''Always seek for reasons to avoid a trade'' — a real-time lesson witnessed in my gated community.
$Borr Drilling Ltd(BORR)$ was a reminder why having a hard rule of avoiding trades within 3 days of earnings matters. No matter how clean the chart looks, you need enough duration cushion against an earnings gap with binary outcomes — almost like a casino game. I stayed patient and avoided proposing the May 18 entry on the triple base-on-base setup because earnings were due in T+3, which fell outside my initial partial profit-taking window — limiting the ability to size down risk even if the trade moved in favor beforehand.
My thought process on the chart after it moved on 18th May is the better reward-risk trade post earnings that one could aligned is a < 1 x ADR% gap down to rising short term MA (10 or 20) for a quick reset and take on any higher low bounce for subsequent session.
“The first rule of trading — though there are many — is to avoid getting trapped in situations where you can lose substantial money for reasons you don’t fully understand.” — Bruce Kovner, Chairman of CAM Capital
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