Tough Trades Everyone Should’ve Taken

04/30/2012 1:20 pm EST


David Grandey

CEO, All About Trends

Daunting recent set-ups in Apple (AAPL) and Priceline (PCLN) prove that the hardest trades to take are often the most profitable, writes David Grandey of

Today’s trading words to live by are: “Do the thing you fear the most and the death of fear is certain.”

So to all of you, what exactly are your fears, be they in the stock market or in life in general? Is it fear of being wrong? Is it fear of losing? Is it fear of making a stand and being ridiculed? Fear of failure? Fear of doing something never done before? Fear of stepping out of the comfort zone?

There are all types of fears, and the list is endless. But the phrases are true. We’re not going to cover all of this; we’re just bringing up a big piece of what it takes to be successful in the markets today and maybe one more.

It is fitting to cover a little of the above fears because of the “in-the-face-of-fear” trade in Apple, Inc. (AAPL).

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All AAPL did prior to earnings was pull back to support at the green trend channel line. That was your cue to buy the stock ahead of earnings and benefit from the 50-plus-point pop!

What did you have to fear?

In a recent newsletter, I said, “First off this IS the kingpin of the market, this IS the name that the market makers go to to prop the market. This IS the name that the market goes to save the indexes. This IS the name that when it goes up it takes everything along with it and here we are selling off into earnings. Because of that an old adage comes to mind.

The rule of thumb is if they run ‘em into earnings they tend to sell ‘em off on earnings. The flip side is if they sell ‘em off into earnings they tend to pop ‘em on earnings, so we’ll see. You can’t tell me they are not selling it off into earnings now, can you?

Keep in mind it is just a rule of thumb and no guarantees. Besides, given the state of the market (on the verge of another leg down, the C wave of an ABC correction, if you will), there might just come a point where they will use this name to “save the market,” so be aware of that, the buzz would be (when)“magically” AAPL takes off. We’ll see.”

NEXT: Playing the Big Recent Move in Priceline (PCLN)


Now let’s look at Priceline (PCLN), which went from $680 to $727!

That $680 level was the zone to “do the thing you fear the most” and where “the death of fear was certain.” But what did you really have to fear?

The stock had been stairstepping down in classic Elliott Wave form. The stock was in grand slam to the 50-day average mode. We gave our paying subscribers a heads up about this when we talked about what happens to follow the out-of-control screamers if the markets staged a C wave. So our paying subscribers were already prepared in advance of this, so you see you really had nothing to fear except risk of loss after the stock had already been pummeled.

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So that said, what was the fear that kept some of you out of AAPL and PCLN ahead of the news?  Fear of losing usually is at the top of the list, and rightfully so, but there is no way around it.

The moment you take a trade, you are at the mercy of the market and have no control because you have no gains to manage, just risk. The bottom line is that the only way you will overcome that fear is to be willing to pay the price if you are wrong. And you know what? You will be wrong, you will wipe out and fall off the horse, stocks will move against us. That’s reality and a fact. Remember, what you resist (in this case, letting the fear of loss keep you from doing something) persists.

We’ll admit AAPL and PCLN were extreme examples, but you get the point we hope. It’s really all about how you manage that. The way we do that is to accept that there will be times when we’re not perfect, as nobody on the planet is. So to all of you out there who are trying to be perfectionists, you’ll never make money consistently that way.

So for us, the next time something like AAPL and PCLN stare us in the face, even if we get knocked off the horse and wipe out on the trade, we have two things going for us from that point forward. One is trade size and risk management, and the other is Rocky Balboa, who said, “It ain’t about how hard you hit, it’s about how hard you can get hit and keep moving forward, how much you can take and keep moving forward, that’s how winning is done.”

Which brings up another quick point to those of you who at times are down in the dumps, be it in the stock market or life in general (we all are at times, so you are not alone, and don’t ever forget that), just remember what Rocky said above.

By David Grandey of

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