Monday, February 05, 2007

Dummy Trade of the Day - Rambus Inc. (Public, NASDAQ:RMBS)

RMBS was an early mover in the pre-market, in fact it was briefly halted pending news of FTC remedy on royalty rates. The stock opened to some very choppy price action, but eventually stabilized near its rising 10 period MA. I took a long entry on a break of the 6th bar high. My preliminary target was a retest of the OR high and when price tagged and reversed, I booked a 50 % profit. As anticipated, RMBS, pulled back to its rising 10 MA in an orderly fashion and managed a strong close.

8 comments:

Rob said...

Jamie,

It's normally pretty obvious why your "low risk dummy trades" entry points are low risk. (ZRAN below, for instance.) I'm not seeing that on this chart. Could you elaborate some on why you considered your entry point on this one low risk?

Thanks

Joao Henrique said...

Hi Jamie,

This is my first post to your site. I'm from Brazil. It's amazing how you manage your trades!

I'm studying your past trades trying to learn from them. I have to say that now I've been more profitable, just adding some of your techniques.

But I still have execution problems... I think I'm too slow to put the orders :)

Best regards,

Joao Henrique

Deric O. Cadora said...

Very curious trade. There was no volume to support the break that you traded. What really made you pull the trigger on this one?

Jamie said...

@Rob and Derek,

Although I did anticipate a little bit, I think the entry was solid. Volume came in when price took out $22.00. That volume was quite heavy on a relative basis because RMBS usually trades 3-5M shares per day and today it exceeded 40M.

I had the support of the 10 MA just below. After the fourth bar, RMBS carved out two inside bars, both of which made higher lows on declining volume - price contraction prior to price expansion.

I like this stock and I trade it quite often, so maybe that had something to do with the anticipation.

The low risk aspect was approx. 45 cents from my entry price to my stop $21.20.

Jamie said...

Sorry Deric, I just noticed that I spelled your name wrong up above, my apologies.

Jamie said...

Hey Joao,

Thanks for the kind words. Its better to be a little late in the entry than to be too early, however, sometimes, you can split your order and get a lower average price because price usually retests the breakout point.

Anonymous said...

Hi Jamie

Do you ever have any losing trades? Would be good to also post them in order to learn from them.

It seems that you always pick the perfect entry and exit, are these hypothetical trades???

Jamie said...

Anonymous,

You forgot to sign your comment.

BTW, why do all of the comments that question my credibility come from people who are afraid disclose their identities?