Trade Date: 2/1/17
One of the stocks making headlines this morning was $PBI, Pitney Bowers Inc. The mailing equipment and software company disclosed a fourth quarter loss of $81.8 million and an EPS loss of $0.44, a 5% decline. Ouch.
Trading Style: Day Trade
Position Bias: Bearish
- Price Change: $ -0.92 and -6.72%
- Premarket Volume: 16,600 shares
- Daily Average Volume: 2.57 million shares
- Average True Range: $0.62
Entry Price & Time
Even if it gaps down, stocks can put in a fake out and short squeeze the life out of you. So I always wait for my familiar intraday setup before even considering a trade. If my setup does not appear, I was ready to let the stock go. The 1st three candles were weak, pushing the price lower. The fourth candle finally presented an entry when the pressure slowed down with a small base at $14.60. If the stock broke below the level in the next candle I was going to enter with a stop above the highs of the day. And indeed it did.
Entry Price: $14.60
Entry Time: 9:34 AM
Stop Price: $15.20
Trade Management and Psychology
Psychologically, this was one of the easiest trades to manage making it unsurprising that it was also the biggest winner of the year. Immediately after I entered, the stock barely retraced above my price. Once my profits grew, I remained calm because there was no need to be nervous. All I wanted to do was follow my rules. During this trade, I never looked at my P&L, only the chart.
Exit Price & Time
Once I entered the position, I switched the time frame of my chart to 5 minutes candles. I planned to exit the position if either the price moves up to my stop at $15.20 or if the price jumps above the 9 EMA, whenever that may be. The stock never recovered above my entry price and it finally broke above the 9 EMA at 11:51 AM, at which point I closed my entire position.
Exit Price: $12.75
Exit Time: 11:51 AM
Results and Evaluation
Since the start of 2017, this was the best trade I made. Poor quarterly performance and strong relative volume put probability on my side. Right at the open, the trend was strong and I rode it down. I followed my rules perfectly entry and exit executions.
R Multiple: +3.12 R