By Sell Puts
Now that the topic of shorting has come into play the last month or so i figured i would touch on how to identify a potential SCALP, not a trade to be married to. I use scalps to take advantage of momentum created by selling or buying through a key level. In the case today, selling through a key intra day level in Research in Motion.
Reason why i picked this level was because it was tested and congestion resulted at levels earlier in the session. When looking for an entry point for a you need to use a 1 min chart, watch for volume to come in and bids being hit.
I saw the 47.84 bid getting thin, i hit the bid as it got thin. I like to be the last SOB to take out a bid level if looking to enter a short because this way you have a greater chance of the trade being immediately in your favor. Otherwise you want to offer out shorts at the highers price and of course cover at the lowest bid.
As you can see RIMM broke down clear to .68, retested the .84 level on meager volume only to be slammed back down to the 47.32 level. this is a classic momentum short sets up. As of this post the stock is trading 47.62.
