Warrior Trading Blog

Stopped for -$300 | Mike’s Trade Recap

Hey, what’s up guys, Tuesday morning here and we’re ending it with a one trade in one stop on BABA. I lost just under 300 bucks on an anticipation trade to see if we could get it to start to break down further with the market.

 

There was a really good opportunity there if it did end up breaking down, but unfortunately it did hold the support and I took a small loss, but I want to take some time to help you guys understand that you don’t always have to wait for your stock to hit, if there’s something you’re not liking in the action or in the overall market, get out. Right? Be aware of your surroundings and understand what’s going on. That’s really important edge to have as a trader. It will help you keep your losses small and play a lot of really good defense. So let’s take a further look into the BABA trade and the market in today’s recap.

All right. Good afternoon guys. Well, I wanted to do a recap of this morning’s trading. We had some odd action definitely. And we really didn’t have much in the line of momentum because there wasn’t really any sort of direct catalyst on any stock. Now I traded BABA, as you can see here, I lost just under 300 bucks on one trade. I got stopped out as we tried to anticipate the breakdown with the market. Now obviously this is a relatively small loss. I’m totally fine with it. Everything lined up and an important question to always ask yourself after being stopped out of a trade or the trade didn’t work out is, would you have taken the trade again? And the answer to the question for me today is yes I would have because I had everything that I needed in alignment and we’re gonna spend some time talking about that here in just a moment, but first want to take a look at the market, talk a little bit about that and then we’ll jump into the setup that we saw on BABA and then talk a little bit about why it actually didn’t work out.

So I again lost 300 bucks. That’s okay, a relatively small, we’ll get back at it tomorrow and look to clean that up. But anyway, let’s first look at the spot here real quick so we can get an understanding of what’s been going on. Last few days, we’ve broken below the 20 moving average, which we haven’t seen that happen in the past several months here. It’s really been a long time since we’ve actually closed below that level and continue to sell. And it’s happened here just the other day. Pull backs are healthy, they really are. They’ll bring in another round of capital to the markets and help it push it higher over time. So it’s not to say that there’s not more lows to come however. The more it pulls back the actual better trading. We’ll see. So I just have to keep a close eye on it, but we had some selling in the market the last few days and stocks have been relatively weak.

So if we take a look at stocks like Apple, look at Apple, is had a pull-back the last couple of days, but it still is ultimately consolidated at higher levels. Again, healthy for the stock and all stocks. Take a look at BABA for instance. This is the one we traded today. Now this chart over the past several months has been pretty broken. All the retests had been failing. And that’s what I liked about it is that when you trade a weak stock in a weak market, typically we see acceleration to the downside. So I don’t typically want to be trading a strong stock and a weak market because buyers are there to buy those dibs, right? As opposed to a weak stocks in a weak market where buyers really want nothing to do with those stocks and they’ll let them just free fall. And BABA has been doing that for the past several months here.

As you can see, it’s just been kind of failing the retests not really holding any support. The pops are being sold, and today on this, we were gaping lower again after breaking through a pretty critical pivot here at 153 down towards this pivot level in through this 147 and a half to 146 level. Now you can see it’s a very well defined pivot in through this 147 and a half. It also acts as the entry to a very minor gap here, but a gap nonetheless. And at 14587 is the gap fill point. And then below that we opened up into this big window that takes us down to roughly 137 and a half. Now, what I was looking forward today was the market to experience some continuation and the selling and see if we can get really get through the support zone down through 146.

Because if that happened, this would really open up and start to look really nice to the downside here, getting into this pocket for a trade down toward this 13750 level. So back to the five minute, you can see what happened here this morning. We just defended this level really well and it kind of helped support the SPY helped it pop up. But let’s take a look at what we were looking at here on a faster timeframe. So we’re watching BABA this morning out of the open. I always let the first few minutes shakeout just to kind of see what the opening range looks like, see if we can get a direction established. And then I’ll look to take a trade if it sets up properly. So what happened here on BABA, as we get a, the market opens, we get a quick dip, it gets bought right back up, and then it kind of sits there.

Then it starts to fail again. And this is where I started to like it because when we see stocks that fail and move to one side and then come back, we typically see that direction continue. So being that we failed to move back up, came back down below the view app in the 20 here, and we kind of were sitting below view app after this retest, we made a lower high and we started to pull again. This is where I got short right here at 14780s. So I got filled. Now what I was doing here was anticipating this breakdown. This was that gap entry pivot point that if that broke we would see a move like we saw over here to continue down towards 146. Now I was anticipating the move, yes, but I only had a small starter position, a feeler position, if you will.

