma line again. What do you guys think? Am I missing anything or is there something else that I should have looked at? I got into the stock at 15.97. At the time I made the order the stock was trading at 15.65. I made my support and resistance lines and it seemed like 15.97 would be a good entry point and that's the target price I set for the order.

[blancoarismendi]

Well, just to keep you guys updated on my progress. AES had a pretty rapid decline today. Had I gotten out at the low for the day I would have grossed approx. $115 profit today before deducting fees. I decide to ride it out because I think it will keep it bear run for at least a couple more days. right now I'm at only $25 profit before fees. So I hope I made the right decision to stay in, because it was very tempting to get out. The questions that kept running through my head were 1)If I get out, am I getting out too early? and 2) Am I scared to pull the trigger with a profit of over $100... Well, as I stated earlier I'm sticking it out because this stock has a tendency to drop for consecutive days. I guess I won't know if I made the right decision until Monday or Tuesday. I guess the weekend is as good a time as any to get the homework done for this week. I'm looking forward to seeing everyone's posts.

[jchavez]

Can anyone explain the concept of shorting a stock? I understand that you are selling the stock in anticipation of it decreasing in price, and that to exit you "buy to cover" that short position. But in laymans terms, I'm a bit confused on how this works. How can you sell the stock if you never owned it to begin with? I think that's my biggest question - how is this being done?

I am looking at several stocks which seem to qualify as good bearish investments, but I've been hesitating because of these questions. Any help would be greatly appreciated. Thank you

[timjustice]

Hi Jaun,

Yes, shorting can be a confusing subject for someone new to the market. Remember, it doesn't matter what product that we're talking about (stock, options, futures, commodities, bonds etc) you can go long or short on all of them.

When shorting, you sell something you didn't own to begin with. The market lets you do it and the broker lets you do it. The only obligation is that you have enough cash in your account to cover the trade if needs be.

For example, if you short a $30 stock with 100 shares that would require that you set aside somewhere between $600 and $3000 in your account to cover the transaction. The difference in margin requirement is set by the broker depending on your account type.

[blancoarismendi]

AES made an undesireable bull move today. It seems like I did miss my chance when the stock dipped on 8/8. The stock is still below the exit price I set. But I do have another question on this stock...
After the fundamentals class I went back and took a better look at the fundamentals and they actually look very good. It is also getting strong buys and buys from the analysts. The stock is also currently bouncing around an all-time low. I may have to change strategies and watch this stock for a possible bull move. After taking a better look at the technical data it seems to historically have a bull run starting september and through the colder months of the year which makes sense because of the sector that it is in. People need to heat their homes.
Tim am I analyzing this stock correctly? This education we are getting is great and it has opened my eyes to pay attention to things I never really thought twice about. But it's also new and I want to know if there is something that I am not taking into consideration..

[timjustice]

Very good!

Actually both scenerios can be good trades. The bear rally you traded was a good setup for a short term move. What you're describing in the fundamentals, analyst rankings and seasonality is what I would call strategic positioning. On a trend reversal (as the stock is in a confirmed trend downward) you'll want to see some strength and a trigger to get you in. We'll discuss some of these things tonight.

[blancoarismendi]

I currently have 2 positions that I am in on. Both times I set up the order the night before and set my stop-limit prices which was then triggered.
1. PCU 100 shares @ 25.30
2. ENER 100 Shares @ 78.95

I also have a day order for CTRP but it has not hit the trigger price yet.

[VegasCharlie]

Ok...

I tried to do something based on what we have been going over, but did it wrong.
Basically, I wanted to buy a 45.00 call option for KNDL .
If you look at the stock on 8/27, you see a great rise in the share, even piercing the current resistance point of about 48.80.

I put in a stop limit call order with a limit of 5.00. That way when the stock goes above the 50.00 point, I would be triggered into the position.

I also wanted to cover my bases by adding a "OTO" in case the stock went reverse in direction (down). I put my sell trigger at 1.00 thinking that if the stock went below 46.00 it would sell...

Turns out that my orders both the buy and sell triggered pretty much at the same time.

So I think I did the first half of the trade right, I just need help with the second half.



Please explain how to do this the right way.

Thank you!!!

Oh and... what do you think about the stock?

[blancoarismendi]

OK I'm excited.. yesterday was a really good day for me, unfortunately it wasn't all good but it was still my best day of trading so far.. Here's what I'm into right now.

1. ADBE OCT 42.5 Call. 3 Contracts. C/B 3.40
2. ADVS 100 Shares Long C/B 46.09
3. CTRP 100 Shares Long C/B 48.47
4. GOOG SEP 480 Call. 3 Contracts. C/B 11.2
5. PCU 100 Shares Long C/B 25.3
6. VCI Sep 10 Call. C/B .35

(C/B is cost basis, or what I paid for it)

All in all with #'s 2-5 I made $408 yesterday and 1 and 6 I am currently down $23. That's the good news... now for the bad news.

ENER.. Ouch. I was -$300 on this stock. Not what I wanted but at least I didn't lose more than I was willing to risk in this trade before I got into it. Now I have to go tighten up my stops for this morning so I don't my winnings.