Emini Trading Blog

Posts Tagged ‘GM’

Do you even recall the last time the words exemplary and General Motors were this close to one another? Too much time and too many missed opportunities have passed since one could write that with a straight face. Yes, in view of the “Titanic”-esque pace with which GM truly changes, exemplary is a stretch. However, the far-reaching cuts and wholesale abandonment of long-held nameplates is a feat worthy of recognition. Worthy also of imitation. Yes, even for day-traders and investors alike, GM of all sources, can serve as a valuable warning example!

One application we can glean is the need for clarity. The rest of the world could see that there were numerous needless models in GM’s line-up. The cost of flooding the market with redundant offerings outweighed the margins earned. Additionally, this flood-strategy fails to guarantee market-share. What are the similarities to trading? 1) Our entry criteria is met so we enter. Prior to our profit targets being reached we see an additional trigger telling us to enter. Is this an opportunity to earn more? As a rule, no. The time it took for the second trigger to develop has embedded risk. More often than not, a delay in reaching your profit target is a signal to lessen your position. If you decide you must keep it. 2) Generally, this secondary entry will be at a less favorable price point. This means your profit targets require greater follow through from the market. Of course there are exceptions, these are general reminders that will likely have application at times regardless of the time-frame or instrument you trade personally. Yes, the payoff for adding to a position you already have can potentially be rewarding at times. However, risk when realized is unrelenting. Just ask GM.

TODAY WE SAW: Bullish start with higher highs throughout. Expanded volatility came as bank related news was released.

BUY-SIDE ENTRIES: One entry near 859 was a very quick earning trade. POTENTIAL OUTCOME: + six-tics.

SELL-SIDE ENTRIES: One entry near 858 was a very quick earning trade. POTENTIAL OUTCOME: + six-tics.

TOTAL POTENTIAL OUTCOME FOR FRIDAY 24-APRIL-2009: + 12 TICS.