One of the most confusing things I see on a daily basis is people shorting the strongest momentum stocks. This morning, somebody on the stream was shorting Solar City.
I don?t know this person, their time horizon, or their strategy, that?s not important. It turns out this person likely made money off the trade, also not important. What is important is that shorting the strongest stocks is a low probability trade.
I took a look at how Solar City has performed since it broke out on Tuesday. There has been 2 green hourly candles for every 1 red candle. Furthermore, the average high-to-low on the red candle was just 2.0% while the average high-to-low on the green candles was 2.9%.
Who knows how many times this person banged their head against the wall before they pulled a profit out of this stock. The point is, hard fought profits are not more valuable than any other type of trade. Making money in stocks is hard enough, the bank doesn?t pay you any extra for being a hero.