Warrior Trading Blog

$SQ for the Swooooosh! +$17K | Mike’s Trade Recap

What’s up guys? What a day, $17,000 on one single trade on SQ. Just phenomenal. We haven’t seen a move like this in quite a while, such an incredible trigger level that the stock had on the daily chart.

 

The market came into alignment and everything played out Just as we wanted it to and I couldn’t be happier to realize a win like this, as we’ve been coming out of just some incredibly tough training throughout the summer months, grinding on low numbers. It’s really nice to be back in action and hit a big winner like this to start off the last quarter of the year. So let’s take some time and really break down this trade and I’m going to show you guys how you can do the same type of trading in very simple approach.

All right guys, good afternoon. Well, pretty incredible morning here today. I am up $17,000. Okay, just over $17,000 on one single trade on SQ. As you can see here, down in the bottom left, my positions window closed out SQ for one single trade today, actually two trades. First was actually a stop out and on my second attempt I got it to work and we were able to catch that massive move and lock up just over $17,000 in profits. So it’s definitely a really good day. I’ve been kind of grinding along on summer on relatively low numbers and that’s just part of trading and once we are able to get a setup that has that home run potential, you have to step up and be aggressive and today we had the setup on SQ. We know that this stock had put in massive range and it had an incredible technical level that we wanted to watch very closely, especially if the market became weak.

So I was glued to this stock all morning. Like I said, I tried one trade on it. Initially I got stopped and actually it was kind of funny. I actually got up from my desk and started to leave my office and I said, “You know what? Yesterday that happened to me, I got stopped out on a trade where it was really the only stock with a direct catalyst and I walked away,” and I definitely missed the entire move we had in the market yesterday. Plenty of stocks really took off and I was definitely in a position there where I became a little bit frustrated and I knew I shouldn’t have missed that move. So today coming back, I wanted to be sure I sat here in the event that we were at to see another move, take advantage of it. Today I was able to do that. I became extremely aggressive. I stepped up and I put on a big trade here and was paid for it.

But any of you guys can do this. The theory of mine behind this strategy are trading these big trigger levels in pockets. I’m going to talk a little bit about that here in the recap, but I cover the majority of it in much, much more detail in my large cap trading course. It’s a very low frequency type of approach, with a sniper like precision entries and sizing into a move and then we wait for those moves to play out into these big pockets. So always looking for that home run trade, you really shouldn’t be in any other type of trade unless it has that home run potential because it’s not worth risking your money and trying to trade a thousand times a day, especially on the large caps when you can sit and wait for these moves to come into play.

So let’s just jump right to it here and talk a little bit about this SQ trade. So I’ll blow this up and we’ll get into it. So SQ today. What a move, right? Initially it was kinda tough to trade because it kinda got kind of choppy here and the market was a little indecisive. So let’s first look at what the spy was doing because this definitely has a big impact on the type of trading we’re doing. I talk about this every morning. It’s really important to understand the spy is going to have a big effect on the majority of our trades because if we can get alignment in the market, it’s going to drive our trade that much better.

So obviously yesterday, big move down the market, over 800 points. Today we’re sitting on the 200-day moving average. Now obviously this is a situation where we see a lot of traders come in and have the view that this is a low risk trade here for long because it’s now sitting on its major moving average, the 200-day. Every time it’s hit the 200-day in the past it’s been bought up, right? If we look back at this chart here, we’ll see that every time it’s had a big crash into the 200-day, it’s been bought. So what’s going to be different about today? Right, history definitely repeats itself and if traders can get a low risk position for a big move, a low risk, higher reward trade, they’re going to attempt it, especially if it’s occurred last several times, right?

So looking back at the five-minute, you can see how the spy came into this level and was holding in the after hours and the pre-market today, so we had to be very careful because we don’t want a short into a huge support zone. That’s for anything, any stock, you definitely don’t want to shorten the support or or buy into resistance.

