Thunder dome

[Adam Lewis 64]

Date: 11 January

Stock: NIO

Strategy: Fallen Angel 

Why did you take the trade?: This is again a strategy I am currently looking for. With my watchlist now I'll watch in the first 5 mins for trades setting up like this, and with a 6 x stock watchlist there are usually one or two (on Friday, actually, all six set up like this! But I took NIO). I took three partials, one at 2R, another at VWAP, and sold the remaining shares after another continuation up. 

Long/Short: Long.

Entry: 56.70

Risk: 15c

S/L: 56.55 (loss of a daily level)

How did you feel after taking the trade?: Pretty good, because this is exactly what I'm trying to do! For the first time in my (short) life as a trader I feel like I actually have a plan! I am going into the open watching for very specific things, and I am learning to react well when I see them.

What did you do well?: Waited for an entry signal after seeing a double bottom off a support level.

What can you improve on?: I always think I need a better partialing strategy. I like the VWAP partial, but I am still trading small size - there comes a point where partialing combined with a 50c commission isn't cost effective! I do 50% partials usually, should I be partialing 25%, 50% and then remainder? This is a blind spot right now.

Questions?: The hardest thing with this set up is always going to finding the bottom and keeping stops tight. There is an element of knife catching going on! The truth is these stocks don't always reverse. I've seen them before just drop and then go sideways. 

Edited January 12, 2021 by Adam Lewis
Forgot to put the date on

[Adam Lewis 64]

12 hours ago, Michael Sanchez said:

Stock: NIO

Hello Michael - a quick question with both this and the MARA trade above it. You don't seem to be partialling out at the moment. Is there a reason why not? At one point your NIO trade seems to have hit almost $2 a share profit and yet you didn't begin to lock in profits. Are you waiting to hit a fixed R before selling? In the first 30 mins of the market stocks will move in a very broad range, I find, and to be profitable you might want to consider setting some partial targets on your way up. Either way both of these trades were very well put together, the entries were excellent. I'd now be looking at exits, in the case of NIO partialing on the way up and in the case of MARA having that exit as a partial leaving some shares to ride on up.

[Adam Lewis 64]

11 hours ago, Michael Sanchez said:

So, I have a hotkey that predetermines my stop in order to achieve 3R. While I was in NIO, I did reach 2R but I did not get out because my plan was 3R. I know that if I start taking profits early that it is going to create bad habits. Occasionally, I will get out at 2R 1/2 but never at 2R. My plan is to take 3 trades a day. If I lose 2 trades in a row I will lose 2R and that is my max daily loss. However, If I get 3R on one trade and lose 2 trades back to back I still have 1R profit. If I start taking profits at 2R my whole system is going to be thrown off. As stupid as it sounds I would rather break even than get 2R. Hope this answers your question. Thank you

My apologies, I see you answered this already! 🙂  So, yeah... I guess then I'd suggest trying to really tie down the risk to give you the ratios you need. In the event and given the time of day and the way stocks will range on the open, you're setting a big old target here. A $2 move on a stock worth $65... you've made more than 2%. Later in the day when stocks are more likely to spend a long time trending perhaps you can begin to extend the Rs a little more, but in the first half hour it's very volatile. Have you considered something like Thor's camarilla pivots as a way to provide a more staged set of targets? 

[MattfromNZ 55]

13 hours ago, A_aron said:

In this instance I say riding the stock  in the opposite direction.[I have seen often that a stock will  break in one direction then reverse in the opposite direction early in the morning. Im still working on the set up and criteria for this play. I apologize I am not using the term reversal correctly.
I didn't consider this a 5 min ORB b/c the first 5 min candle was a doji additionally I don't take ORB with wicky candles. About 45 min later there is a nice 15 min ORB though.  

I am still working out the criteria and circumstances for my Directional strategy. It is basically trend trading using volume price analysis. It can be used on short trends or long trends. However its more effective on longer trends than shorter ones. Ill use oscillators and directional studies  occasionally for confirmation. 

