Big Blue IBM Offers New Bullish Swing Trade 2-10-20
IBM Stock Chart 2-10-20
Hello and welcome back to Smart Money Alerts...
Shares of IBM have declined after a vicious bullish rally and now offers a chance to get long with a better reward to risk ratio.
If you're a daily follower you know we live by a single mantra before accepting risk on a new trade: "Does the potential reward justify the risk?
Most active traders fail because they want action. But traders who get paid want odds. They want the expectation for a profitable trade to be stacked in their favor.
One obvious situation that falls under the "mistake" category is buying support or selling resistance. On the surface it makes sense but it's only a risk idea. Meaning you know your risk. It doesn't tell you to expect a profit.
Here's a key question...
"What if you always knew a trade would be a winner?" How would you feel about accepting risk? You'd feel pretty darn good wouldn't you.
Well we know we can't "know," but that's how strong we want to feel. We want to feel we have built such a strong argument that it would be a shame to pass on the idea.
Today's trade in IBM has solid momentum, but lacks bullish order flow. The best trades have both. I'm pointing this out to get you thinking like a trader. It's not just one or the other, you want both to set up trades with high expectation for profits.
When you learn to do this you will own the keys to the kingdom.
So what's the trade in IBM?
I'm looking for the stock to trade lower today and close on the lows, then buying those lows MOC (market on close). If the stock trades higher I am letting it go.
To take our lesson/trade deeper into the game plan, I am not trading full shares. I am initiating the trade (if I get the price action I want) with less risk because it only shows momentum.
Always adjust your share size based on your assessment of profit potential. All trades are not the same. Also a mistaken thought for struggling traders.
If you have any questions leave a comment.
Have a great day.
Pete
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