Last week SMB visited the selfless trading conference held by Tickerville.  My call was to share an A set up.   A set ups are our favorite trades.  We have A trades, B trades and C trades.  With an A set up we trade a stock with more size, hold longer, and perhaps set a larger stop. We put on 30 percent of our intraday risk for each A trade.  Today our goal is to teach you an A set up that you can start making your own.  An A trading play that has been the most effective of late in this market.

Here goes:

1) Find a stock with significant fresh news (like earnings)
2) Find a stock that on your long term charts has a clear path ahead
3) Wait till the Open has ended, usually around 10:15AM EST
4) Wait for the stock to start trending intraday
5) See the stock hold above an important level on the Tape
6) Hold until there is a Reason2Exit

Here is an example of this A set up that I made in AMLN this week:

1) AMLN announced horrible news on one of their drugs as it gapped down dramatically.

2) 10.25 was a huge intraday level on our charts

3) The Open ended

4) a little after 11AM AMLN started to trend up intraday

5) AMLN showed strength on the tape holding above 10.30

6) Hold until there is a Reason2Exit, which generally is when the intraday uptrend is broken

See if you can make this A set up your own.  We will discuss this trade in more detail on an upcoming SMB Trading Lesson of the Week for StockTwits U.

Mike Bellafiore

Author, One Good Trade