Warrior Trading Blog

Short Week, Fat Profit! | Roberto’s Weekly Recap

All right guys, here is Roberto Barbaro. I’m a trading educator for Warrior Trading and today we are going to talk about another weekly recap. So first of all I’ve got to say what a beautiful week, earnings are back and very nice and clean moves also showed up themselves in the market.

So let’s dive into the details and talk about the over all trading for this week. So first of all as I was worried about the way I initiated my month here. You may remember about a weekly recap that we did into the red, at the beginning of April. So little did I have actually to worry guys, now the stats really look the way I want them to be. Currency is above 60% and profitable [inaudible 00:01:06] just turned above three to one. So I only took another total of fourteen trades for the month so far, but as I always say selectivity is incredibly important and it’s a big part of the way I choose to trade.

So with that being said let’s jump in and talk about the trades I took. Right? So I took overall amount of five trades this week, actually the week initiated of course on Monday. But I was off so I did not of course take any trades on Monday. I was just out of town, so no trades on Monday. My trading actually started on Tuesday and for this week it’s only going to be three days of trading. Because as you guys may know the Friday, tomorrow is going to be a market holiday, for the Good Friday, The overall stock exchange is going to be closed, so no trades. That’s why also the weekly recap is coming one day earlier than usual.

Let’s talk about each and every one of the trades individually. The first trade I took was actually on UNH, so UNH United Health Care was coming off of a few days where it had a huge sell off. Caused by pretty sad catalyst pretty big catalyst for the stock and then on Tuesday they just announced earnings and the first reaction from the market was to the high, the upside. As you can see here the day actually opened higher than the prior day, but given the overall kind of trend in the daily as you can clearly see here.

I was definitely open to take it eventually to the short side as well, it was still below the 20 MA, 100th MA, the 200th SMA and it’s been quite a hot stock in the past few days to the short side as well. We knew in the chat room that this one actually could have served a descent opportunity going down. Despite as we said here that the gap up is as clearly visible here as on the three minute chart as usual just for you guys here on the left side we have the three minutes chart on the right side above here we have the ten minutes chart. The bottom right side we have the daily chart. The overall look before the market opened didn’t actually look very weak, indeed. As you can see here we had higher highs, higher lows and this indicated a little bit of strength but because of what we said about the overall daily look. Also the fact that the gap up, going lower is one of my favorite strategies. I’m always open to potentially take a short but I will take a short position only when below 13 EMA in the three minutes and the vwap and 13 EMA on the ten minutes. Which is the other thick yellow line you can see here, Right?

As soon as the market actually open we had this first candle extremely weak, as you guys may know I never take a trade during the first three minutes, after the market open. I always wait for a little bit on the trend to settle before eventually placing my trade. As soon as I notice this very good volume above 500,000 shares traded on the first three minutes after the market open alone. It sold of all the three of the major technical indicators that I use. I was open to take a short and that’s actually what I ended up doing here. I ended up taking a short on the second candle as soon as it started rejecting so it opened, it pushed, and then it started rejecting. I entered my short at about 234 20 here, anticipated actually the crack here of the previous low of the day because it looked really weak after the push. It just started selling off again, so I jumped in and this thing just continued on. Instead of me waiting just for my profit target to get hit, I started taking my profit a little bit too early because as you can see here, I would’ve reached all the way to the six to one profit : loss ratio here and it would have been a fantastic trade.

Not that I’m really disappointed about that, but as I wrote here into my journal I actually started piecing out a little sooner than I should have because I felt I entered a little too late because the move was a little bit extended already. So instead the move just continued and ended up being even more powerful than I thought. See a very nice trade to start of course the week with. I’m not going to complain about a nice winner but it could have been definitely even bigger did I respect just my profit target.