And typically that’s what I’ll do on anticipation trades, especially if it’s around a big level of support. However, we did have the market in our favor. So back to the SPY here a minute. You can see what happens out of the open is that the move is failed, right? That move up is failed to closes back below the weapon 20. And we start to pull here and go through the lows. The opening range low, so when I see the market or the SPY start to give up that initial move and start to sell back down, take out the low. I have to consider that. All right, well there’s more sellers here, president and we may continue the rollover and see more lows into today or this afternoon and I want to try to keep my trades aligned with the market because the tailwind of the market will definitely help your trades play out in your direction.

So being that we had the market start to roll over, I went back to BABA and I started to see the same thing. I started to see it follow the market, right? Right in through here. Big level of support that gave way we were going to open up and flush down towards 146. Now if we go back to a faster timeframe, you’ll see what happens here at that support level is we just kind of sat there, right? We broke it once, we started to look okay, we sold down a little bit, pop right back up, held it, came to view app hold again. We started to look really nice again and then right in through here at this point, there was something that happened on the SPY that I did not like and I jumped out of the trade right away.

Right? So if we go back to the SPY, five minutes, look at this spike that comes in out of nowhere, right? This big reversal candor, almost engulfs the first 20 minutes of trading, right? This one candle pretty much engulfs the entire range of the open. And that tells me the bowls are here to take this thing back higher, at least for the short term. So when I saw that big candle get put in I didn’t like that. It’s not good for a failed trade. So what I did was I just exited the trade right away and kept my loses small which is good. It’s an awareness thing, if you see the market not in your favor, you don’t have to wait for your stop to hit, just get out, right?

Because typically that sort of thing is going to drive your trade against you if the markets against you. So take that into consideration because you don’t always have to wait for your staff be hit if you don’t like the action in the stock, then just get out. And that’s what I did today. So I have 500 shares of this and as we started to push back up here, right at this point, when the SPY spiked, I just got out. As we pushed through 148, I took about forty cent loss on it a little bit more. As we started to push back up through 148 and 4820 I believe is where I got fill. But that’s okay. One thing I always like to do is after a trade, I obviously review it, but I always ask myself the question, what I have taken it again, and my answer to this one is yes, I had everything that I wanted and the market was in alignment, which is the biggest factor.

The market’s been week the last couple days. It had the ability to continue. We started to see some selling pressure coming on the market, which also was reflected in BABA as we started to give up that initial move, we put in a lower high pivot after trying to retest, which is on the rules for entries. And as it started to pivot back lower here, I got short anticipating the breakdown, the breakdown would have played out, I would have added substantially to my position. However, it didn’t, not all trades work and that’s just part of trading, but it’s, I’m fine with it. It’s a very small loss. I was worth the attempt because at that did open up, there was a lot of money to be made there. So it’s okay that you take a trade that doesn’t work as long as it’s not a trade that you wouldn’t have taken again. If you’re way off basis from taking a trade in alignment with the market or you didn’t follow the rules or something like that, then that’s a different scenario.

But here, this is the type of action that we see the big trades play out on, the markets in alignment and we’re anticipating a breakdown of a big level. When those things come together, we typically see big moves and today it’s just one of those trades where the support was stronger and we decided to stop out for a relatively small loss. So that’s okay, tomorrow’s a new day. We’ll get back at it and look to clean that up. Now as far as other stocks on the watch we had PRGO on here, which I actually did make a very nice move. Unfortunately, the volume was just anemic. There was no volume on this, nice levels on this. Below the 70/20 level you could look at our watch this video and see how we had this mapped out, but basically I wanted this short below 70/27 and you’ve got a pretty nice move here for a couple of points a quick.

But the volume was 156 K in the first five minutes. My minimum threshold bare minimum threshold is going to be about 500 k, so really not enough volume for me to get involved in this. And so we had to sit tight on it and not treat it. We had PYX on the watch list as well in the event that it wanted to continue. But it was just real whippy, kind of choppy out of the open and I didn’t really like the action on it. We said we might want to watch it over the pre-market high, but as soon as it hit the pre-market high at pulled hard and that’s typically not what you want to see. It did hold this gap up though and then it started to run.

So if you were a scalp type trader, this is definitely a trade that there was some potential on. You’re definitely going to take on a much higher degree of risk, but there is a reward there if you’re quick and can get in and out quick. And typically that’s not the approach I usually take. I’m looking to kind of lean into a trade with some size and then let it kind of play out. But so again, kind of an odd day of action, not really much to look at in the terms of momentum, but it’s probably because we didn’t see any sort of direct catalyst and that’s a really important factor. So any events, that’ll do it for today guys. We’ll be back here first thing tomorrow.

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.