Fulcrum Shift Trading ^

http://www.screencast.com/t/yzEiKB5uh (Click to enlarge)

Above is a follow up to the 15 minute chart with a reversal pattern (Gartley/butterfly) which I 1st posted in yesterdays blog. BRCM (Broadcom) is reaching previous resistance and we now have a divergence forming over the past 3 trading days further confirming a POSSIBLE reversal – nothing is ever for certain which is why I always advocate risk management, position sizing and probability forecasting and you can achieve these objectives by trading the optimal number of shares or PUT contracts if you prefer the leverage and risk control of options. The m3-  Money Management Modeler does a wonderful job addressing all 3 of these dynamics so that at the end of the day, we as traders DO control the only element of trading over which we have complete mastery – how much we are prepared to lose on any given trade.

I was stopped out of the trade on BRCM yesterday with the smallest of losses (-.10) but had you entered shortly after my post yesterday, you would have indeed profited about .50 – .70/share depending on when you entered the trade short. On my latest trade as of today, I have purchased 10 –  Jan 2010, 31 (strike) PUT contracts for a price of  2.87/contract. This will allow a bit of time for this trade to play out and  hopefully reverse given today’s euphoria in the market courtesy of some earnings reports and the breach of the psychologically important DOW 10,000.

Fulcrum Shift Trading