SMB Training Blog https://www.smbtraining.com/blog Lessons from the trading desk Thu, 17 Jun 2021 16:10:27 +0000 en-US hourly 1 https://wordpress.org/?v=5.7.2 https://www.smbtraining.com/blog/wp-content/uploads/2017/08/favicon-100x100.png SMB Training Blog https://www.smbtraining.com/blog 32 32 How Pro Traders Use Weekly Options To Trade AMC https://www.smbtraining.com/blog/how-pro-traders-use-weekly-options-to-trade-amc?utm_source=rss&utm_medium=rss&utm_campaign=how-pro-traders-use-weekly-options-to-trade-amc Thu, 17 Jun 2021 16:10:27 +0000 https://www.smbtraining.com/blog/?p=51270 A top trader on SMB’s trading desk picked up on a strong trading idea on AMC and had the knowledge and experience to express this idea using weekly options, which had the effect of greatly reducing his risk on the trade while increasing returns. In this video, our trader shares his playbook entry with Seth Freudberg, SMB’s head options trader. ... Read More

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A top trader on SMB’s trading desk picked up on a strong trading idea on AMC and had the knowledge and experience to express this idea using weekly options, which had the effect of greatly reducing his risk on the trade while increasing returns. In this video, our trader shares his playbook entry with Seth Freudberg, SMB’s head options trader.

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coming soon

* no relevant positions

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How to Handle Stocks You Do Not Trade Well https://www.smbtraining.com/blog/how-to-handle-stocks-you-do-not-trade-well?utm_source=rss&utm_medium=rss&utm_campaign=how-to-handle-stocks-you-do-not-trade-well Mon, 14 Jun 2021 18:27:13 +0000 https://www.smbtraining.com/blog/?p=51264 In this video, learn how to handle those frustrating stocks that you do not trade well. A firm prop trader and Mike Bellafiore provide a template for how to handle stocks that you do not trade well, with a step-by-step trade example in $QCOM and $NFLX. Let’s get to work on sharing these important trading lessons so you can grow ... Read More

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In this video, learn how to handle those frustrating stocks that you do not trade well. A firm prop trader and Mike Bellafiore provide a template for how to handle stocks that you do not trade well, with a step-by-step trade example in $QCOM and $NFLX. Let’s get to work on sharing these important trading lessons so you can grow your trading account.