Ok, thanks. So you're not following established proven strategies, you're trying to make up your own ones and then test them to see if they work? Sorry for the questions, I am just trying to understand what you are doing and why.

And I guess my point with the ORB was not that the particular trade was good for an ORB, but rather to point out that if it wasn't good for an ORB, why would it be good for your reversal strategy?

[MattfromNZ 55]

12 hours ago, Adam Lewis said:

I'll post some of my own trades from today shortly as this is now the one strategy I am trying to nail and so far I've done pretty well with it, but check out the fallen angel strategy (there's a tradebook available I think). It's a very short term hold, and more of a momentum / scalping strategy than anything. I'm interested in it (to the point that right now it's all I do!) after noticing the tendency of stocks on my watch list to flush right on the bell, sell for 2 or 3 minutes, find a bottom and then bounce right back up again. If you can find that bottom and keep stops tight, your R:R is really strong. I'll post something shortly showing how I played NIO today and PLUG on Friday last week using this strategy. It's not perfect, a little risky and needs quick thinking.

This is cool, it is definitely on my list of strategies to get familiar with. I have heard the rising devil / fallen angel being talked about in the chatroom. For someone who focuses on trading primarily around the open it makes sense. Glad you are getting this strategy down, you can help us with it.

[A_aron 27]

Date: 1-12-20            
Stock: PLUG
Strategy: Double Bottom
Long/Short: Long
Entry: 62.22
S/L:  61.71
Risk:  .51 [ did not think it the risk was this big]
Plan of attack:
-Go long and exit completely at pre-market high. 

Why did you take the trade?:
-          Double bottom on the 1 min chart.
-          Gapped up in the pre-market 

How did you feel after taking the trade?:
-          Didn’t like the amount I was risking.
-          Anxious, b/c TD has this stock on no shares for short, So I couldn’t partial out and have a stop loss at the same time. PLUG moves quickly and I wasn’t to thrilled about having no hard stop in place.  

What did you do well?:
- waited for the right R:R, hit 2 and 3 R.
- Recognizing the Double Bottom and acting quickly.  
- stuck to my plan!

 What can you improve on?:
-           Smaller share size for this risk size. Yes its not a irresponsible sized risk, its just more than I would like.

Question?

Could this have been a fallen angle play also right at the open? [ 1^st and 2^nd candle on the 1 min chart]

-          I was considering it but I didn’t have  knowledge about it to be confident in the trade.

Chart: 1min,5min,15min

[A_aron 27]

3 hours ago, MattfromNZ said:

Ok, thanks. So you're not following established proven strategies, you're trying to make up your own ones and then test them to see if they work? Sorry for the questions, I am just trying to understand what you are doing and why.

And I guess my point with the ORB was not that the particular trade was good for an ORB, but rather to point out that if it wasn't good for an ORB, why would it be good for your reversal strategy?

Correct!... no need to apologize for asking a question. Honestly this strategy is better used around or after the 2 hour mark and its one Im starting to mov away form. 

Ah I see. To be honest I didn't even consider that. Thank you!... my thought process was if it didnt break out then I will ride the price action in the opposite direction. Like I said earlier I haven't been using the term reversal correctly. Think of it as riding a wave in a direction . Then I get off before/ when it starts to break. 

Am I answering your questions?

Edited January 12, 2021 by A_aron
added more

[A_aron 27]

Adam,

For your fallen angle and rising devil If you don't mind me asking what is the Indicators, confirmation and  entry signal for these trades? This is defiantly a strategy I would like to get good at.
- the trade you posted looked clean! Good job
 

Regarding your partial question I wont be much of help as Im still learning what is the most effective/profitable approach. 

[MattfromNZ 55]

2 hours ago, A_aron said:

Am I answering your questions?

Yes Thank you!

