Warrior Trading Blog

Back in the MONEY! +$600 | Mike’s Trade Recap

money

What’s up guys? Well, a great way to start a Tuesday morning. A quick 600 bucks on two trades in the first hour. We got short on VKTX. I was actually stopped my first time around for a couple of hundred bucks. Took that quick loss and then sat patiently for a few more minutes.

 

Was able to take a second attempt, and then we finally got the fade we were looking for. A textbook gap fade on VKTX, really played out well, and put us back into the green for today. Let’s take a few minutes and break down today’s trade and the market action.

All right, guys. Let’s do a quick recap here this morning and talk a little bit about the action that we had. I took one trade on TEVA. I tried to get the gap fade started on it, and it didn’t really work out. I had some size on this to try to get a quick move for about a point down to the gap fill and it just didn’t continue. The market was choppy, so I’m actually a little bit red today. I am down just about 400 bucks.

I had 6000 shares on this at the initial entry, at let’s see, 23.90. When I took the initial entry here at 23.90, as we got below 24, I took 6000, and I tried to get a quarter off almost immediately as we got a quick spike down, and I got filled 1000 out of 1500 at 23.70, so I got 20 cents on only a thousand. I was trying to get a quarter off. I was really trying to hold the balance for a fast move down towards 23.

Now, I got 1000 off, I canceled the balance of the order, then I had 5000 shares remaining. As it started to pop back up here, I was using 24 as the backstop. 23.90 being my breakeven, but I was trying to give it towards 24 since that was a big spot initially for it to get through. When it popped through 24, caught a little bit of slippage on the size that I had and I got rid of the 5000 that was remaining. That’s where I ended up.

Disappointing that it’s red, but at the same time, 396 bucks, that’s well within the risk parameters for the type of size and strategy that I’m trading. 396 bucks, it’s a lot of money definitely, and it may be a lot of money to a lot of people, and that’s definitely the case, but you have to understand that when you’re trying to swing for the bigger hits, these relatively bigger losses are going to be present, even with a relatively tight stop.

Now, I could have stopped out breakeven, but we had the view app right overhead, and we also had that $24 spot that was causing a big support point on the way down. If we dial in to a faster timeframe, I’ll show you guys what I was looking at on the 15 second here. Remember when we were talking about a pivot being put in the direction of the trade, or the direction that we want to trade it?

I did trade the open because we never got a pivot put in out of the open, right? We got a quick little sell down and then it ripped up to the upside, but it never put in a lower high and then rolled over. The only time it did that is right in through here and through this consolidation. You can see the type of support 24 was putting in on this 15 second chart.

So, what I wanted to see was that 24 be taken out before I took a trade. Once the 24 level got taken out, I punched my order, I got filled at 23.90, and then almost instantly we sold off down towards 23, 60s or 70s, and again, that’s right near the low. Usually I try to take something off. I was able to get 1000 off, I was trying to get a quarter, but only got filled 1000.

And then we just consolidated sideways. We tried to test that level several times again, and this was what I was talking about, about the basing action. We’re holding at a higher low and through all this basing action, the spy’s not really breaking down and I was giving it towards 24, because of this support that we had put in. It’s a big support level and I wanted to see if we could remain below it if we tested it again.

When we got up to it, we punched right through and I stopped out. You can see, it’s not that I was letting it go too far against my stop. I was still trying to give myself an opportunity to allow the trade to work, and in this situation, I just didn’t see what I liked. If I did see what I liked in the market, if I saw the spy continuing to break down, I probably would have held this trade longer.

But since the spy wasn’t doing that, if we look over here at earlier this morning, we got the initial sell down here and the lows kept being bought, right? It never actually was breaking down and continuing to sell. Every time it tapped those lows, we were being held in that same spot. Being that we weren’t seeing the continuation in the market, I didn’t really want to give this trade anymore room. That’s why I decided to stop out, and I’m glad I did, because the trade hasn’t moved. It hasn’t really gone anywhere. It just chopped sideways and grinding higher, and a disconnect with the market.

