Ending Action #1 – Bounce Trade

We love the pot stocks and they were killing it again today. I’ve been long CANN since 2.67 (video post). MSRT was first recommended on 12/7 (second arrow) –

MYO had a couple SOSes. MSRT also, and tied in with pot stocks.”

But MTP was the runner this morning, with a halt (the #1 buying climax). There was a classic setup today in this morning runner – there was the BC with the huge volume, then what are we looking for? What is the next trade setup to expect? The secondary rally (bounce) is an extremely high prob. technical event after both the #1 and a #2 BC. And guess what? A 123 spring setup. Classic. And the spring was the break of the gap low. I missed the trade, even the retest, but it was a beauty. And the parameters were excellent with a rally back to resistance above $2 (20%+) to be “expected”. Remember it’s a bounce, and you’re on the clock.  It ended up having a huge bounce. That trade is very high probability. Real beauty, but you need to get out.

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About traderscott 917 Articles
Trader Scott has been involved with markets for over twenty years. Initially he was an individual floor trader and member of the Midwest Stock Exchange, which then led to a much better opportunity at the Chicago Board Options Exchange. By his early 30’s, he had become very successful in markets, but a health situation caused him to back away from the grind of being a full time floor trader. During this time away from markets, Scott was completely focused on educating himself about true overall health and natural healing which remains a passion to this day. Scott returned to markets over fifteen years ago where he continues as an independent trader.

13 Comments

  1. very instructive. the chart combined with the commentary (which brings it to life) would you play10% and take profits or game it into resistance? Could/would you enter into this with a limit order to exit or ??? (sorry I am still a newb) thanks Dawg.

    • Yes. Notice I had the plan going in, I was ALREADY looking for the exit. On a daytrade/short-term, I’m always looking for the exit also, even as I’m looking to get in. And to exit, I usually use market order. In this case, definitely would.

  2. Tuesday was a beauty. Tried to get filled on WATT after hours Friday but wouldn’t fill even though the bid was higher than the ask.
    Missed HMNY low by 2 cents, averaged in on NXTD for a gain finally, if that didn’t work out I’d have given up.

    • The point is your work is very good. Keep doing it, it will work out. The statistics are heavily on your side. Your WATT idea was excellent. And you know how much I like, as a support to be sprung, the “low of the lowest bar before the big blast off”. So in WATT, that thing was drawn in on the chart I left at the post. Remember that deal in your work. Let that thing break first.

        • That’s why I wrote about that the other day, “beating the market”. Our goal isn’t to beat the market, so to speak. It is a struggle of course. Just do your trade setups over and over and over. You know what you’re doing. Be prepared every day. Imagine the 95% of the people in markets who are rarely on the right side of any trade ever. You are on the right side, huge edge right there.

  3. At what time point to did you enter your limit order for $1.51? Are you looking at the second point in the 123 downward trend? Or do you enter your order after the 123 waiting for the reaction? And what made you choose $1.51? I know this trade didn’t work for you, but am curious about your mental process.

    Still trying to figure this out. I keep thinking I have it down, make a few good trades and then get bitten again. I have gotten past the “mental toughness” part as I have lost enough by now….but have to work on properly picking my entry. Many times I think I have good reasoning behind my entry based on what I have been learning, but either miss the trade, or it moves away from my entry and ends up a loss.

    • I had my areas staked out, and the 1.51 was a tick above the bottom of the gap. So I had 1.50 in my mind, and then the order was put in when I believed we had the #2 top in place, so right after that 3rd arrow. Because then there was a 10%+ parameter in place as potential. The #2 rally top is usually a good place to sell into. With a daytrade, short-term trade, I need 10%+ clearance. You know the zigs and the zags. The other thing to do, perfectly valid, is to wait for, or wait if it even does, a bit of a bounce out of there, and do a (maybe) market order into the little selling deal. But to warn, you really have to micromanage the volume there. You have got to see a noticeable drop in relative volume there, or the prob. is not there. Could still work, but trying to get as much on your side as possible. Garvin, I get extremely specific with this stuff, you do not have to be, but trying to make this as “exact” as possible – all about probabilities. You have to know the specific trade setups, to know the probability structure. I’ve worked out the probability structure for you guys, via losses and learning. You are way ahead of the game, just keep at it, learn specific trade setups over time. But please start with springs. And springs in strong stocks overall is much higher probability. And learn accum, absorption, time-frames. And stay positive, it is a struggle, but it is very possible to do this.

      • Also, I miss trades a lot. Better to be rigid on entries. Missed one today in MSRT, had a bid in at .69, on the retest, never got filled. It sat right there and no fill, and the stock rallied right to where I had staked out – .84. Beauty of a trade, worked great, 20% in an hour, (why trade futures, and no leverage necessary) had it all planned out, and I missed it. A #2 top bounce trade BTW. #2 top being today’s big daily top. Retest beimg #3 reaction spring, just not quite.

    • You mean WATT? The trade setup was very nice, it was a beauty of a spring using that “low of the lowest bar before the blast off”. So that gets broken and sets it up. It closed right at the low on a 3 day weekend. No I didn’t want to do it. An overnight, AND cut back position size, yes I’ll do it.

      Legitimate shots/areas at them David.

    • Don’t know if you did anything, but DPW up 10-25% in premarket, pretty darn good there. These things are going to be in and out traders, or accumulators, meaning buy into weakness and, and add-on, or buy and sell part into rallies, and add-on into more weakness. The latter is what I’m doing with DRYS.

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