So on the spy, we wanted to really kind of sit tight and see what would happen. I talked a little bit about how I would expect an initial move to the upside take place, potentially backed up towards this 280 level because it was a big level yesterday, right in through here. If this got taken out, we may have a chance to move higher, but if it couldn’t reach that level, we probably see it start to turn back over and it couldn’t even get nearly halfway there, it started to turnover. So once I saw this move start to take place here, I became more interested to try this SQ short. All right.

So what I wanted to do here is back to SQ, I was watching this very closely and looking at the five-minute, we saw this big rejection candle off the hundred day moving average. This is a daily 100. So when I saw this big rejection, I wanted to initiate a short trade, but we had this level of support in through here and I really wanted to wait at least back below 70 and 140 to get taken out to see if we can get that continuation.

So what happened was, is as I started to reject, I started look for entry back below this 20-day moving average on the five-minute. So let’s look at the daily real quick so you understand the levels that we have. There’s a couple of different types of levels that you have to understand and one of them is going to be … One of them is called a trigger point, which is the point at which the stock is going to trigger into one of these big pockets, right? These are these pockets that we talk about. Other levels are going to be levels of resistance or support. There’s a difference because pockets trigger levels are going to lead to pockets, which are huge, wide range windows and support or resistance are just going to be levels where the stock, we’re going to see it react to, all right?

So we had a big trigger level in through here at 69, 29. Now, make this a different color so you guys are clear on a trigger level. So let’s make it this yellow. So this is the trigger level here. So if the stock triggers through this, then there’s potential for this thing to really start breaking down because we’ve got virtually a five-point window down to the nearest support. Now this one right here at 71, this pivoted through 71 is just a very short term pivot here where it tested the top side, pulled back, broke it, then pull back and tested it from the top side again, and then it took off. So nice pivot in through there. It’s not really considered a trigger point because it doesn’t have that much room to the next level. However, these are the types of setups that I liked the most because as you start to push through resistance levels or support levels in this case, and you’re getting to a pocket, these are the ones that really start opening up.

So what I wanted to do here is if we could start breaking down through 70, 140s, it would be a low risk trade to get it started to see if we can move down towards the 69 level, take that out, then get into this big pocket, right? So that’s what I liked on it and this big trigger level here into this big pocket was really looking forward to break and that the market was in our favor, this had big potential to pull. Broke a big ascending support trend line. You can see here yesterday we closed below it. That’s an extremely important factor or element to this trade, is that it did break that recent support, it broke and closed below. That’s extremely important because that is something that is telling and it will be meaningful to the direction of the trade, which is going to continue.

So what happened was when I saw this start to reject the 100-day here, I said, “All right, now the spy is starting to turn over here as well.” So if you look around this time on the spy on 9:35, 9:40, we’ll look real quick, you can see that it starts to turn over, right? This is the spy out of the open, 9:35 starts to turn over and roll to the lows. This is where I said, “Okay, we’re obviously kind of given up the move here out in the open. So let’s see if we can get this thing to break down.” So back to SQ. I saw it start to break down. We rejected that hundred day. We’re getting back a little at 20 moving average. So I got short just above 72 to see if we could get this to be taken out, anticipate the breakdown.

We came into the support. I was able to cover some on the flush down through 72, I think it was 70, let’s see, it was 70, 140s I believe, where I got filled on the first one, 71, 75 is where I took half the position off. So half the position off took 71, 75. I was looking for lows to take more off, but you can see we held that support level. We held that support level. We bounced and I got out. I got out at 73. So I gave some back and what happened was it was a flat trade and I became quite frustrated because we had a rejection of overhead resistance. We had a hard pull. The market was pulling, we just couldn’t continue to break down. These are the types of setups that fade big when they do work and we had a little bit of support in through here which actually held and it popped me out once it got above 73.