Those are the trades you just don’t want to be in because they typically don’t go anywhere. That was the trade on TEVA. Again, just didn’t really work out in the way we wanted, but definitely worth the shot, because if it did work out, there was nice potential there for a move down towards 23, which would have given us a really nice win.

That one worked out initially but no continuation. I would have taken this trade again, any day we had that set up. That’s one of the questions you always want to ask yourself, is go back and look at the trade and ask yourself the question, “Would you have taken it again?” If the answer’s yes, then you probably did everything that you were supposed to. It’s just the trade just didn’t work out, right? It’s the same situation for this. It’s got a good set up here. We can in back of the VWAP and the 20, we broke through the pivot support, we got short, it did move, right?

It started to move really nicely, just didn’t get the continuation. No problem with the trade, just one of those ones that didn’t continue like we’ve been seeing lately. The other side of that is if you see the action and you don’t like it, get out of the trade. You don’t have to wait or give it extra room, or let your stop hit. You can just get out of it. I tried to get out of it, I had a little bit more size, but it was still a relatively tight stop, around 10 cents or so.

All right, that was TEVA. The other one we had on watch was AMD. Now, AMD you can see this thing’s just been all over the place, too. No direction. It’s virtually sideways here. There’s no momentum in either direction. You could have gotten a move out of the open, you could have got a scalp long, but again, there’s no real directional move to this thing. That’s ’cause the market up until now hasn’t really had any sort of direction either.

If you look at AMD, another thing I want to show you on this was there was never a pivot put in to the short side, for the gap fade. That’s something that I have to wait for. You can see what happened here out of the open and you initially pop up, you pull back, you never broke the low, and then you start to pop up again. That’s how you can avoid being caught in the wrong side, or being whipsawed out of a trade initially.

If you get a move like this where you get a higher low, and you’re looking long, then this would be a trade that you might want to take the long side. However, the market was pulling, we had the 5 minute 20 above you, and that’s one of those situations where going against the market can be a really tough trade, and it’s not typically the highest success rate, right? Those are the ones we want to stay away from.

Now, it did continue to the upside. It started to put in a pivot back below, not until later in the morning here, but right over here, started putting a pivot back below your 20 again. It sold off a little bit, but again, there’s no real continuation when it’s back up. Just another example of the choppiness. It’s just the follow through’s not really there right now. Scalper’s market maybe, but as far as the continuation goes, we’re not just seeing it.

You just have to be a little bit quicker on your feet, and get out of the way if something’s not working. Those were the two trades we were looking at. BABA did break down a little bit here in the morning. There was probably a decent opportunity if you’re able to cash that back below VWAP here, but again, there wasn’t really a catalyst on it, and if there’s not a catalyst, it makes it much tougher to trade.

BABA, there was some opportunity there, probably for some scalps, and for those of you guys that were able to catch that, good job to you there. But the market’s just choppy right now, still. The spy, it’s just inconsistent. There’s just not much direction to it. We’re not seeing much momentum. What happens is exactly what’s happening here. You start to see a little bit of a move, and then it comes right back into line. It snaps right back and that’s going to kill all continuation. That’s what makes it really tough.

When the market will trend in one direction or the other, that’s when you get good continuation, but when you have this snapback action, that’s going to kill all continuation, and it makes it really tough to size into a trade to get a big hit. You won’t know that, you won’t know that. Initially when you see this action and you initiate a trade, you have to act on it because the market is breaking down, you are sitting below VWAP in the 20, so your signal is good, but you can’t not take the trade because you think it might snap back. You have to act on this and when it snaps back is when you have to play defense and decide what you’re going to do.

But it’s just the type of market that we’re in, and we’ll look for other trades. They’re here, you just have to be patient, and again, 390 bucks or whatever it is, no one wants to start the week that way, but again, it’s very, very small in a relative to what we’re usually pulling in on these trades. That’s all right. We’ll stop there for today, and be here the rest of the day, we’ll try to find something else and if not, we’ll be back at it first thing tomorrow.

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