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in this video learn how to handle those
frustrating stocks
that you do not trade well hi i’m mike
bella fury co-founder of sme capital and
we’re a proprietary trading firm located
in midtown manhattan and i’m also the
author of the trading classic one good
trade
and the playbook in this video a firm
prop trader and i provide
a template for how to handle those
stocks that you do not trade well
with a step-by-step trade example and
qcom
and tesla let’s get to work on sharing
these important trading lessons
so you can grow your trading account
[Music] the trade i decided to play book today
was um
it’s on may 28th and essentially
breakouts based on
market context um so over the past few
sessions
cues and spy had been consolidating over
its 10 20 and 50 moving averages
um and one thing we were looking at was
what was being bought right so the
strongest industries in the market over
the
past month had all been defensive if you
look on the right
you see like oil metals and mining
leading the market
and then over the past five sessions
however you start to see a different
story like
uh pvw which is clean energy ipos
art funds starting to lead the market
and so that’s telling us that
tech is getting bought and we’re seeing
that we could potentially break out
um another thing that tells us this is
that
a part of our scanning process after
hours is
figuring out all the stocks that moved
four percent or more i mean comparing
that with the stocks that move four
percent or less
and this gives us a tell of exactly how
are these stocks moving what’s being
bought
um and like what potential trades are
there and so over the past
few sessions two sessions exactly what
we noticed was there was an increase in
number of four percent breakouts
despite cues and spies staying in range
um this is pretty strange right um just
because historically when you see
a lot of breakouts you’re gonna see
breakouts on the indexes and
big moves on the indices as well so this
is kind of indicating to us that
there’s a good chance that we’ll see a
breakout in the near future kind of
adding to that market narrative
super curious brian as to
how you came up with four percent and
how you
observe this because this is a great
observation
something that i’d love for more people
to do so
want to dive deeper into how you spotted
this
yeah to be honest four percent is
um i think if you did it like three to
five percent it would probably be the
same
we just wanted to see i guess
um what are stocks that are moving and
that’ll capture
like um i guess all industries if that
makes sense just because like
four percent is gonna be substantial for
like
uh like a large cap versus like a small
cap which it might not be
um and how i go about doing so is that
we just have like a scan feature
um it’s just really simple filter
that’ll filter say
average volume over 500k and then
closes over four percent on the day okay
gotcha love it
appreciate it and so real quick this is
just cues and spies on the daily
um don’t need to talk too much about it
but as you can tell it’s an extremely
tight range over the past few sessions
and then the moving averages have been a
huge help on the daily as well
and as you can see in both of them the
10-day moving average is
increasing at a pretty steep rate and so
key inflections i’m watching
going into the open is this qs334 75
as you can tell the past couple sessions
we failed to get over
um so being able to hold that would be a
clear changing character
and then on spies it’s this one’s a
little more discretionary but i’m
looking to see how we hold over
yesterday’s range and hold this gap
um if this is essentially how we’re
going about doing so is seeing
if a first move is lower like are there
bids
our bid stepping up are buyers taking
this aggressively
and most importantly do we see clear
buying relatively close to the open
with things opening so close to
inflection um and
a breakout narrative supposedly
happening that’s exactly what we’re
looking for
hey so brian you’re noticing you made a
great observation
that hey these stocks are up four
percent and the overall market is kind
of stuck in a range
so how are you thinking through those
levels for queues
and spy is that something that’s going
to be an extra check in your favor
is that going to be something where
you’re gonna need
for us to be above certain levels and
cues
how are you guys thinking through that
yeah 100
um i it’s definitely more of a check in
favor
and how what it affects does it affects
the execution style
um how aggressive we’re going to be in
terms of targets
um and how big we want to get into these
positions
it’s not necessarily like it clears this
level therefore it’s strong
it’s more of how are they all moving
together and it ties to with
um what’s being bought so on our screens
we’ll see we’ll have iwms spy iqs
we’ll have a list of industries lists of
sectors
and all of that kind of ties together
into the market narrative it’s not
really just like
one or the other if you want to learn
three more real world setups that our
traders use
including the simple setup that we teach
all of our new traders
and the setup that turned one of our
traders into a seven figure
big money earner check out the free
webinar that we’re currently running
just go ahead
and click the link that should be
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you won’t lose this video you can also
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you’re going to learn more in a couple
of hours from this trading workshop
than from years of online education so
in terms of names when we’re choosing
names one of them was netflix that
caught up
caught our eye and the reason is over
the past week previous to may 28th
what we saw was nvidia a market leader
we saw
facebook we saw google pushing highs
and that was in turn with when cues and
spirits run
so seeing that was a check in favor as
to why we thought netflix could be a
name that could go
it’s also consolidating really well in
the daily sitting on its 20-day
and the 10-day was increasing as well um
and
yeah consolidating at top end of range
means that we’re really close to
inflection
aka the rr on that position is really
good if it comes
and qualcomm was the other name we were
watching and so the reason behind this
one was all the moving averages were
really close together
that’s just telling us that price is
compressing
there’s buyers and sellers on both sides
and that an expansive move could
definitely happen
we’re also opening right over its 50 day
with the tight consolidation
that’s another check in favor and again
the increasing 10 day
is a big deal so in terms of catalysts
and fundamentals
um and these the numbers the two that
i’m really focused on here
are average volume and atr so for this
type of trade average volume needs to be
ideally over two to three million but
over one million is a baseline
just because those are the names with
tighter spreads and easier to day trade
um atr we found that when i look back at
my previous trades over the past six
months
i made most of my p l off names that
with an atr over one
and so from that period forward it’s
just been if it’s over one
then it’s tradable um and this last part
that
we’ve recently added to part of a check
in favor is
oh if you remember the end of last year
when we saw a bunch of those growth
names
get bought up um a lot of them had
really high sales quarter recorder
growth and eps quarter over quarter
growth
so that’s just one thing we’re seeing
especially if we’re trading a tech name
when we’re trading a growth name
um having these numbers is another check
in favor as well
and as you can tell like these are very
substantial
trading plan and so i broke out the
trading plan into two parts here
so the first part is gonna talk about
the market overall what we’re looking
for and then the second part is the
execution side itself
um and this is all done in the
pre-market before they open
and to summarize what we wanted to see
was breakouts occur
across the board so across all indices
and then
as well as in smh fang and growth
specifically
we want to see those lead and show
relative strength
and in this market overall this is over
the past couple of months
i’m just taking profits a lot quicker
this was from running back on my stats
and seeing that
i had a little higher mfes than i would
like i was giving back more profits than
i would like
and so until things clear up more and
especially when the narrative
isn’t essentially isn’t adding up to
what i would want ideally
um that’s when i’m taking profits a lot
faster hey can you just uh fill in some
of the younger guys on
what mfe is and how you’re using it
yeah so mfe essentially dictates like
um i guess what your unrealized profits
are in a very simple sense so like
throughout the course of a position um
how much were you
like what was the max that you were up
and then i kind of see that as a
i use it more of a general gauge it
isn’t like a oh it needs to be this
percent
but when i’m seeing that like uh i have
higher mfes than i would like
and i’m seeing that like i just feel
like i’m taking
it it’s a little tough for me because
it’s really discretionary and based on
