In this video Steve discusses one of the simplest trading plays – the explosive second day play. Learn what things to look for when executing this strategy.
View Video Transcriptso I’m filming this one from the mobile
office someone hit me up on Twitter
today to thank me for a trading idea
that I discussed in today’s morning
meeting and I thought it was worth
actually discussing it because it’s one
of the most the simplest trading plays
to understand most successful can be
used at any training level from beginner
all the way up to the most experienced
traders and it’s called the second day
play
[Music]
I will discuss it and kind of show you a
picture and cut me a couple points but
if you want to learn how to trade this
set up in more detail go to trading
workshop comm or click on the link above
it is one of three low-risk high-reward
trading setups that we teach in our
two-hour free workshop and I also spend
a half hour actually teaching my stock
selection process which got us to be
looking at the stock mRNA during
Friday’s meeting as a fresh in Play name
and then today as a second day plan
alright so the stock is mrna and it’s
one of many companies working on
developing a vaccine for the Cova virus
and it received the news the reason why
I made at our morning game plan if you
take a look at the morning game plan
from Friday was it was one of two stocks
with fresh news that we discussed and
they were rewarded and awarded a 500
million dollar contract to develop this
vaccine and scale at manufacturing now
500 million dollars is not chump change
so my first thought when I see this is
like wow this is probably real there’s a
lot of things these days you see a lot
of these pump-and-dump stories and
stocks that are total BS and there’s not
much there and so if we look at the
chart from Friday what we can see is if
you had a large gap and when you have
some news like a contract like this in a
biotech and a stock has a very large gap
quite often you’ll get profit taking
right on the open you’ll get some sort
of flush and it’ll come down to more
reasonable prices and then some people
will start to buy it on day one but
quite often what will happen is undie
wallet if it just holds the gap but
doesn’t really go up more on the second
or third day you may have larger money
larger funds come in and create creating
it create an uptrend and that’s kind of
was my common the morning meeting like
the analysts I’ve had a chance to look
at it over the weekend talked to the
portfolio managers at the larger funds
and they can make a decision they’re not
day trading stocks that had you know
momentum trading these gaps these larger
funds they’re looking you know they’re
looking at the news and look they’re
doing analysis the analysts are looking
at it then they’re communicating in the
next day or
with their portfolio managers and then
they’re starting to build into larger
positions and so that’s kind of the
scenario we discussed in day 2 so if we
look at the morning game plan notes from
today what we can see is we have these
three resistance levels and so the
reason why I’ll actually wanted to talk
about the second day play and by the way
a second day play is one where there was
fresh news on day one and then based on
the levels and the information we
established on day one we can make a
trade on day two so the thing that was
interesting about this one well I really
wanted to talk about it was the pattern
that actually established itself on day
two was what we call a strong opening
drive so if you look at this chart you
can see that I’ve labeled the resistance
levels and in that first 30 minutes when
a lot of volume is coming in it actually
blows through the resistance levels we
highlighted in the game plan sheet and
so that’s what we call a strong opening
drive when something has a strong
opening drive and this can be to the
downside or the upside and has a strong
opening drive what we look for is then
some sort of consolidation above a level
when it’s a strong drive to the upside
and we look for that consolidation and
for the rest of the day we can look for
it to trend and so that’s that’s
actually why I wanted to share this one
with you and then also you know great
job to the person who reached out to me
on Twitter they were happy here was the
tweet that they sent me they were happy
that they can oh that wrote down their
notes their levels from the morning the
morning meeting but I want a word of
caution for the for the younger traders
out there so what do what happens is
sometimes as a trade like this works out
and of less experienced trader
mistakenly believes perhaps the trade
worked out for reasons other than worked
out for other reasons then why it really
worked out and they’re thinking okay
this thing gapped up on day one I’m
going to just get these long these
things on day two and I’m gonna make all
this money if you really look at it and
you think about what happened here like
look at the price action on d2 it in the
first 15 minutes they drove through all
these key resistance levels on volume
and then it held above those levels so
it wasn’t like you know you showed up on
day two and just said oh this you know
the stocks it’s about forty six dollars
a share I’m buying it it’s gonna go to
5455 or whatever it went to its that the
volume came in in that first ten or
fifteen minutes took that or two
eventually was able to take out our
three stabilize and hold above that’s
the price action that you’re looking for
and rather that’s a long set up or a
short set up on day two is you want to
see the volume come in the speed of
taking out those levels that you’ve
established where potentially there
could be some supply and went right
through and then held above consolidated
for over twenty minutes and then you got
your trend
