Pending Trade Suggestions versus Live "SMS" Trade Suggestions

"As a trader you should wait for the trade to come to you; Always apply patience and wait for ones that do."

The focus of this discussion is on comparing the trading styles applied to TRUMarkets "live" CFD trades with our 'pending' trades that may never trigger.

Comparison Example:

Live

Assumption: A "live" email and SMS alert was activated for a CFD trade, suggesting to short sell (short) Boral Limited (BLD). It was suggested that CFD traders should 'sell to open' the CFD position. The technical and fundamental analysis for the BLD trade suggestion would be as also detailed in the CFD Snapshots page.

Pending/Static Trading Rules:

According to the basic rules of short-term trading, traders should not blindly rely on a static entry point as  technical analysis changes from day to day for any short-term trading entry.  In this example, (see chart below)  the share price gapped down on open the following trading day, changing the previous entry point.

We think it's important that subscribers adapt their entry points prior to the start of trading if there has been a fundamental announcement overnight by the company or stock markets overseas have changed the shape of the short-term landscape.

Please click here to review gapping as a tool for short-term trading.

In the above chart you can see that BLD closed at $7.31 on the 26th and opened at $6.90, we say that BLD gapped down $0.41 the next day. The area that BLD gapped is highlighted by the aqua rectangle. While the direction of the trade was correct you would not have entered this trade because the gap itself was 5.6%.

While the BLD example is extreme, that is, the distance of the gap, as a trader you shouldn't get into a trade that has gapped even slightly. While there is no hard and fast rule, generally a gap of even 1-2% might be considered too much.