the trade
um but when i just kind of see
essentially a pattern of
higher emifs than i would like um and
that’s a really easy thing to see on
trader view as well
just for the youngest guys so mfe is
maximum
favorable excursion and that’s one of
the things that we measure
in our stats for you guys to keep track
of
um and yeah so if we’re to be strong um
pools in the market should get bought
aggressively
or we should go immediately um that’s
because of where we are
opening gaps in the range and the
breakouts that we had seen
leading into today or into this day and
we
definitely don’t want to see us get
under yesterday’s range or any type of
false breakout narrative playing out
meaning strong selling volume or stuffed
move on
uh initial move higher
and so now the execution plan so top
names qualcomm and netflix
execution style is opening drive or
opening a range break
this is where we found that we have the
most edge best rr
and if we’re to be trending these are
obviously the best prices on the day
um and points to watch so this is
something i’ve added really recently
into my training
but kind of to to the point previous of
negating having a really high mfe um
these are false breakout points where i
believe could happen
um so on netflix it’s 508.50 and on
qualcomm 1.3650
so i’m watching these inflections
essentially for
like really carefully on tape to see is
there going to be a changing character
do we stuff um at these points are
sellers there
and how i’m deciding where these points
are just from
um high volume areas previous resistance
on like a daily chart
or any higher time frame as well as just
what overalls made sense and what we’re
kind of seeing
over the past couple of sessions as well
um
and potential reasons to sell so i’m not
going to go through all of them but
these kind of are the main points
um a temporary change in character on
tape will automatically mean
i take off a quarter to thirty percent
um high volume capitulation a cell will
immediately make me take off fifty
percent um and a change in market
narrative so if what that means is if
i’m
thinking we’re going to be strong on the
day and we’re breaking out we stuff and
low day breaks
on cues and spy obviously then that’s
not the narrative that i wanted so
if um and because we’re trading these
higher beta names
um that’s pretty prevalent and then full
price targets
is going to be atr or average true range
um
and we’re dabbling with this potential
like 15 to 20
swing as of right now so that’s if we
close that high a day i want to be
swinging fifteen to twenty percent
for a potential two to three day move
right away off the first ten minutes
um q’s is leading we’re holding well
over opening range after
a false breakdown um this is exactly
what i want to be seeing in terms of
price action
however it’s one thing to note is volume
is low
one thing we’ll look at is the opening
bid volume of
relative to the past previous sessions
in past previous sessions a lot of
the days started with an opening bid of
around five to six hundred k
so this is really low um and spy
is at low day so obviously right off the
bat this is already
not the ideal market narrative so i’m
weighing that as a potential
thing to note as like a hesitation
as to getting super big or being super
aggressive in terms of targets
and so first 10 minutes continued so i’m
also watching
smh and fang so both are looking really
good at the time they’re holding over
their opening range
um and yeah this is exactly what i want
to be seeing
so now first ten minutes on netflix and
qualcomm so
both have a really clean opening range
breaks
bids are stepping up neither garnering
much volume so that’s a
thing i’m weighing as well um and i’ll
show a netflix closer on the tape to
explain that better
but i do enter long on both of these
opening range breaks okay so next 20
minutes
and so this is where things kind of
change um and so
if you remember what i was talking about
earlier of looking
at cues and spy really closely to see if
the narrative continues
this obviously tells me that this isn’t
happening the false break or false
breakout narrative
is more likely now and that a really
strong breakout narrative is more
unlikely right
so we stuff pre-market high on queues um
put in a lower high
again no substantial buying volume and
now we’re starting to fade back into
opening range
on spy we’re breaking low a day after
stuffing and failing to hold vwob
and so in the short term this is telling
me that it’s weak and if i want to be
long really aggressive on an opening
drive opening a range break scenario
well that’ll most likely not work out
so just a quick idea and you probably
have thought about this
and you’re doing a really good job
looking at cues you’re looking doing a
really good job measuring strength
in a particular sector at the beginning
of the open
you might think about hey is there an
etf that i also want to watch
so you know maybe you want to watch
something like xlk
at the beginning and check in on how
that’s doing as well
right 100 um yeah so we
at this time i believe i had smh and
fang um f and gu pulled
and so now i’m just gonna break it out
into a more
broad view of netflix and so
as you can see um we have uh
the first move higher on extremely low
volume
right compared to opening bid that’s
what i’ll use as a relative gauge of
high and low volume
and we’re slowing down as we come into
the value area so if you see like size
of the candle
and on tape you’ll see like how
aggressive offers are lifting
as we come into that 508 or start to
come into that area
we’re stalling out and then the first uh
lower high
or potential to catch and move higher
get stuffed
so there’s no follow through and we see
a failure of buyers to appear at vwop as
well
as we sell back into opening range
and similar idea it kind of happens on
qualcomm
so uh high day breaks are stuffed as we
approach resistance areas as well
as you as you remember in the pre-market
plan i was talking about this 136.50 so
this is exactly what i was watching for
and so even though this one is a little
bit better in terms of the entry point
because we do see aggressive buying as
we break opening range
um this is a huge check in favor to us
and something we’re weighing
and what we like to see ideally is does
the brake
does the volume on the brake equal or
get
larger than the opening bid um because
to me
just like that’s a huge change right
that’s not something you’re gonna see
regularly
especially day to day
um but one thing to note is that as we
continue higher
volume drops off and so if we’re gonna
have a super expansive move we’re gonna
see
atr or two atr on qualcomm that’s pretty
unlikely volume is going to die off so
early into the morning we’re not even 15
minutes in
all right sweet so now executions i’ll
start on tape
and so at this point in the tape i’m in
about feeler size
on netflix just seeing um
first move lower was on really low
volume um
buyers are stepping up and so i’m
keeping this wide at this point and i’m
seeing
if we claim 505 which we weren’t able to
claim before 504 80 to 505
and bids claim that how are buyers
stepping up so we break
505 and bids are stepping up at this
point i’m adding
and i’m looking to see two things i’m
looking to see are offers lifting and do
bids hold
or and if volume comes in and so
at this point what i’m thinking through
is if
we flush under 504 50 i’m immediately
cutting half
seeing where this position is and maybe
even cutting full
if we’re able to hold 505 for extended
period of time and i’m able to get good
rr
where i believe we shouldn’t sell under
view up then i’m moving my stop up
and i’m trading that from there
and as you can tell right off the bat
we’re not getting substantial volume
we’re not lifting higher
so how i’m interpreting this information
is
like i said before if we flash i’ll
flatten out um
but if we move higher i’m not going to
have super aggressive targets
i’m going to look to cover risk into the
first move
just because this is already not adding
up to the narrative i want to see
so you can tell 100k volume at the open
for something that does
4.7 million average volume is extremely
low
so this point i’m continually waiting
i’m also watching across the board
um how are other names holding up how
are the names being bought
um yeah and just weighing all of that
together
yeah and just a question so
q qcom is going to match up better with
smh right qcom is going to
match up better with uh some of the
other names like
you’ll you’ll notice qcon moving in sync
more with something like
an amd
not as much with a netflix so i’m
wondering if you thought about
whether or not you would expect qcom to
really move the way netflix would move
those those stocks aren’t
generally stocks that i would pair
together
uh and they’re not not in the same
sector they they are independent of each
other
whereas i i might not say that for a
q-com or an amd
q-com and an amd um thoughts on that
right 100 um and yeah i totally agree
with you so
i’m watching that’s why i was watching
like fang and smh separately so the idea
stems from
i’m gonna see we’re most likely gonna
see a breakout in the market
so what i’m watching is what’s gonna get
bought and so i’m kind of seeing like
