Here’s Why Market Confirmation Always Helps
When the market’s not
working in your favor, it’s especially important to keep focused on
our money management rules, and not how many “things” the trade has going for
it, only to watch your “paper” profits turn into something less attractive.
10:12:32
Intraday
Setup Alert
Qlogic (QLGC)
has triggered to the upside out of a FlipTop
pattern. The stock was the subject of a negative article in the New York Times. QLGC
is triggering a news reversal play as well, above 34.85, with a high of
34.88. The stock is currently off .90 at 34.80.
The trade had a nice pattern setup for entry, as well as confirmation in the
form of a news reversal play, which should provide additional power to the
Flip Top. When you look at the chart above, you can see that the play was
initially right, but ultimately
(
QLGC |
Quote |
Chart |
News |
PowerRating) only went up .40 higher after the news
reversal entry. How can a trade that has so much going for it do this to
“us,” if it was so good? Maybe we should be asking something else?
Maybe it was the broader market averages which weren’t working in our
favor. Maybe because this is an aggressive daytrade strategy, and we are playing
against the bigger trend, this happened to be one of those situations where the
“trend is indeed your friend.” I don’t have an answer to this,
but I do have an answer to keeping profits in my pocket, and that’s one price
decision that I have absolute control over. The moral of the story, and an old
Wall Street adage that seems to fit is: “You’ll never go broke taking a
profit.”