Warrior Trading Blog

GREEN $200 Trading Small Positions! | Mike’s Trade Recap

mike_9.11

Hey, what’s up guys? It’s a green Wednesday morning for me here trading the large caps. We are up over $200 on this morning’s trade. You might be asking yourself, well, why only 200? On the third day in to what I started on Monday of a small account challenge in trading large cap stocks, I want to show you guys that it is possible to generate consistent profits if using small share size. I hope you guys will follow me along in this new venture. I hope that you guys can take away something for yourself and understand that you can definitely do this as well. Let’s take a few minutes and break down this morning’s trade in the recap.

All right, good afternoon guys. Time for a recap of this morning’s action and it was a green one. We’re ending just over $214 today. For most of you that are with us on a daily basis in the room, you are probably well aware that I started this week trading a small account. What that means is that I’m taking positions that are a max of $50,000 amounts.

What we do is we then adjust our position size to get to that dollar amount. For instance, this morning, we traded ZS. ZS is roughly a $50 stock, so that means it would be a max position size of 1,000 shares. All right? I decided to trade ZS with 500 share blocks just because it was a little bit more evolved, so it was a little bit more difficult to manage. I had to compensate for my risk a bit.

That’s what we’re going to do for the foreseeable future here. I want to show you guys that you can generate consistent profits trading small positions. The idea is to generate a few hundred dollars a day in the first hour or two of the day. A couple of hundred bucks for a few hours worth of work is, less than a few hours worth of work, is great. The idea is to, again, just lock up profits in the highly predictable setups with a low amount of risk. That’s what we’re going to do.

Monday, we traded the [SPY 00:00:02:18], we ended just slightly in the green. It was kind of a choppy day. Yesterday was a little bit choppy as well, didn’t really see much action there. Ended the day up about $90. Today, we’re doing a little bit better here, up to 15. The idea is to, again, just generate consistent profits and remain green. That’s the most important thing. Remain green, play defense and the winners will come.

Not to mention it has been a relatively choppy market for large caps, not a ton of momentum. It’s been sparse. When the momentum does come in and and we start to move into the fourth quarter, we’ll start to see some pretty good trades take place with some pretty good continuation of momentum. For now, let’s talk about ZS.

Today, ZS, big gap down below the 200 day moving average. You came right into this major pivot point here at 4850. We got that from the daily chart by looking where the most significant support resistance levels were. What we found was if you go back and look for the most significant swings in the market, you’ll see that you’ll have one right here.

This was, at this point in time, the high. I use this as my anchor point. I looked over to see if there’s any correlation. You can see here that we definitely had some interaction in through this area, created a pivot and then from there when it launched off that pivot, it really started to run. I wanted to use 4850 as my next critical support zone. Below that, it really opened up down to about 43 where you have some good consistent action at this pivot.

Now, I understand that this is not the the cleanest level, the cleanest pivot point, but you can definitely see there is some very good interaction at that level where some support or, at this time, was resistance that came into play. Once it broke through it over here, it came back to retest as support. That was the next support, and what we were looking for was it to fill this pocket. All right, so broken down stock, below its moving averages, moving into a big pocket, good potential for this thing to move.

What we had is coming into the open, you’ll see here, we came through test of the 4850 pivot, tested again right before the open. Then, as we were coming into the open bell, we started to fade a little bit and this trade actually was a little bit challenging to get started. I actually traded this first on this initial flush. If we go to the fast time frame, because of what the setup was doing right out of the open, it was basically coming into play as the bell was ringing. When that happened, I saw this first plunge. Always wait for the retest, right?

Always wait for the retest. Retest came, failed. I got short. I had 500 shares and it started to plunge. I took out half. I tried to hold the half and then we popped back up and I got out. I was up about $350 at this point. Then, I tried it again in through here as we broke back down, as we tested VWAP and failed. I actually went red because I caught some bad slippage right in through here. I caught about 40 cents of slippage because this thing was moving fast, so that ate up a bunch of my profits.

I was now only up around 70 or $80. Then, I sat tight for a while because it started to run and I was interested if it came back below VWAP. Then, what happened was as we started to trade below VWAP again, I didn’t take it here because I wasn’t really that confident yet. I waited a little bit further in the morning to see if we would make a lower high on this retrace. Then, I got short on this move right here, got short retest, failed, and then I just held it for as long as I could. Then, we started to get the breakdown and I covered in through this move here.

My final out was 4610, I believe, 4611, we can check what that is, 4611 was the final out. 4611 right here as you can see at 11:09 was my final out on the stock. All right, so that really played out well for us today. It was a battle definitely. I was nicely green in the morning, went basically back to flat and then I was able to come back around and hit it again and put us back in the profit.

Again, most important thing is to play defense, try not to let yourself go red. If you see a setup take place again, don’t be hesitant to try it, right? Basically what I saw here was this move break. As we started to break down, I got into this and we got a nice move. Good job to everyone that was able to stick with it on this. I know it was a volatile name, I know it was tough to trade, but sometimes you got to stick with it, especially when the setup is there and you have a lot of room to move. That’s what we did today and it was a good day. Right? Good day trading the first hour of the day. Anyway, we’ll get back at it guys first thing tomorrow morning.

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