is fangs gonna our fang names gonna lead
or smh name’s going to leave
and so that’s why they’re kind of split
up in different industries but i am
watching amd
nvidia on the side and that’s actually
something i wanted to ask
about later in the presentation
okay wait i’ll wait for that all right
perfect um so as you can see now we lift
um i’m looking to see our bid stepping
up and
our sellers stepping in aggressively
because we’re moving on such low volume
and so light
it’s very easy for like a seller to come
in
with substantial size and absolutely
wipe us back into opening range right
like none of these bids are that
substantial and so these are the things
i’m weighing
and also like although we’re moving
higher i’m constantly thinking about
like
is the spread gonna open up to a point
and then um
like i’ll be back at my break even price
and also
um uh how substantial
are the offers lifting um in terms of
independently to each other
and so we’ll continue pushing higher
in a little bit here
the good thing i’m seeing right now is
there there is nothing telling me that
we’re going to stuff really aggressively
um shallow moves lower still getting
bought so
um i’m still holding this position
spreads tighten it decently tight for
this name so
and so we’re gonna push to about 507
507 some change and that’s the point
where we start to stall out
um and that’s where i start to cut a
risk
and i take off that 25 lot that i talked
about earlier
but yeah that’s pretty much it on the
tape and so in terms of executions
um feeler on high low hidden on opening
range broke
out a quarter as we start to slow into
507
um and then i was out another piece uh
into failure to hold v wap and at this
point i don’t want to go red on any of
these positions
um especially with the market narrative
changing so everything is
moved up to more or less a break even
stop um
similar execution on qualcomm more of a
momentum-based one
in this one so my first position was the
opening bid
feeler that got stopped i hit in on
opening range breaks especially when
volume was there
covered risk as we came into resistance
and we broke high day and
and stuff right um brick high day by
like 20 cents and stuff to me that’s a
change in character i cover risk at that
point and then
um whatever left i just have it
essentially a break even stop
and so this is what i wanted to talk
about so
i had a i’ve developed this character
sheet about a month ago
essentially it’s like a ranking system
for the type of names
and how i believe they trade and how
they match up to my
execution style so one ideal two market
leaders
wic low reliable especially on opening
drives opening range breaks and high
volume
three is kind of missing one to two
components for they’re tricky
that four is where it’s really hard to
trade so
for me like if i have a four on it
that’s something i’m
eyeing really carefully five and six i
will only
trade if the setup is really ideal and
the entire sector industry
and the market narrative is all lining
up and so that’s what i wanted to ask
your opinion on bella
so amd was setting up really well as
well
but it’s a name that when i look back
historically on my trades in amd
that i underperform um and
i found it it’s because to me that name
is pretty wicky
it fades a lot of opening drives it
takes multiple attempts a lot of the
times
despite it closing maybe at high day and
so
i kind of if i were to look at qualcomm
and amd
and weigh their setups purely i probably
would have weighed
amd’s a little higher but because i
historically trade qualcomm a lot higher
are a lot better i chose qualcomm over
amd so i was wondering
with your experience and how you’ve seen
guys at the desk kind of tackle this
when they have certain names that they
don’t trade well how do they manage that
balance between
i don’t trade this name well but the
setup is there if that kind of make
sense
yeah i think you want to be looking for
first of all i think this is terrific
i love what you’ve done here i would
highly recommend that other traders keep
track of the trades that they trade well
and this is an excellent best practice
for going about doing that
and so you’ll hear us say internally
uh a bunch of times if you if you’re
sitting in enough am meetings
you’ll hear us say all right
that sector doesn’t trade very well okay
that stock isn’t a really good intraday
stock you know for instance the oil
sector doesn’t trade well
a gold doesn’t trade particularly well
intraday
just to give you an example now that
doesn’t mean
that we won’t trade oil it doesn’t mean
we won’t trade gold it means
we’re going to be slow to trade them
we’re going to need
that stock or that sector to really pull
us into it
and so you for example
when you’re just starting it might be
the case that you are only going to
trade
something that you don’t trade
particularly well
if it has an a plus setup you may say
just not going to do it unless i just
love the setup i love the catalyst
i love the way it’s setting up intraday
i can control my risk
i can make a lot of money on this trade
and you can create new parameters to
take that trade
and and you should do that you should do
that
now senior traders tend to just do that
more instinctively
but uh the you younger guys are better
than us
and particularly in the way that you can
be more systematic
and so just like you develop a ranking
between you know one and six for whether
or not you’re going to take something
you can you can create the times that
you’re willing to take something that
maybe is a
for or worse something that’s tricky or
something that’s a little bit more
difficult for you i i do not recommend
i do not recommend saying
for any particular sector or any
particular stock
that i’m never going to trade it i i
don’t think that’s what the information
you’re getting from the market is is
providing you i
i think if you find a stock that’s
tricky i don’t think that’s information
is
i can’t ever trade it i think the
information is
man i better be really careful about
trading this and i better save it
for only the best setups because we all
know that
the stocks that you’re trading they do
move i mean there is opportunity in that
so you’re going to have to be more
selective
you’re going to have to be more
selective for the setup that’s best for
you
you’re going to have to make sure you
can control your risk
and you’re going to have to make sure
it’s worth your while
and if you did that i i would i would
surmise
i would i would predict that
you’d have a lot of success with it so
you might just sort of say look a
playbook trade for something that i
don’t trade well
it’s just going to have to have way more
variables in my favor
and i’m just going to live with that but
i’m going to give it a run if
it really sets up nicely gosh it
okay that makes a lot of sense i
remember carlton also talking about how
like if you know and name trades really
badly
you’ll know exactly when it trades well
so yeah that lines up i appreciate it
thank you
no that’s that makes sense i’m trying to
think of something that i trade
really badly
that i just
really you know almost i mean gold is
something that i
i feel like intraday you’re going to
have
i think that’s probably something that
is going to require
that that that sector to pull me into it
i’m just going to be real slow to trade
gold
intraday um and there’s lots of trades
better overnight as it is so
that’s that’s that’s one problem um
anyway but i like
excellent work here love the character
sheet appreciate it thank you
and so the other thing um to take away
that we’ve been doing was another part
of our process is
um doing this in notion and so it’s
screenshoting
um the charts on multiple time frames um
setting them up based on
four different rankings and then what is
the intraday setup
where was the open and then particular
stats that we think that
could be meaningful and the reason
behind doing this type of chart booking
is we believe
it’ll help us identify patterns within
setups that share similar key variables
that’ll give us more of an edge as well
as repetition
with different names that move and how
they move exactly and how they move
based on the variables that they have
and then just figuring out intent of
what execution style works best with
that
and so lastly yeah so the focus on this
this last part here is that how to
improve further um
i believe that a big part of the edge
that i have is in the ability to
constantly adjust
um i don’t think edge is something that
stays forever and it’s just
one constant thing with the market it
just so especially as day traders it’s
so volatile it’s constantly changing the
current market environment is constantly
changing
so just trying to constantly stay in the
mindset of
what is the most efficient form of
execution and how can i constantly tweak
and improve
but yeah that’s pretty much it
appreciate your time bill hey go ahead
and click our subscribe button so you
don’t miss
any of the videos they’re producing for
you and the trading community and please
take the time to add your feedback in
the comments section for what videos
you’d like for us to produce next
and what you found helpful from this
video from all of us at smb
train and trade well

