Warrior Trading Blog

Trade Review | Playing The $ROKU Opening Range Breakout

opening range

Trade Review | Playing The $ROKU Opening Range Breakout

Here is a new blog post about the “behind the scenes” of my trading days. Hopefully, this will help you better understanding what I did and it can give you some ideas on how to improve your trading skills. In fact, looking at what other traders do is still for me a valuable way to improve my own technique and skills set.

Let’s get started. Every day, I invest about an hour and a half during pre-market just scanning the market in an attempt to have ideas and to build up a plan for being ready to execute it once the bell rings (I very rarely trade during pre-market).

In fact, a trade plan is as much important as its execution. So, given the latest volume and range, together with the pre-market gap (above 4%), I decided to keep $ROKU and $SQ on watch. They both offered great returns respecting the idea of the trade very nicely. Personally, I did end up trading $ROKU and here are all the details about this trade.

Day Trading ROKU

What made me interested about taking this trade was a nice bull flag on the daily chart. In fact, as you can see, this stock has been consolidating for a while after a huge run up, when it went up over 100% in just four trading days with huge volume. So, I knew this was one trade with potential for pushing back up again once a nice and clean bull flag would have presented itself. And that’s exactly what happened (take a look at the picture below). As day traders, we know that these setups can be really strong since we can anticipate strong volatile moves.

So, the plan was to wait until the open, let the move shake out for the first 5 to 10 minutes after open and then potentially play the opening range breakout above premarket highs. Moreover, as soon as the market opened, I lost the chance to get the entry I wanted for the SQ fade.

This made me a little nervous, I’m not going to lie. But instead of chasing an entry on that one, I decided to be patient. ROKU, instead, did not resolve on either directions and it kept bouncing between 41.50 and 40.50 areas. So, I decided to wait for a clear sign of strength before getting in for the strong move up I was expecting.

Here are the details about the trade:

Strategy: VWAP pop (opening range breakout)

Direction: Long

Entry: 41.50

Stop: 41 (or a close back below VWAP / 20EMA)

Target: 44 (but it ended up going even higher)

P/L ratio: 50c vs $2.50 (5 : 1)

Time in the trade: 40mins

As soon as that candle at 9:50AM made a new high I opened a long position (@41.50), the trend continued higher pushing through the high of the day resulting in the big squeeze I was looking for. The price got closer to my target @44 and I become scaling out my original position. Finally, I sold the balance at @43.65 as it got back towards VWAP / 20EMA. I ended up making $2.5 profit on average.

In hindsight, I could have waited longer as $ROKU ended up running crazy later in the day to a high of 47.75, more than $6 above my original entry but I can’t complain about how this trade unfolded and with the gain that it was able to give me. Even with missing that SQ trade, still a great day in the markets, locking up a solid profit within 45mins into the day. That is what happens when you overcome the fear of missing out and maintain composure until the next trade sets up before jumping in.

Trade safe,

Roberto Barbaro