When people hear the word "flexibility," they may think of yoga,
working out, sticking one leg over your head, or something to that
effect. But in trading, flexibility is also an important skill. In
fact, I believe that being flexible is one of the most important
and underrated attributes you can posses as a trader. The worst
traders are stubborn and get married to trades, and the best
traders simply read and react purely to the price action.
I will use my experience trading
) on February 20 as a perfect example of flexibility. I came in
with a long bias because yesterday's daily green bar close was the
first in green day in six trading days for ExOne. The oversold
stock was due for continuation to the upside, in my opinion. I
believe recent IPOs have a particular penchant for reversing and
following through after several days in one direction.
The stock opened up above February 19's high of $27.20 and looked
like it was going to head back to the $28 area. It took a while for
the stock to get going, but it eventually got as high as $27.72. It
then set up a small bearish consolidation on the 5-minute chart
between $27.20 and $27.40. When it broke that channel to the
downside, the whole complexion of the trade changed. ExOne went
from $27.40 to $26.30 in the blink of an eye. At that point, I had
to adjust my thought process to go from wanting to be long on
pullbacks to shorting on bounces. The stock bounced back to $27
where I initiated a short and then ultimately covered for new lows.
As a momentum trader, you have to check your pride at the door.
Just because I initially traded the stock as a long doesn't mean
the situation can't change. I am never afraid to admit when I am
"wrong" and flip to the other side of a trade.
Although I played ExOne for a short in the late morning, this
doesn't mean that I won't look at it again from the long side in
the afternoon. That is the beauty of being a momentum trader. Once
we have identified the most in-play stocks, we will continue to
trade them in both directions based on the intraday signals.
A perfect example of an inflexible trader is one who is still
focusing their attention on
). The former market leader was once a great momentum vehicle, but
at this point, it is dead money. Many traders are programmed to
always watch and try to play Apple, and in doing so, they are
missing out on a ton of great tradable stocks over the past few
months. The 3D printing stocks like
3D Systems Corporation
), and ExOne, for example, are providing great two-way action.
Editor's note: This story by Steve Levay originally appeared on
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