* no relevant positions

The post How to Handle Stocks You Do Not Trade Well appeared first on SMB Training Blog.

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A Remarkable Return in 15 Days Using this Simple Options Strategy https://www.smbtraining.com/blog/a-remarkable-return-in-15-days-using-this-simple-options-strategy?utm_source=rss&utm_medium=rss&utm_campaign=a-remarkable-return-in-15-days-using-this-simple-options-strategy Thu, 10 Jun 2021 14:16:35 +0000 https://www.smbtraining.com/blog/?p=51259 A trader that we’re working with has put together a very simple swing trading idea that can yield eye-opening returns in very short periods of time when expressing that strategy using a very simple options strategy. In this video, we’ll teach you this straightforward trading idea and how to structure an options strategy that takes this swing trading concept and ... Read More

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A trader that we’re working with has put together a very simple swing trading idea that can yield eye-opening returns in very short periods of time when expressing that strategy using a very simple options strategy. In this video, we’ll teach you this straightforward trading idea and how to structure an options strategy that takes this swing trading concept and adds a nice cushion of safety on top of the excellent return potential of the trade.

* no relevant positions

The post A Remarkable Return in 15 Days Using this Simple Options Strategy appeared first on SMB Training Blog.

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The Gamma Squeeze Trading Strategy (in $AMC) https://www.smbtraining.com/blog/the-gamma-squeeze-trading-strategy-in-amc?utm_source=rss&utm_medium=rss&utm_campaign=the-gamma-squeeze-trading-strategy-in-amc Fri, 04 Jun 2021 13:50:06 +0000 https://www.smbtraining.com/blog/?p=51255 In this video, learn the Gamma Squeeze Trading Strategy. A firm prop trader shares in step-by-step detail The Gamma Squeeze Trading Strategy, from a recent trade in the hottest stock in the market- $AMC. Let’s get to work on sharing these important trading lessons so you can grow your trading account. * no relevant positions

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In this video, learn the Gamma Squeeze Trading Strategy. A firm prop trader shares in step-by-step detail The Gamma Squeeze Trading Strategy, from a recent trade in the hottest stock in the market- $AMC. Let’s get to work on sharing these important trading lessons so you can grow your trading account.

