Trading on the Fringes:ALL time highs & lows






This year my best three long term trades have been trading long at all time highs and selling short at all time lows.  I was the ‘crazy’ guy that traded Apple only long from $390 to $630 never shorting it and only stepping out during draw downs below short term moving averages. However I was able to pull out of the stock $50 and $100 dollar runs multiple times with little draw downs. Price line was another one that I bought after a break out to new highs after earnings for a $100 run up. All these trades were made as the stocks pushed to all time highs, so few were able to ride the waves that far, worse so many shorted them over over and over for miserable results. What happened when they reversed as so many traders were terrified of? I sold them, {Yawn}. As long as you limit your risk to 1% of your total capital using stop losses and the right position sizing based on volatility you can exit when the stock rolls over and lock in profits, so many think that a trend trader will ride it back down, I will not. If you want to win in trading play at the fringes of all time highs and lows  as one strategy. The very fact that a stock is at an all time high or low means that all buyers and sellers currently agree that is is worth more or worth less than it ever has been before and studies show that lows tend to get lower and highs tend to get higher, put the odds on your side and trade where a stocks price has nothing but blue skies above or a black abyss below. My recent trade? Groupon, at all time lows, it has dropped 25% in price since I started the short. My results? +60% return year to date.

I have called on my positions on twitter all year, all my $AAPL & $PCLN longs are there along with my $GRPN short and my small losing trades. @SJosephBurns