A Mistake To Avoid

A quick trade to finish up the first week back at the grindstone. Here’s a little short on ZM:

The stock was weak from the off. When they fall this far this fast there’s always the question in the back of your mind — can it get any further or was that it? But we push that question aside and watch the chart and the off-chart indicators, wait for the setup, and if all looks good — as it did here — we enter regardless.

There was an obvious target around the $88.50 mark, but the price failed to get there. That failure was in itself a good indication to get out. The trade generated a little over $500 and lasted about ten minutes.

There seems to have been a theme to the trades this week. A lot of shorts, and a lot of ten-minute trades. When we see a pattern or run of similar trades like this, it’s tempting to look for more the same, or to alter our strategy to favour them. That temptation is even stronger after a long holiday period without much trading, because those recent trades occupy a disproportionately large part of our memory. But to alter a strategy that has been tested over decades, on the basis of a handful of trades made over a single week, would of course be a mistake.

I hope everyone reading this has had a good week in the markets.