View Video Transcript

in this video learn the gamma squeeze
trading strategy
hi i’m mike bella fury co-founder of smb
capital and we’re a proprietary trading
firm located in midtown manhattan
and i’m also the author of the trading
classic one good trade in the playbook
in this video a firm prop trader shares
and step-by-step detail
the gamma squeeze trading strategy from
a recent trade in the hottest stock in
the market
amc let’s get to work on sharing these
important trading lessons
so you can grow your trading account
[Music] this is a gimmick tweeze set up on amc
from about a week ago
some of the things we’re going to talk
about is how there’s so much edge in the
setup but when not traded properly
can put you in a pretty deep hole uh
some of the things we’ll talk about
best candidates for a gamma squeeze a
trade strategy um the pulling setup
some executions reading the tape and how
we can improve
hey can you just get right into
explaining what
a gamma squeeze is yeah
um so
there are certain conditions that have
to be met for a gamma squeeze to
manifest
um a scam squeeze slightly differs from
a short squeeze
as it adds another layer of intensity
because of the
stock’s underlying a lot of time we’ll
see
money flowing into the call options from
investors which forces more buying
activity which can lead to an increase
of volatility and range
so for some of the things that we need
to see for gamma squeeze to happen
is it has weekly options and then within
these luiki
options you want to see lots of out of
the money call buyers
near expirations um you want to see the
stock and play high
our vault sector strong so we’ll see
like the in this
trade setup is uh the wall street bet
names are all running like gme
amc and a few others
and then smaller flow stocks like
microsoft or apple or floats are pretty
large
so you want to have names that can have
some really large
weekly volatility maybe over 15 percent
range
in a week expr gme and triple b
wise an example of this and then high
shore interest
and we’ll get to more of this
specifically within how it worked within
the trade
amc and is there something that you
use to screen for unusual
call buying yes a lot of this
information
i think i can find on twitter there is
scanners you can pay for
um i can’t listen to the names on top of
my
head but a lot of time as i look through
at the end of the day at twitter and i’m
looking for what is getting a lot of
options activities
and i’ll hear from other traders this
information
that’s great but you might want to be
thinking about
hey how do you get some of that
information delivered to you more
readily as opposed to
one offs or chatter or in sort of a
in in this non-systematic way i mean if
this is something that
can be so powerful i’d want to know more
of that
well with this i’m actually looking at
the open interest so i can just pull up
like the option chain and look at which
strike prices have the highest open
interest
and so that’s the the main way i’ll
actually use that data
is maybe not the inflow at the current
time but what’s been happening from the
past two days
or more importantly the weekly calls
which has the highest interest
or yeah open interest so with poland
setups you want to
look it’s your entry is really based off
your risk is of what you’re willing to
risk and
what level you want to you enter in
let’s say you see an inflection point
and you see a larger timeframe or a
solar timeframe trend you want to get in
at as close as you can to that price and
prior to entering the trade
and you want to know exactly where your
risk is and ideally when price is
pulling into this
you want to see decreasing volume as it
pulls into support
and then reason to sell reversal candle
breaking emas a lower high
or a breaking trend a lot of time with
these setups
it might be better to be selling into
the break of new high days or into an
extension as you can be
getting really good exit prices another
reason to sell gets below v
wap and then a change in character in
the tape
thin on the bid and you can see that
seller control
as price is stepping down as in in
regards to risk this trade
should work right away as entries need
to be based off clear and defined levels
stop is determined before the trade is
executed
if you want to learn three more real
world setups that our traders use
including the simple setup that we teach
all of our new traders and the setup
that turned one of our traders into a
seven
figure big money earner check out the
free webinar that we’re currently
running
just go ahead and click the link that
should be appearing now
at the top right hand corner of your
screen that will open up the free
registration page in a new window so
don’t worry
you won’t lose this video you can also
visit
tradingworkshop.com to register for this
free intensive workshop
you’re going to learn more in a couple
of hours from this trading workshop
than from years of online education so
mike this is where we’ll talk about
um why the options or the underlying is
so important
um and this is really determined by the
strike prices so
when gamma squeezes happens there’s
three major players
of why this can create so much range
first
it has to be a large increase in buyers
in this case
wall street bats or and other popular
online forums which create a large
imbalance of retail involvement on this
certain day there is a 20
increase in amc ticker sediment
um so this was one of the largest
increase from the past few months
and that really caught my attention
the second part of this is with these
retail buyers they
are likely to be purchased the out of
the money weekly calls near expiration
which forces the market makers who are
selling the calls to delta hedge
one way they are delta hedging is by
buying common stock of amc
thus creating even more demand and as
the stock price
increases the more they have to hedge
this is really important
as price moves higher and higher the
more and more large
larger buy orders are needed to to be
executed
to hedge against this call buying thus
creating
a vicious cycle and why these moves can
get so parabolic
and then thirdly we had um 23
short float um so they had to cover when
price was moving against them
um when uh shorting is basically when
the individual has to buy back the stock
and that creates more demand
and when these three mechanics are
working together at the same time
it creates a similar effect to putting a
microphone up to a speaker
and things can get amplified very
quickly
okay let’s talk about social media
sentiment data
there’s a new regime change in the
marketplace right now what is it
buying calls out of the money calls
these uh these meme stocks
are catching a bid and running right
the talk of the market is these
meme stocks
like your amc’s like your bb like your
triple b
y uh like your doge
are running agree gma
running agreed agreed yep so a lot of
retail participants
the stocks they’re interested in are
really running that is the big picture
of the marketplace if we’re writing the
nightline news copy for cnbc that’s got
to be in it
these stocks are running so
social media sentiment data
in this regime right now more important
and something we really want to be
paying attention to and learning how to
incorporate into our trading
so it seems as if you’re using wall
street bets ticker sentiment
