There have been 3 huge runner stocks this week – ZSAN, RKDA, and DXR. I somehow lost money in ZSAN, had a couple of great trades in RKDA, and 2 more excellent trades with DXR on Thursday. A couple of points, yes I lost in ZSAN, but I took the loss quickly, it would have been a good trade as it bounced big out of the area I was buying, but this is trading. Take the small loss and move on. I know I’ll make it up soon. Also, know your SPECIFIC trade setup, within the TECHNICAL CONDITION of the stock you are monitoring for setups. I’ll get more into that with subscribers. And also, a #1 and a #2 EA are both tradeable events, but understand they are also part of the PROCESS of tops and bottoms – ZSAN, RKDA, DXR. So if you are long use that recognition, and if you are looking to short, also use that recognition.
The DXR details are in the charts. I have different setups for different conditions, the first buy at 12.97 was to me a reaccum area, and it turned into a huge runner. I lucked out. Also notice I always plan my trades exactly, right or wrong:
Initial 1/2 profits, and move stop to scratch, stock soaring and halted:
The thing was flying, and I was trying to “guess” where the top would be. Of course I sold too early, but look at the last chart below, that’s where I came up with 19, pretty good guess….:
…as the stock started putting out the huge red volume and the EAs:
The cocktail glass represents where the StockTwitters knew DXR was going to 100, and they would all be rich:
I used the EAs to setup my next play, sold it way too early, but I had my plan mapped out, with the SPECIFIC trade setup:
But as I was watching it play out, I was also very cognizant of the potential for the upthrust, exactly what it was:
thanks scott , i love those step by step charts .My god you trade like a machine scott š
Visao, I have no talent, no IQ, but I work my rear off. And yes, robotic is an outstanding way to do this. Staying away from guessing. predicting, it is 100% trade setups and probabilities and exiting and being prepared.
Hi Scott, so the first DXR trade setup (12.97) was reaccumulation. The second (17.01) was EA, a 123 selloff?
Yes, to me Dave. Also, it’s hard to pass on all of my experiences which I bring to each trade, but that thing was so strong into there, I “knew’ it had another bounce in at a minimum. Look at all the setups in AMTX today. I seriously believe people can do this thing well as a “part-time” trader. But one then must study trade setups extremely diligently. Start small, cut losses quickly, focus only on the best setups, only trade with strength (any time-frame), and focus focus on believing in probabilities.
By there I mean the second trade.
Thanks Scott
Awesome post bro… lovely lesson… the champagne glass and fighter jets add a nice panache š … good stuff my man… thank you.
https://www.tradingview.com/x/3NefU1PO/ 12.97 entry point.
I don’t see the 1-2-3. would that be an example of buying at an area instead of waiting for the 1-2-3?
Yes, exactly, it is reaccum, NOT a bounce trade, to me.
A)Speaking of bounce.
https://www.tradingview.com/x/lH33T8ps/ a bounce question.The bounce is constituted by 4 bars in which 2 of those are green(middle ones).The angle was measured(line at an angle) from the low of the 1st bar and the high of the 4th bar.
Ignoring context and time frame.I’m trying to understand. If a bounce less than 45 degree angle like the one on this chart may not really be a bounce(just one or some random(s) movement(s) to be ignored on the 1-2-3 counting) is it safe to say that?In other words. can we ignore anything less than 45 degrees when counting for a trade-setup such as 1-2-3?
B)Just to recap and to remove a question on EA on a longer time frame.(after break)
If we are trading something on a longer term we wait for a break of the support. To clarify let’s say 1 Hour chart as reference. On the 1H hour chart we wait for the EA 1-2-3. On the 3rd EA we switch from the 1 Hour to 5 mins(let’s say). Now we wait for the 1-2-3 on the 5 mins. Buy on the 3rd EA of the 5mins and then switch back to 1H chart and sell at a resistance on the 1H chart? (Is that a good approach?)
Let me know If you don’t understand the question.
Thanks Scott.
The problem is you can’t ignore context, ever. That is part of the probability structure, also can not ignore time-frame. That 60 minute chart is too compressed Raphael. I can’t make any judgement from it. As far as angles, I have never thought of it that way, but it doesn’t mean there isn’t something there. If something should be deemed a bounce, for me, I need to know the higher time-frame trend. That to me is nothing, no bounce.
Also, I want to make sure that you make these setups yours, where you feel comfortable. I have done the “back-testing” on these myself, so I know they work, I know the probabilities, but I know “exactly” what I’m looking for and trying to recognize. Trying to do this exactly my way won’t work for you. You want to really make it yours. Use my work and struggle to hone these to your advantage. I’ve done the heavy lifting part for sure. Time-frames and context are a huge part of this. It sets the CONDITIONS. The specific trade setups are only applicable to certain technical conditions.