[MattfromNZ 55]

This was a successful trade, but also a missed opportunity (FCEL, ABCD, $20 Risk, +$34.90):

I also like to document when opportunities arise from my watchlist, but I miss them. This is a missed 5min ORB on BLNK this morning:

FUBO, ABCD, $20 Risk, +$40.68

Happy with this trade, except I need to sort out my partials so I get more gains:

 

[MattfromNZ 55]

2 hours ago, A_aron said:

Date: 1-12-20            
Stock: PLUG
Strategy: Double Bottom
Long/Short: Long

Nice trade man, although not gonna lie the amount of noise in that first 5mins would have made me nervous.

[Michael Sanchez 53]

On 1/11/2021 at 2:26 PM, MattfromNZ said:

I got 3 ABCD trades here. I am kinda struggling to find good patterns with good risk/reward, what do you guys think?

FCEL, ABCD, $20 risk, +$7.56

GME, ABCD, $20 risk, +$3.07

NIO, ABCD, $20 risk, Break even.

 

Man your ABCD patterns are Awesome!!! The FCEL trade was amazing in my opinion.  I can learn a lot from you.

[Michael Sanchez 53]

@MattfromNZI love your trading style. It is really clean and clear cut. In terms of your partials, how many do you usually take in a trade? and does it eat up your profits a lot or not really?

Edited January 13, 2021 by Michael Sanchez

[Adam Lewis 64]

10 hours ago, A_aron said:

Adam,

For your fallen angle and rising devil If you don't mind me asking what is the Indicators, confirmation and  entry signal for these trades? This is defiantly a strategy I would like to get good at.
- the trade you posted looked clean! Good job
 

Regarding your partial question I wont be much of help as Im still learning what is the most effective/profitable approach. 

Hi Aaron - I'm currently focused exclusively on fallen angel trades (going long), simply because CMEG rarely has shares to short in the $20-$100 range I'm working in and it's simply easier then for me to focus on only fallen angels. Maybe once I move to a broker with more shortable shares I'll also explore rising devils (my plan is to eventually move to IB once I'm over PDT).

My criteria are fairly simple, but the key is keeping stops really tight. In general I'll be looking for (and this all happens on a 1 minute chart):

1. A stock that is green for the day pre-market, showing overall strength. For stocks red for the day, for me there's nothing to tell me they aren't simply going to continue to sell off and trend down. I therefore build my watchlist mostly from green stocks which have a catalyst.

2. A very sharp move to the downside, which represents irrational selling, in general as people sell positions and take profit following a strong move up pre-market. By the point I enter the price will be far extended below VWAP. My ideal entry will first show 2 or 3 strong red bars on the 1 minute chart. I really am looking for stocks that are over extended and ready to spring back.

3. My entry signal is then a bottoming candlestick - a spinning top, a hammer, something like this, and then ideally a green confirmation candle coming next. I aim to get an entry as that candlestick breaks above the top of the previous bottoming candlestick. Things like pre-market levels add further confidence.

4. Stops should be below the previous candle stick ideally, but if this is already extended either consider setting a stop half way back down it, or not taking the trade at all if you've already missed the reversal. Once in the trade you're looking for a very quick resolution. If in doubt, get out, don't be afraid of cutting a trade off if the price action doesn't match what you expect. Don't sit in the trade waiting to either hit profit targets or stops - in my view if it starts to wobble sideways you're more likely in an ABCD downward pattern than a reversal and given the uncertainty it's better to protect your capital than wait to find out. 

5. For me, I'm aiming to scalp a move back up and partial out along the way. Generally a broad target is back at VWAP, but I'm working still on setting targets and given its a scalping strategy I don't always set clear R targets as I go, I'm more interested in just keeping stops tight.

It remains a work in progress! Trading this one single strategy, I've had eight green days from the last eleven. Still not good enough, but then my trading has been imperfect and with better execution I hope to improve further.

It's worth adding as an addendum, I am only now finally learning the importance of having a strategy! Sounds bonkers to say, but yeah...

[Adam Lewis 64]

8 hours ago, MattfromNZ said:

This was a successful trade, but also a missed opportunity (FCEL, ABCD, $20 Risk, +$34.90):

 

You're doing so well with the ABCD set ups Matt! Great to see. Keeping disciplined and sticking to a strategy is so important, and you're doing a great job of this.