why don’t you just spend a little bit
more time what you’re doing there where
you’re getting that from
how that’s potentially helping you with
your trade decisions
yeah so this website is called swaggy
stocks um you just do a google search
and you can find it
basically how i use this is i go on the
website and i see which stocks are
most trending on the day according to
wall street bets
what it does is it scans their website
and sees and it looks for
is their positive sediment is their
negative sentiment and what is the
overall activity
in this name so when i’m watching these
names i’m gonna see
what’s what name has the most retail
volume and on a day like today we see
amc
climbing up the list some days amc will
be higher than gme
and some days blackberry would be above
gme
and i want to be involved in the names
that are at the top three of that list
as they are most likely to be in play
and it’s going to have the greatest
amount of retail involvement
which can lead to a very large gamma
squeeze
as we saw here where there was a 20
increase in activity
in amc which um in hindsight did lead
to a gamma squeeze on this day good i
really encourage you to continue looking
for data sentiment and incorporating
that into your trading so there’s
there’s other data sentiment that you
can use there’s other social
media sentiment that you guys can get
your hands on some of that is
potentially in cloud quant but keep that
up
that’s super important particularly
since
the big picture for the marketplace is
retail trading participation
all right so really good work there all
right and then this is some bigger
picture stuff
uh amc is breaking out a larger time
frame wedge
uh and the interesting thing to see here
is when the wedge was breaking out
it was on increased volume and we did
get a pull in
back into its weekly range on decreased
volume
and then moved back over the highs on
increasing volume
per each day which validates this move
as
having really good strength and then
some 15 minute technicals leading to the
setup
so the daily breakout happened four days
prior
and then we see continued strength and
we are not able to fail
and i think the important thing to look
at this is to really see visually
if the gamma squeeze is happening is how
price is accelerating
as um we’re moving higher um see in this
like 13 range we’re very consol
we were consolidating we did have a
decent range but as price reaches higher
into the six teams into the 18s
um it really starts to a ramp and that’s
the mechanics of a gamut squeeze
starting to
play out and you can see here this was
that when it was stock was at 1850
and i think right now is up near in the
60s so
price really expands when prices start
to break out and get higher
so on this particular morning this was
the first real pullback we saw in
pre-market
so this was going to be on lower volume
and
i was thinking that oh this gap down in
the morning could be a
could be a trap for shorts um as like
this would be the first red day
and what would confirm my long thesis is
if we did hold these pre-market levels
and the pre-market trend
for a continuation move higher which
just move a trap more shorts
which would lead to a more aggressive
squeeze
and then a little more zoomed in
pre-market this is on a one minute
so right on the open the first 15
minutes we developed a range
we also had a false breakdown which
actually add convict adds conviction to
my trade because that means
price moves lower but it was quickly bid
back up that could be
buyers coming in because they’re really
interested or shorts hitting in and then
when price breaks up and reclaims the
range them having to get squeezed out
um so that really piqued my interest for
the long thesis
about 30 more minutes into the day we do
break out of this
range and it is confirmed by strong
volume
so we pulled into that lower 1850 range
the bids held
and then we break out of the 30 minute
range and this is confirmed by
consistent and buying volume and as
price continue to move higher people
getting squeezed out
and this is uh naturally how the gamma
squeeze would take place
and as price developed we see it
developed a trend
and we continue to break higher and we
had a consolidation
false breakdown trap more short sellers
and then rip them
rip re-bid rip them out and move back
into the highs
um and then i want an important thing to
take notice of is
on um all the upticks there’s increased
volume and then the down ticks it’s
decreased volume
we didn’t necessarily see a blow-off
candle and there is consistently
throughout the day buyers in
in control i just want to show a full
picture of the day i didn’t catch the
second leg
but i just want to show that how this
relative strength worked and how this
squeeze played out for the rest of the
day
so we consolidated for about two hours
and then we broke out of its range
and yet again we had volume strength and
a continued squeeze higher
um for the rest of the day and then
there’s a one inflection point i really
want to show on the tape
um mike you talked about uh the see it
moment and then i just wanted to show
this part
right here so this was the pre-market
trend this white um
line right here and this is an
inflection point of um 18
like 18 1842 level uh this was a level
from pre-market and the previous day
and i would what i noticed was price was
pulling into this level
in on decreasing volume so this is a
ideal pull-in setup this is what got me
excited
as there was confluence of pre-market
trend and
previous a previous day’s level
so right there i put my order in and
this gave me a
an obvious level of risk off of which
was that 1850 level i wouldn’t
necessarily
risk low a day on this because that was
a shakeout
um and that if price does get down there
then that is actually true weakness and
what i want to see here is this 1860 to
1855 level hold
and we do see that as the bids are
stacked at 1860 and then we’ll
eventually see it stacked at 18.55
and then coming off this level we want
to see expansion of volume and the
speeding up of the tape
and we see that right about here
yeah right there we see people hitting
the ask and then we pull up
above 86 1870 and when 1870 lifts then
volume really starts to
pour in and this confirms the pull-in
trade
and now i’m able to risk that wick low
of 18.55
so right now now i’m already in the
money and
now i just have to wait for my reasons
to sell
you just need to hold it until 76. sell
it at 70 yes
it’s hilarious that this that you’re
showing this in the 18
i mean it’s great that you are tipping
off a potential really good trade
around 18 when as we speak right now a
couple of sessions later
the stock traded up to 76
traded down uh this morning into the 40s
and is now trading above 60 as we talk
right now at this moment
and so you know this is a signal
that is worth studying um i i do want to
say
and i and talking about that see it
moment super important
for you guys as you’re growing as
traders super important if you are an
elite trader
so yesterday i was chatting with shark
about amc and the range was 42
to 39.50 and you know when it got below
39.50
i chatted shark and said well the
intraday the intraday
momentum is now to the downside but what
happens
is it couldn’t really trade below 38.80
so the stock
should have gone down a stock that has
no business being up in the 40s
