February 6th stocks to watch

Trading an Alert Setup

Great post by @szaman, http://nyctrader.blogspot.com/ $Study.  I get caught way too often chasing my alerts!!!!.

JANUARY 30 SETUPS

4 Short Squeeze setups for Monday.  
All of these stocks are highly shorted and have been upgraded to "buy" and "strong buy".


LNG:  
Would be great to see consolidation for a few days at these levels.  34% short float and tapping highs.  Entry on break of 12.86

AUMN:
Alot of airspace overhead.  Break of 9.82 should send this.  20.7% short float

STMP:
Nice move out of flag.  Looking for continuation over 33. Real breakout @ 33.74.  12.6% short float

AMED:
Double bottom bounce and break of triangle.  Looking for a break of 10.22 (20 SMA) for continuation.  18% short float.

20 SMA SETUP

I have noticed this setup working very well over the past few weeks.

SETUP:  The setup is a morning washout, and a price base below the 20 SMA.  I wait for a 5 minute bar to close above the 20 SMA and enter on the next bar.  Important to have consolidation below the 20 SMA and to wait for the a close above the SMA with a 5 minute chart. The setup probability increases if the move is through a previous support or resistance level.  This strategy seems to work really well with the MOMO stocks.  As well, the bigger the washout, the bigger the move over the 20 SMA.

2 Trades today:

ENTR:  Entered a little late (5.75 vs. 5.73).  Still holding

ACHN:  Entry at 9.03.  Sold first half at 9.17 and raised stop to 9.16 after second breakout.  Stopped out last half at 9.17

Here are other examples of this working really well.

PR Trade

ASTI had a huge gap up this morning.  Waited for the chart to setup and entered on the break of the morning high.  My entry was on the break of $6.25.  Fill was at $6.29. Sold 1/2 of my position @ $6.62 and another 1/4 @ $6.85.  I kept 1/4 for an end of day run with a stop @ $6.50.  The chart based for most of the day and looked like it was trying to break out again, but never did.  I still hold 1/4 of my position with a stop @ $6.50.

SMB Post

http://www.smbtraining.com/blog/traders-ask-how-do-i-stop-losing-money

Traders Ask- How do I stop losing money?

Dec 1st, 2011 | By Bella | Category: Mike Bellafiore's (Bella's) Blogs, Traders Ask

Hi SMB, thanks for all the great posts and learning tools that you guys have done over the years (stocktwitsvids, One Good Trade, etc.) I have been fortunate to have been trading (intraday strictly) professionally for 3 yrs now but have managed to lose 80% (i know it’s a feat esp no leverage) of every dollar outside of trading (XIV is the biggest culprit–i never double down in trades, but i’ve “dollar cost ave” the heck out of XIV.) This is not the first time i’ve been humbled by madame mkt and it certainly won’t be the last. After seeing non-trading assets disintegrate (and remorsing that I didn’t just spend the darn $$) i know that i need a process to get better at saving/investing.

Have you guys gone through a similar experience? How did you guys get better at building/keeping hard earned income from trading? Any input would be much appreciated.

Bella

There is not one thing to say that would make the difference. There are not a few things I could write that would make the difference. This question ties nicely into a conversation I had just a few minutes ago in my office with a mentee, which I will share.

First, after you are consistently negative you should not be trading live. You should be on a demo. If we are working with a student and they are consistently negative then they are placed on the demo and asked to work on their playbook. Every day they should catalog a set up that makes the most sense to them in SMB PlayBook template form. The idea is to focus on the trades that you can make at this stage in your career profitably.

GMan developed a risk analysis sheet that crunches how a trainee should bump their trading size. Needless to say that you start at 100 shares and do not get bumped until you make money at this level. This severely restricts how much money you can lose intraday before you are consistently profitable.

New traders undervalue the power of being consistently positive. Too many new traders would rather lose 1k in a day than make $200. At least with these losses they are trading bigger. Trading bigger makes them feel more professional. There is nothing professional about losing money consistently as a trader. In fact that could be the very definition of amateur, or as we say “piker”. Respect trading losses.

Today Carlton, our floor manager, and I talked with a trainee about too many negative trading days from last month. To me this is a lack of respect for money. A good intraday trader ought to strive to pull out money from the markets 4/5 days a week. If you are negative two days in a row you ought to hold an emergency trading summit with yourself. What will you do tomorrow to ensure you make money? And then stick with those plays and lock in pulling money out of the market the next day.  Do not expand your trading outside of these plays.

This hyper-focus on making money forces the trader to hyper-focus on the set ups that are best for them. Sticking to these set ups while trading live then improves their results. Better results then builds a trader’s confidence. Improved confidence then allows the trader to find more set ups that are best for him.  It is a vicious cycle of profitable trading.

A typical pattern for the successful intraday trader is:
lose money
lose less money
flat
consistently positive
expand your playbook on other trades
add size to your best trades which grows your P$L

But if you are just at the stage of losing money you should not even be thinking about adding size. There should be no delusion that you are close to breaking out as a trader. You are not. Your next steps are above. And you are not going to get to the stage where you should be sizing up for many stages. So be realistic about your work ahead and be patient.

I hope that helps.

Bella