There are two videos below, as DPW set up beautifully, a “break of support” and a rocket ship back up and thru – SPRING.
Friday morning in premarket trading, I sold my position in TOPS into the big surge. The buy of TOPS on Thursday (shown here) was, guess what, a spring setup. Everything I do in markets (long-side) is springs or absorption – on all time frames. On Friday morning, in premarket comments, I included a chart of DPW, which had an excellent solid support area built, from 2 excellent areas that I liked:
“The crypto stocks, in the bigger ones……………(long), there have been big preliminary support areas. I’ve been talking about them, and trading, no position currently in the others. And DPW, still some opportunities for short-term trading.”
I laid out the exact chart in premarket comments, with the support area drawn in, which I was focused on. And the second chart below, is the result of that outstanding spring trade setup. People were freaking out when DPW broke support. But in the first video, when DPW had been halted, before the “break of support” even had occurred, I explained why that “break” was my focus, and would be an excellent setup – don’t freak out, take the other side. The second video was done in real-time, when DPW had broken into the new low ground, and I was trying to buy it. Yes it was a spring. Amazing and baffling why more people don’t attempt to learn this excellent trade setup.
Also talked about is GLNNF, SPI, MSRT, TOPS.
Hello Scott. Got couple of chart skill questions. Secondary rally being the first question and one on stop loss.
A) In real time. How do you go about choosing where to buy into a secondary rally ?(how and where to choose your entry point)
How do you go about setting up a mental or physical stop when a 2nd rally trading setup fails?
B) Can you talk about moving up a physical or mental stop loss when prices moves higher as time progress?in other words(How to move up an stop loss on something that resembles an uptrend?)
A) Remember there are 2 parts to this. The secondary rally bounce and the setup after the secondary rally low bar is broken. They are 2 very specific and different setups. Anyway, you don’t really choose, so to speak. You just wait and watch IF it sets up very well in the latter situation, OR you can be very aggressive, and play for the bounce itself (I do at times). Meaning this – a secondary rally is one of the highest probability events in markets. So the probability structure is awesome, therefore I get aggressive about it sometimes, and literally buy right into the spike down as it’s falling – and look to get out very quickly, the bounce. All day long I watch for them. It’s an awesome benefit/skill to get very good at spotting upside EA. Because we know (I know) that the next step in preliminary supply is the automatic selloff, and then the low, and then the secondary rally (bounce). You could do very well in markets just doing that specific trade, but it requires a lot of “training”.
The 2nd one is the secondary rally low bar break. But waiting for the setup – first it has to break that low, then like with all trades, start adding up the probability factors into it – 123 push, another lower support, does it have a wide enough parameter to allow you to exit with (for me on a short-term trade 10+%), is the trend/mpmentum still strongly up, has it had ONLY 1 EA or several (context). The more yesses, the higher the probability.
B) I’ll give you my take, but using trailing stops is my biggest weakness. And to say, it is one of the main reasons I almost always just try and sell into strength. The situation which I’m actually quite good at is when early on I decide that the situation has such potential that I am going to sit with it. But shorter-term trades, I hate selling into weakness, I almost always botch it, and just did that with OTIV yesterday. I was up 50% and ended up with a scratch on 1/2 of it. Amazing. Remember my discussion about “hedging”, but using it in tricky ways. So my advice is – find what is most comfortable, likely a combination. Sell some early on into strength. It gives a little breathing room. I did that today selling some TLT puts (too early). Learn to set a certain % pullback, maybe 15? Understand secondary rally failures pretty well, they are VERY tricky to work with. Learn 123 tops. You notice, most of this is about NOT using trailing stops?
Not sure if I grasped your answer for the question A. Maybe, you can do a visual explanation?
Thanks Scott.
Sounds good.