Real Time Comments on BEAS pullback that lead to Stop Loss Taken

Real-Time Training on BEAS alert

[12:36] <@Chris>  First, let's go over a trade that forced us to take a stop loss
[12:36] <@Chris>  Please bring up the BEAS chart at www.realitytrader.com/calls/beas.htm
[12:37] <@Chris>  To start we had a very nice uptrend move from the open from the 69 level, breaking open price of 70 and continuing to near 74.
[12:38] <@Chris>  The double top at 74 gives way to a pullback that I was interested in finding for a reversal and possibly a continuing uptrend.
[12:39] <@Chris>  I didn't begin to focus on this stock until about the 73 level as the pullback was showing reasonable selling and the price was dropping well enough to look for a bounce.
[12:39] <@Chris>  A reversal.
[12:40] <@Chris>  For a reversal, we need one of two things:
[12:40] <@Chris>  Stock needs to develop some sort of mini range or fast selling (capitulation) leads to a readable bottom.
[12:41] <@Chris>  Should the stock develop a mini range we can look to bid the low, much like we did on AMZN earlier
[12:41] <@Chris>  or we can look for a break of the high of that range.
[12:41] <@Chris>  In this case, I was looking for faster selling to lead me to the bottom.
[12:42] <@Chris>  The comment: Look for a final gasp and reversal was a statement in anticipation of this event.
[12:42] <@Chris>  The blue circle represents this event finally happening.
[12:43] <@Chris>  You will notice that in the area of this blue circel, the corresponding volume shows a spike represented by the bar higher than the rest.
[12:43] <@Chris>  circel = circle
[12:43] <@Chris>  This is where the entry was alerted.
[12:44] <@Chris>  71 3/4 was the reversal point, 72 was the highest possible entry I would have entered.
[12:44] <@Chris>  Next comments are based on the following evaluations:
[12:44] <@Chris>  Unfortunately, if you bring up a Level 2 on BEAS right now, it doesn't show the higher risk evaluation that was occuring at the
time of this pivot point.
[12:45] <@Chris>  Right now, BEAS shows tighter spreads, reasonable MP (market participation) at each level and it's slow.
[12:45] <@Chris>  When this trade was being alerted, it traded more erratic
[12:45] <@Chris>  much like you see on IWOV right now
[12:46] <@Chris>  spreads widen, MP is minimal
[12:46] <@Chris>  sizes aren't great, etc.
[12:46] <@Chris>  Showing a higher evaluation risk.
[12:47] <@Chris>  In these cases, the trader needs to limit his exposure to 200 to 300 shares depending on money management principle that matters to you.
[12:47] <@Chris>  From execution standpoint, 200 to 300 is easier to execute than a lot of 1000, especially if the trade was not offering the profit potential desired.
[12:48] <@Chris>  Even 500 takes a much greater comfort level in execution.
[12:48] <@Chris>  Most ECNs are not at or near inside levels for very long making executions difficult.
[12:48] <@Chris>  SOES, forget it.
[12:48] <@Chris>  SNET to MM, maybe, but not likely.
[12:49] <@Chris>  So if trader has to trade 200 to 300 shares with risk of 1/4 point if wrong, the risk/reward scenario should allow the trade a move
to at least 72 1/2 to be worth it.
[12:49] <@Chris>  What we see is:
[12:50] <@Chris>  The reversal occured and made a move higher so the pivot point was correctly identified.
[12:50] <@Chris>  However, the potential was not enough to warrant the risk assumed.
[12:50] <@Chris>  The trade offered an exit to about 72 5/16 tops and even that would have been hard to get filled on.
[12:51] <@Chris>  From this weak bounce, the holders of the stock were forced to take a stop at 71 3/4, which was low of the pivot point.
[12:52] <@Chris>  With BEAS being hard to execute, and selling hitting it, I would hit the ECN showing most size anywhere from the 71 3/4 level or
higher as it was selling. The stock can drop 1/2 point in few seconds, so it's not worth the effort of "we'll see if it holds 3/4 or not".
[12:53] <@Chris>  Many stocks this is reasonable, when bids are thick and levels are larger, gaps between levels are tight.
[12:53] <@Chris>  In stock with higher execution risk, best to not wait for selling at stop price to try and hit the bid.
[12:54] <@Chris>  Unless you feel like going lower bids to get exits.
[12:54] <@Chris>  So BEAS turned out to be a pivot point reversal after fast selling that didn't follow through
[12:54] <@Chris>  and forced a stop loss taken when the pivot point low was jeopardized.