Also, please step back a bit and try to focus much more on making this simpler, focusing on developing a trade setup, much less focus on the analytical. You will only get better at that over time and seeing it play out with tONS of chart examples, real-time and rear-view. Please only focus on strength and momentum, it makes this so much workable. So the setups within the strength. Develop a break out system, and/or a reaccum area in the “upside”.
B) That approach sounds workable, kind of what I do, but again with the context. Because you are more likely to get a 123 bottom on the 60 preceded by a bigger top, big top, maybe a 123 top, maybe an upthrust of that. Also, look for something else to go off of for where the #3 could be a spring – like a previous gap low, or better yet, “the low of the low bar before the big pushup or the big top. Realizing this is a 1 minute yes, but here is an AMTX trade I did on Friday. I was actually discussing this one in real-time with a friend on Skype at the time. Continued..
Here:
Why 2.33 for entry? What is the setup? Why 2.60 as the exit parameter. I ended up selling 1/2 2.48, other half at 2.56. The 2.60 parameter was a BOUNCE trade only. The 5 minute trend was down, maybe even the 60:
Nice example. with your friend on Skype.
Thanks for that one.
https://www.tradingview.com/x/uBipFbhB/
Here is the same chart but zoomed out. I believed I had taken the context and setup into account
(At least I hope). Having said that. It worked out the 1-2-3. However I don’t know if that is a 1-2-3-4 or just a 1-2-3.That’s what I was trying to discover.
I had seen many ambiguous bounces like that one under similar conditions. That’s the reason I was trying to figure out. So to use that knowledge to judge the setup. I believe you have way more knowledge and experience dealing with this situations.
Maybe I over-analyzed .But that’s how I learn and increase the probability to remember.
Hehe is just a setup thing . You have to put many conditions in place at the right order to improve the % of information you retain..
I want you to point out that the 123 bottom, or 123 with “terminal shakeout” is a trade esetup. It is not analyzing, it is a specific trade setup within specific conditions. It does not remotely mean that every bottom (or top) does that. It is just when we can recognize this setup with certain conditions. I am not doing this business to analyze, I’m analyzing to attempt to spot trade setups. The initial analysis gives me what I believe is the condition, and then I am looking for certain things to show up. So with silver there to me it is a 123 with terminal shakeout. The big SOS out of there is a probability booster in real time, then the next reaction is the next opportunity.
“The big SOS out of there is a probability booster in real time, then the next reaction is the next opportunity.”
It finally makes sense why you care so much about SOS.I believe it can help us stay in the trade for longer.
C)Does the SOS also boost the probability that a real trend will take prices much higher is more probable than not to jump start? Also it boost the probability that lower lows is not likely to take place for at-least a little while?
A)I occasionally see that opportunity I’m trying to understand on how to go long on a retest after the 1-2-3.
“then the next reaction is the next opportunity.”If you were to attempt to go long on that reaction.
Would you switch from the 240 min chart to the 5 min then wait for the 1-2-3 after break, then go long and then return to the 240?(the retest after the big SOS)
B)from 240 to min 5 is that too much of a time frame gap?or maybe should I use more than 2 time frames?
Seriously. Time frame is a killer to understand.
C) It depends on the overall setup, but yes it is a probability booster of a bigger rally than just a bounce, but again it needs an overall structure, on at least a 60 minute chart. That silver example had a couple things going for it.
A) I use a 1 to hone into an entry even on a bigger picture. Also a 5 and a 60. I don’t use a 240, but it may help you so stick with it. If you’re using a 240 then you need to see the overall setup on the 240, the 5 is just to try and see if you see the little subtle signs with the volume and price. Basically if I believe the bigger setup is close, than I know the 60 minute is real close, and I’ll stick with a 5 for quite a while, just to follow it. And switch to the 60 to see if the 60 volume is picking up out of the low. It should be.
B) No right answer there, whatever is the most comfortable, sometimes you can see things more clearly on a different chart. It really depends on your comfort level. Keep working with them. I stick to 1, 5, 60, daily, weekly, sometimes monthly charts.
Regarding your answer for the question A.I’m trying to understand,but i feel that I need the visual aid from a video.
Can you demonstrate the procedure of switching time frames for longer term trading and shorter term?
Once again thanks Scott.
Yes I will.
Question about bounce and one on trade setup recognition and probability analysis.
A)This a question solely focused on bounces. Can we say as a general rule. The higher(more significant) the EA’s bounce is. The higher the probability?
B) https://www.tradingview.com/x/jYp9lZfT/ BLue box area.
Do you recognize any trade setup happening for swing or long term trade at the momentous ?(or a trade setup had started a few bars or moments before the blue box)
If so, is there any other condition(s) that could had happened for an improvement in the probabilities?
“Yes I will”
Thanks man. That’s very effective.
A) I don’t understand the question. Sorry.
B) Who’s there? Two things. 1) to me, there is no setup at all, I can’t see any setups at all with any high probabilities. What’s the trend? Accum or distrib? Or reaccum/redistrib? SOSes, SOWs? Absorption, exorption?
