Wednesday, December 3, 2014

Closed BABA +3.60 @

My bet that BABA would form a bull Flag rather than roll over paid off.  I was able to sell it near the upper trend line today in Premarket.

Entry: 106.60
Sold: 110.20 +3.60 (+1.25R)

Why did I close here despite the formation of a bull flag?   Several reasons, first betting on a trend line break is not a high reward trade.  I missed my opportunity to sell over 111 and decided just to get other was a decent chance the market could have pulled back.  Indeed, BABA would have pulled back to 108.80 on the day.  I don't like giving profits back.  Second, I was not hugely optimistic that this trade would work in the first place.  I don't normally like to enter positions on or immediately after big bars.  Third, I had a good result that warranted locking it in.  Finally, a bounce in bull flag is still a counter trend trade.  Counter trend trades have a fast expiration date.

The plan going forward is to wait for more consolidation or a LRE and then take a position if market conditions warrant.

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