So this one tool you see here is actually a new tool I recently introduced, So the way it works I actually replaced the settings of the Fibonacci retracement. Which I don’t really use for my trading but I converted it into my risk : reward ratio tool, which I find it to be little bit too mechanic. So instead of using that I modify it through the settings as you can see here. If you want you can take just a nice screen shot and replace it with the same value that I use, or similar because that’s exactly how you use it. So I place it in my entry point, I just drag it all the way to my stop area and automatically all my profit are good. Will get [inaudible 00:08:28]. So here the first one it will be the 1.5 : 1 profit : loss ratio, then it will 2.5 : 1, then 4 : 1, then 6 : 1 to eventually close the trade.

So in any case as I said it was an amazing trade to start the week. Given the fact that I was off on Monday, I got a little bit nervous as I always do when I lost one day of the market but of course the feel got immediately much better after getting and hitting this one trade. So very nice one on Tuesday to initiate the week. Then I do a couple of trades on Wednesday and a couple of more trades on Thursday. The two trades that I took on Wednesday were the first one on Intel so ENTC, sorry INTC and the second one on Netflix. So the INTC one ended up being the only loser of the week but more than a loser, I would call it more of a scratch trade where really I just lost one cent per share. As soon as I realized it wasn’t going so let’s quickly analyze that.

Here on INTC we were gaping up into new 52 week highs and let me zoom in look quick at the three minutes, So we’re gaping higher but as soon as we went closer to the open once again there was some weakness showing up. What I ended up playing here was the third candle here in the three minutes that’s when I got short. When I notice it the price section was started to consolidate here at these lows at about 58 25 in the third candle that’s when I got short. I got short here and actually it started working quite nicely so it went all the way to 58 12 but this thing just couldn’t continue. It got bought right back up when the next three minutes candle open it started selling off than once again boom it reverses and as soon as it reverses I stop out. I stop basically here with just one cent higher price than my entry. So really more a scratch trade than a retreat.

Anyway I initiated the day like this and then I switched over to Netflix, switched over to Netflix a little bit later but look at the move. So Netflix was coming out of earnings and it had basically a really strange reaction when the earnings were first announced, look at this huge candle going nowhere. Then in the morning the following morning we had this early push, So when there is this early push and similarly as we see in the UNH whenever that happens I’m actually open to take a trade either to the long side or even to the short side for a fade.

This thing opened and it started very weak then it kind of held it went back up retested the 13 EMA here three minutes and it started selling off, now here it would’ve been the ideal entry. When this fail happen the first 3 minutes to make a new low here after this consolidation after this little flag it would’ve been the best time to get in. But as I was busy with Intel as I was talking about just earlier it was happening pretty much the same time, I wouldn’t feel comfortable entering in two positions at once. So I just missed this huge beautiful opportunity because from here this 364 68 this Netflix just lost ten points in a little more than five minutes, look at this move.

Instead of me kind of just being disappointed I was waiting for the next opportunity to present itself and that’s what happened over here. The move started selling off, then of course it presented a opportunity with a pull back and as soon as it retested these red lines. This red line is actually the 20 MA coming off of the daily chart, Right? So as soon as I noticed there was weakness here and the price action turned dramatically weak that’s when I entered. So I actually ended up entering a position at 358 50, so we can actually measure it once again here 358 50’s…let’s do it actually here if possible, Yes and my stop of course would’ve been here at the high of this same candle. This thing gave two third of target 1.5 : 1 than it gave 2.5 : 1 a little bit later on, so by the time it hit this target I was already out of my position for two thirds. So I was still holding only one third of the position and they ended up taking it all off, I actually ended up taking one sixth of my position off here and than all the rest off when it failed holding that 13 EMA right here.

So a very nice trade overall here it really started immediately collaborating and it was just a beautiful three minutes continuation trade. So Remember guys I’m always interested to take a trade off of the three minutes chart whenever we find ourselves doing the first hour of the day because that’s the most volatile, the most liquid and also the most predictable. With that being said let’s jump in and talk about todays trade, today I took two trade on STNE. First one was really a scratch trade and the second one was the one that really made the day. Lets talk about first what I saw on the first formation and then on the second setup on the same name.

