05/29 – setups that work for me (personal post)

Dear reader,

First of all I want to thank you for taking some time to read my blog post. Much appreciated! In this blog post I will try to explain which setups are working for me, and which I try to avoid. I will also talk a little about myself, those who have helped me and which setups I used to play or played last year.

TRADING BREAKOUTS

My main focus late 2015, until the second half of 2017, was the breakout. I also did swing plays on contract winners, earnings winners and positive court rulings. These type of setups made me good money, fast! The basic idea was to find a stock, up on news (preferably as mentioned before), up on high volume (8 million had my sweet spot) and heading towards either a 52 week high, 6 month high or 3 month high. My swing plays were mostly similar, but at the end of the day (as where I normally enter a trade in the first 30 minutes of market open).

What changed was the fundamental basics of the United States. Although the market was strong, I could see cracks here and these that were quickly fixed. From early 2017 I saw a quick change of how breakout stocks behaved. At first they met a wall of sells. So when a stock was breaking out, after let say 10 cents, a wall of sellers started to attack the stock and stopping it in its tracks. From around early summer, these same stocks started to crash 20 or even 50 cents in about 5 minutes, losing a full week or even month of hard earned cash in a matter of minutes! I started to panic and saw my life passing through my eyes. I was scared, because my bread and butter was not working anymore.

After a few months of losing quite a bit of money (although I cut losses quickly, losses do add up!) I started to look for new ideas. I found this at Investors Underground. Although I was not unfamiliar with short selling, a lot of the things traders like Alex, Dante and Eric said made a lot of sense to me. I started to learn new setups and how to play them.

Before, I shorted either a gap up or a gap down to a certain support or resistance level. Mostly on the first day. This did not work for me, because most of the stocks they were playing, they had an affinity with. The only play that did work for me was the ticker ZN, which I shorted before, so I know they were garbage and would ultimately fail.

HOW I BUILD MY WATCH LIST

So, my basic search is very simple: Average volume must be higher then 100,000 and a stock must be up at least 10% for me to add it to my list. What I do is, I sort them per volume and look if my requirements are met.

The other part is technical analysis. I review the support and resistance levels and plan accordingly.

I enter a trade either when a certain level (VWAP, support, resistance, 50 EMA ect) has been proven and use a fixed profit level (I would like to keep this to myself, sorry!) and scalp a trade or, and that was the market like recently, is follow the trend. I have learned to to be greedy and I am a complete chicken shit (sorry for the bad language). I cut losses quickly, because patience is not my best skill.

Simple, right?

MY FAVORITE SETUP, THAT IS WORKING FOR ME NOW

Charts, or setups, that work for me now, are mostly overextended charts. See some examples here: ARQL.

ARQL over extention

Although I am impatient, when I am in a trade. I stalk like a cat when it comes to finding the right setups. Look at HEAR and I that smoked short sellers like crazy! Please beware of that! Wait, be patient, attack then no one is looking. (you do need volume though!).

ASNA is also another nice chart that has the right setup. These stocks always go down eventually. I notice people want to go in, way too early! DON’T! Just look for either support and resistance or logic support and resistance like 2.00ASNA 3.40 retest (breakout)

SESN’s chart did just that.It bounced from that 2.00 level. Retested a bit. And was killed by an offering:

SESN double top failure (overextended)

A similar chart is SMRT:

SMRT - SESN similarities (over extended)

SMRT was re-testing that 3.75 resistance and failed!

These were the chart setup that works for me. Please share or retweet this post if you find it helpful! What is your favorite setup and what would do you do to improve your strategies?

 

I started my trading career with Tim Sykes and when my breakout strategy did not work for me anymore and when I was lost, I joined Investors Underground. The DVD’s that helped me the most were Tim Grittani’s Trading Tickers and Nate Michaud’s Tandem Trader.  Software that has helped many trader can be found here: Trade Ideas software.

  • kindly note that this blog post should not be treated as advice, trade advice or any of the sort. Always trade your own plan, cut losses quickly and never follow any alerts. Always do your own research and trade accordingly!
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