Now, like I said, I was actually getting up from my desk and going to call it a day because I just didn’t want to be caught in the chop that’s range bound, whipsaw action. But I continued to sit tight here because like I said, the move in the market yesterday was huge and there was definitely potential for continuation. I wasn’t going to let that happen or I wasn’t going to miss that opportunity. So I sat back down and I just waited and I said, “All right, let’s see what happens here on this SQ.” This is a huge trigger level. It’s a huge trend line break on the daily. If this thing can start to turn over and double top and turn over with the market, there is home run potential here and I’m definitely not going to miss it.

So what happened was as it rejected that hundred day again, we started to pull below VWAP and at this point the market was selling. The market started to sell again. So if we look back at the spy around 10:10, all right, let’s go back and look at the spy because this is a really important factor. So 10:10, the spy now starts to sell again, breaks below VWAP and I’m going to anticipate the breakdown again because we’re not able to make a push higher. We’re unable to hold it after a huge move lower yesterday, right? Huge move. Look at the size of this move and then look at this retrace. There’s no buying going on here. Very minimal retrace. If we got some were way up here, I’d be a little more concerned in trying to anticipate a breakdown, but we barely made any sort of move back higher before the selling came back in.

So when I saw the minimal move in that retrace, I thought to myself that there’s definitely not a lot of buying pressure here and we’re probably going to roll back over, especially if we can’t hold that 200-day. So as we started breaking back through VWAP here, I said, “All right, SQ, it’s double top at the hundred day moving average.” We’ve got this huge trigger level here. If that goes off, this is a massive trade and once it broke back below the VWAP again, I got short one more time at 72, 80. So as it was retesting the VWAP, it broke. I got short 72, 80. The next spot I wanted to see break was this level in through here.

Let’s go to a fast timeframe on it. Fast timeframe. I’ll show you where exactly I got short on this. So right in through here. Okay, right in through here is where we started to break down again and this is where I got short, right as we broke, we pulled back, we doubled topped, we pulled back and we tested the VWAP in the 72, 72 level we were failing and then we resolved. We started to resolve lower, so I got short right in through here, around 72, 80. Now important thing to note here is that my stop on this was an extremely tight leash, right? It was at 73 bucks. All right?T The reason for that was because once we had that pivot put in, right, once we pulled back and we tried to round back out again and we failed right here, this level is your pivot. This is your stop right here. Okay?

Because you can see that was the high of the retest. I know this is very subtle stuff, but subtleties matter. It’s very important. When it couldn’t break that 73 level on the retest, that’s essentially a lower high, lower highs mean weakness, right? So once I saw that lower high, I got short, 72, 80. We started to fade, we looked good here for a minute and then what I wanted to do is add once we put in a pivot below this level. It’s important that you wait until a pivot is put in, not just at the level breaks, okay? So if I draw a line at the low of this candle right here at 72, 11. All right. So if I wait for that pivot to be put in below that 72, 11. Okay.

So what happened was I wanted to add once that was taken out and then I wanted to add once this level was taken out, right here at 70, 140. So again, pull off a double top. We attempt to retrace, we fail, right, we fail, we start to resolve, I’m short. All right, I’m short. I’m waiting now for a pivot to be put in. You can see right here we do break it, but there wasn’t a pivot that was put in and failed. It popped back up. Now what did I do here? I added, right? I added here because it failed that pivot, right? I add against the stop. You have to add your positions against the stop because that is the only place where you can add with low risk. So I added a piece to my position right here and then it started to fail again. Here’s where we got the pivot. All right?

So let me blow this up a little bit and you’ll see. You can see we broke through level again. We retested and then we failed again. So there’s a difference between this setup right here and this setup right here. You could see it breaks, but then it pops. Here, it breaks, it tries to pop then it fails. So I added to my position again there, all right and then I wanted to see it do the same thing here, got below that 70, 140 level, which was a big level all morning. You can see this was from the daily chart. So this is a very strong pivot level as you can see at held twice. So I wanted to add to my position one more time if I get below this and put in a pivot.