And 2) Please focus on things in uptrends, or upside of accum, up momentum, angling up, at least to be looking to get long. Get the conditions on your side first. GRUB, NVDA, INTC, SQ, LOXO, NKTR, etc. Some of those are high priced, but what about DRYS, IMGN, there are swing trades in there. The point is, strength begets strength, shorter-term to longer-term.
https://www.tradingview.com/x/oPEhV3tG/
Would it make sense to use this blue line(Connected to supports) as a means of judging strength?meaning the more a line is vertical the buliishier? For example If we compare a 50 degree vs a 45 degree. We would say that the 50 degree angle is stronger? If so how about a 85 + degree is it bulishier than 50?
” GRUB, NVDA, INTC, SQ, LOXO, NKTR, ” all suitable for any time frame trader?If so would AAPL and NVDA be another example of a strong stock?
I mean’t to say BAC not NVDA.kind of tired after work sorry about that.
Forgot to ask. On this stocks you mentioned above such as Grub and NVDA. If there is no to low volume on the 1st ea of the 1-2-3 setup after a break. Would you still take a shoot?(in other words are the odds still good to be worth while taking a shoot?)
No I would not, because it is not a setup. That 123 is a specific trade setup, how do I know a #1 is anything.The #1 is part of the whole process.
I think that a trendline can be a good way to view trends, tho they can be really tricky, to me, to work with. They are good for helping to get us thinking in terms of trends. When I use trendlines, I like to use them in terms of trend channels.
As far as certain angles, higher angles, showing a stock which is stronger, and using specific trend angles, I have done no work on it, so I can’t answer that. I don’t see how it would work, or be helpful. You may want to attempt to verify that for yourself, but all the stuff like context, time-frames EAs, change of character plays into it. For instance, the end of a move usually has the steepest angle of an overall move.
Yes AAPL to me is part of it. BAC is not, I just don’t view it as a solid strong stock. Look at the long term chart, not the same thing at all. Could be a good trading stock tho, but not the same category to me as the big winners, all time highs, or 15 year accum areas. I do not believe BAC is accumulation.
I use trading view.
“When I use trendlines, I like to use them in terms of trend channels.”
Just wondering if any indicator that would help me judge the strength of a trend?
How about moving average for judging trend?If so, how many days average.
any other indicator for helping eye balling a trend for a quick judgement?
The best indicator, and I’m serious, study 1000’s of charts of winning stocks/trades/markets, that is the very best way of all. Learning to see and feel this, and building your own way of doing this. You should go back and watch those fairly recent videos about cup and handle, and runner stocks, high priced runners, trend. The strength almost always comes from below, and then just judging with price and volume heavier on the rallies and breakouts. I don’t use MAs, but you may feel comfortable with them. But DO NOT use them conventionally, it will not work. You need to find a way to use them in a unique manner. My buddy Michael uses TA, but basically in reverse. But if you want quick judgement, just look at the chart, and make sure no huge EA at the top.
“huge EA at the top.”
So as a general rule the bigger the EA the more bearish?If so the bigger the volume the more bearish(bulish) the ea?
Judging how bearish(Bulish) an EA is a weakness of mine.
Can you someday do a comparison and contrast video between a slightly bearish and super bearish EA?(slightly bulish vs super as well)
Thanks man.
A-RE)
Every EA has a bounce.
The EA is composed of the down portion and the up portion(bounce).
I was trying to figure out if the strength of the bounce portion of the EA is something that affects the probability.
http://www.tradingview.com/x/PbrTr8X9/ basically I’m thinking of those two possibilities. I’m trying to decider if the lower drawing has a greater 1-2-3 setup probability due to the bounces being more significant.If so what’s the psychology, logic or reason?.
If you still confused let me know.
“The point is, strength begets strength, shorter-term to longer-term.” May you expand on that? I’m trying to understand. you are saying that the strength starts on a lower time frame and than spreads out to a bigger one?meaning it is only reflected on a bigger time frame after the smaller time frame bullishness had proven itself?
The EA is the bottom part, not the bounce. EA – ending ACTION, it’s the action around the lows. With my 1 minute bounce trade setup from the #1 and #2 EA, I need very little bounce, I just want to see it, bigger picture stuff, I need to see a bigger bounce. That is the proper context. I am trying to get you to think only in terms of how the analysis helps your trade setup recognition.
Strength begets strength is just meant to think and force ourselves to believe in strength so to speak. So our view should be to not be afraid of strong stocks, stay with strength, avoid weakness – overall.
“I am not doing this business to analyze, Iām analyzing to attempt to spot trade setups.”
this makes a lot of sense to me……good way to put it
I am still trying very hard to understand the “analyze” part to spot the setup, but with your analysis I am getting the setups pretty often now. Not enough yet to have that “income” part, but at least I am making more than I am losing, which is a definite improvement over last year.
Thanks!
It’s why people who think they’re really smart are the worst traders, because they spend all their time analyzing. The best analysts are good traders FIRST.