i don’t look i don’t mean that to be a
dream killer to anybody it just isn’t
worth
where it’s trading it this is a
phenomena it’ll eventually will go back
down
if you’re long and you want this to go
to 100
not rooting against that happening in
any way
and that may happen hey it may go higher
than that
crazier things have happened um but you
know
at some point this is going to make some
sense and it’s going to pull in and it’s
going to be a
a single it’s going to be in single
digits
unless something unless there’s an
intervening factor
and again i’m not trying to kill
anybody’s dreams but uh
yes sir so we were talking about that
and and so the momentum
was to the downside intraday for stock
that
had run from the the teens all the way
back up
up to the to the 40s way too quickly and
it just wouldn’t get below 38.80 and so
for that see it moment if you go back
and you look at yesterday’s trading
go look at how that stock when it got
below
important support really couldn’t push
very much lower
and couldn’t uh push below 38.80 and so
when you have a stock
that’s up way too much and should go
down
and gets below intraday support and
cannot go down
and that level is tested multiple times
and cannot trade lower
something irrational that’s not going
down
will trade higher and can trade much
higher
and if you go back and look that was
that see it moment
for yesterday’s trading would have been
a great open-minded
long to get long from that 38 80ish
level
and the stock did really go to 76
yesterday
uh closed in the 60s but that’s the
importance of of waiting for those
uh ca moments and you know one of the
things
that uh is super interesting is look
there are guys in the desk who are elite
who are trying to get bigger and they’re
trying to get better
and some of them in this amc
have gotten themselves in trouble by
trading
a short thesis with a lot more size
and we’ve been talking about
how to offer them the best guidance and
some of these elite traders
saw and see this amc is a really big
trading opportunity to downside
particularly where it is now
and are stretching themselves to
trade with more size but and i wrote a
tweet about this today
maybe making more and being bigger as a
trader
is more about improving your
open-mindedness
and your patience and so you could have
been sitting there saying hey
amc is worth six bucks it’s at 18
this thing should go down but if you’re
open-minded and you see that buying
at that level maybe it’s a pretty easy
long for you
as a trader and
you know i was i was talking with super
successful trader who was one of the
primary co-participants in starting
one of the great hedge funds in the u.s
in history
and on this topic
you know he was saying that uh he’s not
a big believer in
outsized risked for certain trades
that that really works and that some of
the
biggest traits start out as these
innocuous ideas and
it’s very easy trade see it trades
you’re just sitting at your desk you’re
being open-minded
you’re watching the data you’re watching
the price action and and you just
develop this idea that this is a very
easy long
you see it those can be
and often are really effective trades as
opposed to
sitting around saying i really believe
that amc must go down i really
believe that this is a big opportunity i
need to
put on more risk with this huge
opportunity and risk
more because it just doesn’t make any
sense
being at 18. it doesn’t make any sense
being at 42
it doesn’t make any sense being at 60
dollars
all of those statements would have
gotten you in a lot of trouble right
and so um love your thought
about love you’d love love your thought
about
that see it moment and the importance of
it and uh just sharing
this is this has been a crazy stock this
amc
during crazy times and
who’s to say where this is going to go
who’s to say
so the initial entry is at that
pre-market low
and then here’s another moment where i
think i could have put more size on was
the break of this opening 15-minute
range
which would be an opening range break
but i would have to treat that as a
completely different trade
as there’s different variables at that
moment different levels of risk
different ways of exiting
but instead of taking part partials off
at this
previous day close and some resistance
there i could be uh
holding and then just stair stepping my
stop up
along the way as the price action and
the volume develop here was just a
an expansive move under over 21
selling in the strength um here’s
another
into 2250 selling into some more
strength and then this lacks
exit with small size extremely small
size was that was the
trend break one way to improve is
using 15 to 30 percent of my size to add
on dips and cylinder rips
uh basically trading around the core to
mask maximize
my wrists or my r’s and
um and controlling risk when price and
volume are confirming my thesis
creates more cash flow and it keeps me
engaged with the tape
and um i just have to keep in mind that
i’m never going to have the perfect
exits but my job is
is to minimize the gap between exiting
too early and exiting too late
um because perfectionism is ego driven
and i cannot get the perfect exit
this is done by focusing on the trade
setup and executing based on the
developing variables not my emotion
all right great and hey important trade
to point out
don’t know how long this new regime is
going to be in place where the retail
traders are really running stocks and
are super important
in determining price
it lasts for for a long time great that
will
will adjust to that new pattern and
trade accordingly things will go up too
much
uh and then offer a loud opportunity for
some for some good shorts too
some good long some good shorts hey go
ahead and click our subscribe button so
you don’t miss any of the videos they’re
producing for you and the trading
community and please take the time to
add your feedback
in the comments section for what videos
you’d like for us to produce next
and what you found helpful from this
video from all of us at s
b train and trade well

* no relevant positions

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If you use this simple options strategy you’re win rate HAS to improve, probably dramatically https://www.smbtraining.com/blog/if-you-use-this-simple-options-strategy-youre-win-rate-has-to-improve-probably-dramatically?utm_source=rss&utm_medium=rss&utm_campaign=if-you-use-this-simple-options-strategy-youre-win-rate-has-to-improve-probably-dramatically Thu, 03 Jun 2021 14:33:37 +0000 https://www.smbtraining.com/blog/?p=51251 There is an incredibly easy to learn options strategy that logically MUST improve the win rate of any trading signal that you use. In this video we will share with you how that strategy works and provide a vivid example of just how dramatic that improvement can be. * no relevant positions

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There is an incredibly easy to learn options strategy that logically MUST improve the win rate of any trading signal that you use. In this video we will share with you how that strategy works and provide a vivid example of just how dramatic that improvement can be.

* no relevant positions

The post If you use this simple options strategy you’re win rate HAS to improve, probably dramatically appeared first on SMB Training Blog.

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