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
