of a Stock Trade
doing have always been two completely different things. This
week I will
bring you along on a trade that is currently ongoing
so you can get a good look at the “Doing” part of things.
The trade is
a call option on QQQ. It was opened on 9/21/03. Take a look at
first, and then we’ll talk about it.
You will notice that four bars back, price moved above the red line
of resistance that I’ve drawn on the chart. On the following
day, price was still above this line, even though there was a
small drop. Here is where the trade was entered. The idea here
when price breaks up through resistance and into new territory
that there is a tendency for this movement to continue. Confirmation
to enter the trade comes from the second day above the line.
After entering long, if the price closes below the red line,
we would be concerned that the breakout was false and consider
the trade post haste. The last bar on the chart is today (9/23).
This morning, as I prepared to exit the trade with a small loss,
I saw that QQQ was moving up. By the end of the trading day,
it had again moved above the red line of resistance, convincing
to remain in the trade.
The option I purchased expires in March of 2004, so I have plenty
of time to work with one.
Next week we’ll
look in on this trade together and see where it has gone!