Trading Not to Lose - VMware, Inc. (Public, NYSE:VMW)

VMW gapped wide on huge volume. It was trading in the daily spot - all time lows with no support. The fourth 15 min. bar printed NRIB NR7, but the down sloping 5 period EMA was miles above price. In order for a trade like this work, you need a wide BO bar with enough muscle to pull the 5 EMA down closer to price.

The 1 minute chart shows a perfect 3 PP base. Each pivot off of the base carves out lower high (ABC). It's obvious that the base will break, so I take the trade. Each time price makes a lower low, I tighten stop. Partial out after price breaches whole number and takes it back. As price consolidates the first leg down, it prints a lower low and immediately, moves back into the trading range. At that point, I'm on notice that the trade might fail, so I tighten stop on second half just above the pivot highs of the consolidation range.

As we can see on the next 15 min. frame, we had a solid BO bar which closed on its lows, on higher volume. The move pulled the 5 EMA almost 2 points lower from $42.48 to $40.66. However, it still wasn't touching the top of the BO bar and we know that price and the 5 EMA are like magnets and eventually have to come together.

The setup was half baked on the 15 min. and failed to generate a big extension, but I knew what I was getting into. I wanted to post an example of trading not to lose, because I sometimes discuss it in the comments.

Not recommended for new traders. But if you get in a jam, this strategy might be helpful.