I just got an email from a developing trader describing the below as “another ridiculously straightforward set up from today.” I chuckled. He had sent me a few already. But as we like to say daily on this teaching blog, it’s about finding the plays that make sense to you and trading them more often and with more size. And a great exercise which this young trader is going through is recapping his day and branding the best set ups for him in his mind. This is a good example of working on your craft.
I did ask if he caught this trade. He replied, “Yup.”
8 Comments on “Another Ridiculously Easy Set Up (BJ)”
That’s great, but what makes it a great setup, to us layman. Stock in Play> 52 Week High, Held Bid
maybe i should bring in the trader and ask him?
hey jedi…as simple as it sounds, you are pretty much correct. BJ had fresh news (retail conference), good liquidity (that day), a great technical set up (cleared 49.75 R level on the longer time frame and a bullish intraday pattern), and finally you had a great set up on the tape as 50.00 held the offer and all you had to do was pay when he lifted and never risk more than 5-10c on a trade that captured a point move.
the reason I get so excited about these trades is that they come all day, everyday, as traders we just have to sit there and do our job looking for them – the rest is easy if youre patient
If you look at this chart on a tick chart the offer lifts several different times during the hour or so consolidation… how do you avoid not paying when you see the offer lift for that hot second to realize that this is only a program to fuck day traders… when the offer finally lifts and the measured move begins 50 starts to buy on the bid for a hot second as opposed to selling on the offer… this is obviously the most ideal time to pay the offer when 50 is still holding… but this seems like the “perfect scenario” where 50 never breaks once it establishes…
how do you avoid paying all those false breakouts…? and not be stuck getting shitty prices.. .04s, .05s etc.
and also your risk has to be the bottom of the consolidation of .89 correct?
Those trades are often not as easy as they look. I’ve seen plenty of times where it pops through $0.10 and then reverses hard and goes back under the level to $.75 before rallying, or the seller comes back, or just backs, or it just reverses entirely. Yes, this one worked if you chased a bit once the offer left, but that seems like the exception rather than the rule. Of course, I didn’t watch it in real time so my two cents doesn’t mean as much as someone who watched it trade in real time. My easy trades are ones where it really tries to go one direction and can’t… A slightly lower low followed by a pop higher is a buy setup and vice versa.
youre right, we used 01c…and although he lifted once that is not the point. if the set up is still great and the stock isnt really going down then we keep watching and waiting for another shot. so lets say I tried it the first time 01c lifted (I actually was still at lunch), then it pulls back to 99×00 then 98×99 etc and volume really isnt coming in, ill scratch that trade for a few pennys and wait for another opportunity. we also keep in mind that its lunch our so they will absolutely play games most of the time. however notice the real break out occurs at 1pm on volume. this isnt a trade where you just set buy stops. if you were watching the tape you would see what I mean, it was differnt the last time. as for stops it depends on the trader…mine was 94 and 92c
good trading
there are a bunch a ways to make this play. but to your point they are much much much easier when the stock is actually in play, the consolidation here happened around lunch so there where some (although minimal) games played. another one I really liked that I bella mentioned was PEP yesterday at 11:05 pulls back to 61c support (prints a few shares below it to push out the lazy traders) and never stops. That trade we put on has a risk of 3c to make about a point…these happen everyday
even better held offer that lifted…again in PEP yesterday at 69.00…never lifted once, no games played…just pay when he lifts, and yes you could have gotten great prices…and look at what time volume came in..1pm, just like BJ.