Trade Review: Netflix- When its a scalp vs when you can go for more

If you read my latest blog post about "Trading on Emotion", you'll have some background on the emotional mistakes I made on this NFLX trade from Friday, Feb 19th 2016.  Comparing it to today's trade Feb 23rd 2016.  They both were short set-ups, one dropped about $1 the other over $2 on the initial move.  Besides the monetary amount, there were certainly big differences in the charts.  The trade from today where I had over $2 in gains was what I consider really easy. So easy in fact, my add dropped the second I added to my short position.

Below is the intraday chart and 30 minute chart from Friday

What do we notice from these charts.  My idea was correct, but price moved right into a bigger time frame support.  My idea in my head was if it could get thru this support it would be a home run trade.  Obviously what I want to happen compared to the reality is a completely different story.  Home runs and bigger moves happen when the chart is clean and doesn't have areas of support like this.  Compare this to the next set of charts that I am about to post, you will see why I had much better success with this trade.

Netflix ran right into resistance on the bigger time frame.  I was watching level 2 and how the stock reacted every time it got up to this level which confirmed my thought process on this stock that it was going down.  As we can see the 30 minute chart had much more room to drop until the next support (which it finally found at the end of the day)  The bear flag I added on was almost too easy looking back on it.  As soon as I saw a red candle, (some weakness and a confirmed risk) I was able to add to the position which worked immediately.  I have always thought and said, flags move much cleaner when it has room to run and not stuck between support and resistances.

Anyone that knows anything about technical analysis knows that stocks move from support to support and resistance to resistance.  Stocks that have the most room in between will be the best traders and move the cleanest.