You could see we broke and then this one broke pretty quickly and once it made that move away from that 70, 140, I added again. You could see we put in a little bit of a pivot right in through here and then we resolve lower and then we started to come down to this trigger level. I covered some in through 70 bucks as we broke that just in the event we got bought up teal big off this trigger level. But I covered a few in through there and then I wanted to hold a position to see if we could break down through this level because this right here is a trigger that puts you into a massive pocket that makes these trades run and it’s basically a freight train and you’ve got to be on it to make money.

so what happened was, is we played with it for awhile. You can see the first attempt that we came into it, big volume spike, alright, big volume spike in the level and we just sort of hovered around it for awhile but you could see what happened here is the volume overall increased as you’re around that level. That’s definitely what you want to see because that will confirm that’s a valid level. Now, once it toyed around at this level, I just kind of sat tight with it because I was well on the profit here. I had a big day going. My average was somewhere up here, so I have plenty of breathing room on this trade. I wasn’t going to micromanage it.

So I sat tight, gave it a chance. We started to see that makes some lower highs here and again, these price action pivots are big, guys. The same thing we used over here for the stop. The same thing here. You can kind of look and see what’s going on. So look at this little bit of a low right here and then extend that line out. Look what happens, right? This is why I use a much more granular chart, a 24-second, 15-second, 30-second, whatever you want to use. You can see here how well this reveals the price action, right? Look at this level. So as long as it didn’t get back above that, I was okay with it. I was going to sit tight. Then we get the break, all right, we get the trigger to go off. It fires and then it just starts tripping over itself and just really starts to sell hard.

Now, I actually covered my position right in through this level here. We try to get this big volume spike down through 68 and I said I was done with it even though we had room towards 64 just because I had racked up about a four, just over a four-point when there and I had 5,000 shares. So I definitely want it to just take that win, it’s a big, big win and I haven’t seen one of those in quite a while and it was nice to see the action return, a trigger level go off and the trade follow through. So, that was the SQ trade, guys. Again, this is really simple stuff. You can learn all about the pockets of protection that I talk about and I teach and the theory that I put in the courses. It’s very well defined. It’s very straightforward and anyone can do it.

You can trade this stuff with small size and really do well. It’s a sniper-like approach. You don’t have to trade all day every day. You can see that one trade, what this thing can do. Yes, I had some size, but you can definitely work up to that point and take advantage of these points on the chart that we can exploit that as traders because the algorithms see these pockets and if they can get a move in here, they’re going to move the stock to the other side and that’s a point in time where again, us as day traders can exploit these levels and take advantage, right? So, trading large cap strategy really offers a lot of opportunity. You just got to know what you’re looking for and that’s what we’re here to do is just show you guys exactly what to look for.

So in any event, couple of lessons today. Don’t be afraid to take another stab at a trade. If it doesn’t work the first time, don’t be afraid to take it again if you see it setting up again because today, if I would’ve taken this again, I would have been flat. I think when I stopped out of the trade I was down like 60 bucks or something because I gave back my initial profit because I let it go. It kind of ran against me for a minute. So I stopped out. It was down like 60 something bucks and I almost didn’t take another stab but I saw it setting up again. I saw the market setting up again and I took another stab and I would have left this number on the table if I had not tried again.

So don’t be afraid to do it. Trust what you’re seeing. Trade what you see. Have confidence in it. But definitely don’t be hesitant to take another stab if you see the trade setting up and that’s sometimes what it takes to get what you need from the trade. So in any event, guys, great, great job on SQ today. Just an incredible move, incredible technical setup and really nice way to wrap up the week here coming into Friday. So anyway guys, we will be back here first thing tomorrow morning and look to do it again. Oh hey, I didn’t see you there. Well, I was just working on the dream board for my next home run trade. Hopefully it comes soon. Until then, make sure you subscribe to get email alerts anytime I go live or upload new videos. Until then, happy surfing.