Up a Buck and Out --- or not

I'm very much a beginning level trader so was trying to follow the up-a-buck-and-out rule today. I bought a few AAPL calls for $14.70 and immediately placed my gtc sell order for $15.70. Admittedly, my entry wasn't great, but the stock started moving my way after a few minutes.

As it was moving up, I thought maybe I should change my sell order to a little more than up-a-buck so I could also cover my commissions. So I did.

I then watched as the option price hit $15.70 (my original sell order) and I thought it was going to be great. But within just a few short minutes, it had slumped back to $14.40 at which point I capitulated and sold for a small loss rather than a gain.

Ugh!

I was trading small charts which had rolled over. Even though the 233 looked like it was still ready to move up, I didn't trust myself enough and thought it would be better to preserve capital in case I was wrong.


Guess I still need to work on my entry point and stick to my exit points.

Oh well...there's always tomorrow.

With short charts I never try to hit a home run, I only go for a single. Anything under a 60 minute chart and with the big charts not confirming my direction I would stick with your up a buck and out. Joe

rufinnati-
Also know, this is a tough time to trade. Option prices are changing so fast. I agree with Trader Joe. Off small charts, look for smaller moves. Find stocks that consistently move with the broad market and have strong trends by using RTT trend analysis. When the market drives strong in one direction or the other, check your indicators and RTT. If you see an opportunity for entry, jump in, but do not expect to be in very long.

During this time of they year, I am seeing stocks drive strong in one direction in the AM, and many times turn and drive strong in the opposite direction shortly after lunch. Problem is, if you cannot see the potential of the turn against you, the price changes, and you are losing money.

Suggestion: If you are entering on small charts, pay close attention to the chart you used as your decision. You might want to drop down a chart and take a peek at what is going on inside your decision chart, anticipating a turn- just a thought. Some turns can wipe you out! I only had one good trade this week. I have lost an entire basket during this time period- well almost two. This year, I have finally learned that trading is very different and extremely risky for me during this trading period. I am protecting a good basket that I built over the past several months.

I continue to say, when I retire from my 9-5, and trade full-time from home, I do not anticipate trading during the thin summer months. I want to trade heavy for only about 8 months, and tread water carefully during the other months 4 months.

Good luck!

Rookie & Trader Joe, thanks for the encouragement and advice. Today's a whole new day; so I'll see what happens.

Sweet Redemption

I purchased AAPL 435 Puts for $14.90 @ 10:57 and immediately put in my GTC sell order for $15.90 which was filled within 20 minutes.

Based on the charts (55m above 80 and all indicators turning over; 21m above 80 and already turned over) I'm fairly certain that the stock will continue to fall for at least a couple more dollars. I could have probably squeezed more out of the trade; but after yesterday, I'm H.I.S. with up-a-buck-and-out.



Edited 1 time(s). Last edit at 05/17/2013 10:29AM by rufinatti.