Thursday, December 07, 2006

Trade of the Day - Research In Motion NASDAQ (RIMM)

RIMM was set to crater from two downgrades this morning. Yesterday's NR7 bar hinted that the expansion would be quick. There was no low risk entry off of the OR, so I decided to scale into the position starting with 100 shares on a break of the OR low. This is a pricey stock and errors can be costly, hence the scaling in tactic. When price showed me that it was not going back to test $132, I added another 100 shares and when price took out the second bar low, I added another 100 shares. My target was $130 because round numbers tend to have strong psychological meaning for support and resistance. My original stop was $1.00. By the time price broke $131, I tightened the stop to $132.

Trader X pointed out that a low risk dummy entry could have been taken on a break of the 10th bar low. Notice how bars 8-10 all had highs of $131.15 reinforcing this as a strong resistance level.

3 comments:

Cal said...

Nicely done. Do you guys have Instant Messanger, or do you just email each other?

Jamie said...

Hey Cal,

Mostly we just read each others' blog comments.

Trader-X said...

Actually, it is ESP. We have this freaky mental thing going.