Here’s a stock trade in SWIR – Sierra Wireless I played today off the stock picks I posted online this weekend.
I don’t like to bias myself by deciding on a direction for a stock before a trading pattern shows up. When looking at SWIR I wrote, “Looking to short a trendline break, buy a bounce off that trendline support, or see if it’s heading to 13 before moving higher.” That may sound like I’m waffling, but I disagree. What it does for me, is makes sure I don’t become biased on one direction, and try to defend it. I wait for the action of the trading pattern to allow me to take the trade.
Looking at the 5-minute chart, SWIR finally took that bounce by gapping higher at the open this morning. It then pulled back, and gave a buy signal. It made a lower high pivot, and then fell below the low of the day. You have to respect that huge, wide range bar on the daily chart, and not just jump in long. You could scalp it, but I wasn’t that aggressive. With the stock now at it’s intraday low, I’m ready to short. SWIR trades a few more bars, and then breaks lower. Here’s where you hope you can get filled. The uptrick rule is a trader’s worst enemy. A tight stop is placed above the small base, or the pivot if you’re trading conservative. I was conservative, so R = .25. Two profit targets are chosen. The first target is .50 lower for half, and a buck for the second half. A trailing pivot method is used. A profit was taken on half the shares at an average of 13.80, and the rest was stopped out.
