Several days later, after a mildly successful swing trade from shorting a financial stock, I had kept my eye on everyone else in that sector to see if similar patterns would emerge, and sure enough, they did. Bank of America after bottoming out, started to rise and rise some more when they posted better than expected earnings.
In a matter of a week, the position was over bought on a 5 day basis; the stock had gone from 18 to peak at 34. That's when the stock started to falter. Rather than do something silly, like buy the stock, hoping to capitalize on its magical upward movement, I waited to get on the next mystery tour bus.
At around 30.25, BAC started testing support, the position was still overbought on several time frames from minutes to days, and upward momentum had slowed. I had my sell short order ready for 200 shares of BAC.
My previous swing trade only involved 100 shares for a .25 cent move. Nothing stellar. One way to increase profit is to increase volume. I made use of my margin available to me.
BAC broke resistance, and I sold short 200 shares at 30.03. And like clockwork, the stock began its predicted descent. I closed out my position buying back at 29.75; a few up ticks had me nervous so I sold. However, I was too early on my sell. Several hours later, the stock was down to 27. I had to shrug, but that was my risk tolerance.
Another sucessful trade. Another .25 cent move, but this time, twice the profit. Now we're getting somewhere.
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