Archive for February 19th, 2012

“Fade” Friday…

Successful trading boils down to two things. A simplistic approach easy enough for an 8 year old to understand. And two, a method focused on minimizing risk while ensuring maximum profit is extracted from the trade.

Friday morning the SPY was gapping to fresh highs for the year with plenty of other leaders gapping to Supply levels. I had a watch list compiled to focus on at the open and Arcelor Mittal (MT) was one of them on my list to short. MT was a stock that had an extended run on the 60 min (chart not shown) the day before and was gapping into an area of Supply (see 15 min chart below). Therefore, this made MT a viable candidate to fade short at the open on the first sign of weakness.

I split my position in pieces since I was entering on a very short term timeframe, but with the bias of the longer term charts. Here is how the trade broke down…