STNE today was gaping down, This is a Brazilian company technology company nobody really knew what was going on there was some sort of weak catalyst around of some negative comments about the company and whenever I don’t have a very strong catalyst of course I tend to be a little more cautious. But I also tend to pay a lot of attention to the technicals, the technicals are expressing themselves in the form of of course the pre market pattern and the volume. This is pre market this volume is no joke on such a low profit name like this having 3 – 400 shares traded during pre market with this kind of beautiful pre market formation. It was gaping down and look at this lower highs, lower lows, lower highs, lower lows and so on, So it was just beautiful it was just an amazing formation here.

After the market open as usual I wait, I wait and I observe the price action here. To figure out what’s the reaction of the trade so of course for the first few minutes we have this huge candle, which made me really hesitate look at this. This is the technical indicators you can see here and I use it for divergence whenever it’s red there no way I’m going to take an open range break, break out or break down trade because it’s just too much divergence. So I have to wait for some sort of consolidation getting closer back to VWAP and 13 EMA here to eventually initiate a trade, so that’s what I did I actually ended up initiating a trade right here. So the first trade was taken here on the fourth candle on 9 42 and ended up entering at 28 30.

This thing started collaborating just like Intel Corporation did though on this in the following three minutes candle this thing pushes back up against the trend, so as you may notice here from our nice risk : reward tool here as you may notice I may compare to where my stop would have been. I got pretty close to my first cover but it didn’t get quite there and so as soon as this thing reversed especially when it gets very close to my first target neither reverses I’d rather just stop out, break even than let it go against me too much. Because in this case I would’ve gotten stopped out anyway with a max. Loss for the trade as so whenever I get a feel the price actually is not quite right I prefer just to cut if off and that’s what I did.

I ended up taking off the first trade completely scratch, Actually the first trade was also with a little bit of a lower size because my risk was of course here about 40 – 45 cents from the entry. What I mean by that is the fact that a little bit later on we had this beautiful second formation, at that point I was waiting once again for the three minutes candle. [inaudible 00:20:28] candle to make a new low and of course after holding the VWAP and 13 EMA otherwise I would’ve just called it a day, but the market decided to collaborate.

Whenever the market decide to collaborate I’m open to take a trade and that’s what I did right here, we can actually maybe zoom in a little bit and show you guys what I mean by that. So we had this descent formation over here, so that was a beautiful little flag as you can see over here on the three minutes. As soon as this three minute candle open I was commenting in chat room and saying hey guys this thing I still like, if this starts making a new low on the three minutes that’s when I want to jump in. Especially after this three minutes that happened here in 9 51 has such a short range so at this point this short range candle allowed me to actually risk a little bit more and so go a little bit more in size. Without risking more money actually from dollar amounts than points because at this point all I’m risking is basically all the way to VWAP.

So with an entry at about 28 40 I would be risking this point only 20 – 25 cents. So not to mention my 1.5 : 1, 2.5 : 1, 4 : 1 and 6 : 1 were also closer to my entry point, so this is kind of the best possible condition to be in exchanging a trade in. Because you have a very very short range candle in this case a three minutes candle to base your trade off of and then boom this thing just sold off very very nicely. Actually it went even further lower but I’m never going to complain about a trade that hit all my profit target and so it was a beautiful way to just end off the week, and actually call it a day. Call it a week, just waiting for Easter to come so a lot of members in chat room were also able to bank on this move. It was such a beautiful move it went all the way from 28 50’s all the here to a low of 25 50, guys this is a three dollars move it’s oh and on 25 dollar stocks that means it’s 12-13% move, actually almost 15% move on just from the entry point all the way to the lows. So it was plenty of room to take profit and we just did bank on it.

With that being said that’s really about it for today, I want to thank you guys for watching and as usual if you like the recaps like this please let me know by hitting the like button. Also if you have any questions please just go ahead and put them down below, I’ll be making sure to come back and answer to everyone of you guys. With that being said I want to wish you all a good Easter to all of you and your families, especially for the Warrior Trading members and family. I want to just call it a day and saying we’ll see you guys in chat room first thing on Monday morning.

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