The right way to use technical analysis for momentum trading

In this video, learn the right way to use technical analysis for momentum trading. We teach a developing trader, with a trade example he took, how to use technical analysis to determine the buyers are in control with a momentum trade.

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in this video learn the right way to use
technical analysis for momentum trading
hi i’m mike bellafury co-founder of sme
capital 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 we
teach a developing trader with a trade
example he took how to use technical
analysis to determine the buyers are in
control with the momentum trade let’s
get to work on sharing this enduring
technical analysis principle so you can
grow your trading account
[Music]
all right tori i want to provide a
little context as to who you are and
why you’re here
so my name is torie hudson and i am from
california i graduated from usc and
with a degree in history and shortly
thereafter i was trying to find what i
wanted to do
and stumbled across the stock market and
started watching videos and
found smb’s youtube channel and decided
that
this really interested me this piqued my
interest and i wanted to do this but i
didn’t know how to go about that
so i just kept on watching videos and
kind of traded on my personal account
and i had a really hard time for the
first year or two i had a really hard
time
until i reached out and i tried to do
the internship with smb
and i didn’t get that and that was two
years ago so i was put on a path into
smb by jeb by one of the traders that
works here jeff
through the sme training side so you are
coming to us through the sme training
side which is another part of estimate
capital
and you are an smb training in-house
student right now
and
presenting to us
a playbook trade from your work
presently
and
i’m curious
what’s what’s your ultimate goal
to work at smb okay
ultimate goal is not hey i want to go
back and trade my personal account
better your ultimate goal is hit when i
get hired by the firm and
this is one of the ways that you can do
it if you don’t come in the front door
if you’re not an intern
who then
gets offered a spot on the desk there is
sme training and you can take the same
training
and if you stand out
then and we like you and you like us and
you fit in and you do good work and you
show some good results there is a path
to interview and be hired
on the desk and
there are people out there even though
there’s not a lot of traders in the desk
right now because the covid
there are traders on the desk right now
who who did go through that path so that
does happen
and so
well i’m a little nervous for you though
because
you have to shine a little bit more
than maybe some of the others since
you’re trying to
impress the the firm
so let’s see what you did
so early on in my trading career
something i’ve noticed
is a lack of psychological preparation
and i’ve made it a
intention every morning when i wake up
to get my mind in the right spot
and by that me i mean as mark douglas
says trading in the zone
um you know trading is as much
psychological as it is technical or
fundamental if not more
so when i get up i make sure my mind is
ready to go
and in many ways for me i like to frame
it around a battle i make sure my mind
is ready to go to battle you know asking
questions like have i had a good night’s
sleep
is my mind in the right place do i have
any lingering emotions from previous
trades
those are all questions that i think
they’re important to ask
and there’s just those are just a few of
the questions that i asked myself
i also gather a quote book in the
morning just something to kind of
rejuvenate my spirit and get me in the
same get me in the right mode here are
some of the quotes i chose for this day
two of the ones i’ll point out is every
battle is won before it is fault or
before it is fought
and essentially that just means if you
failed a plane you plan to fail and
bella also chose one of your uh quotes
trading is a sport of survival
reinvention and perseverance even for
the successful trader i like that one
so i found that doing this for myself
and maybe it’s working out or or
whatever you have to do to kind of get
your mind in the right spot but these
quotes kind of help me
like hone in like a guiding missile on
what i need to be doing for that day if
you want to learn three more real world
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this trading workshop than from years of
online education now on july 21st the
big picture market fundamentals
were a little bit hazy so i just saw
that vix was down 12.3 percent from the
previous day
and there were surging covet cases
related to the
delta variant which was reigniting fear
and this was that was probably the
biggest one that i saw on that on for
the news for the day
as also treasury yields pacified
investors concerns that a rise in cases
would slow down economic recovery
with the 10-year treasury yield jumping
back to 1.2 percent after hitting a
5-month low of 1.1
there also saw a string of upbeat
earnings from some companies i think
google just had or just reported for the
previous few days yeah this is great and
what i really love what you do here
is you mark
how the vix was on this particular trade
that is something that’s super important
just before i came in here i got an
email from an independent trader who was
saying hey i’m struggling this year
my playbook from last year is not
working as well as it is this year
can you give me some
hands as to what i ought to be looking
at and one of the things that i shot
back to him is
well yeah your playbook is going to be
adjusted for this year
relative to last year
and i’d say one of the most important
variables for that is the vix
volatility
that it is lower now it’s shot up a
little bit here
from
even much lower levels and then is
subsiding a little bit but vix is much
lower this year than it was last year
and you can’t sit there and say i’m
going to trade the same way when vicks
is 15
as you do when vicks is 25.
that makes no sense those are two
different markets you know for a long
time we had vixx even at 12.
there are certain trades that work when
vicks is 12.
okay for years
vixx
had trouble peaking its head above 15
for years and then it did
and even when there was a difference
between vicks being 12
and getting above 15 there was a
different playbook certain trades
started working much better
and now
in this new era where volatility really
picked up you know we’re starting to
look at measures of vix above 15 fixed
above 20 vix above 25
but when you’re doing your playbook and
you’re archiving certain variables in
your playbooks you have to archive what
the vix was on that particular day and
you have to take note and potentially
think about different playbooks for
different vix levels so for a long time
i would
do presentations like this and i’d say
if vix was below 15 around 12 we
wouldn’t play marketplace stocks we
wouldn’t trade the overall market and
then i’d say if it got above 15 we’d
think
about actually making marketplace
looking at spy and volatility and big
caps that move with the market
and then if vix got above 20 then we
certainly probably would be
we certainly would be trading and
looking at making market place trading
the spys trading
volatility products and you know that
was
that was the guidance that we gave guys
for years and then we ran into the last
24 months where volatility is elevated
all right
but
you know my advice to that particular
trader mostly was
you you really need to pay a little bit
more attention to volatility momentum
trades are going to work better when
volatility is higher absolutely
certain fade trades are going to work
better when volatility is higher market
players are going to work better when
volatility is higher
breakout trades are not going to work as
well when volatility is 12.
and so
you know and when volatility is is lower
arvold becomes even more important in
your stock
and so and i see this a lot
this is such an important factor that
you’re putting in there for your
playbook trades
adding the vix as a key variable to your
trade and keeping note of that and
keeping note of your stats
when volatility when vix is 15 or 20 or
25
for certain trades
and and noting that so
this is a really great addition to a
playbook which you’ve caught right here
okay so here’s the fundamental drivers
for for kosovo it’s their drug
saimufilam i’m sorry if i’m not
pronouncing that right um
some trials claim came out that it was
98 effective across a range of
biomarkers in the treatment of
alzheimer’s
but one of the things that i considered
a con on this is that it’s still in
phase two so what’s driving this price
movement is a lot of enthusiasm and with
that enthusiasm has it comes uncertainty
and so that’s why i think you’re seeing
a lot of the volatility
that has arisen in this in this stock
everything related to this stock has
essentially been
based on this alzheimer drug and so it’s
extremely volatile when i was trading it
that morning
this was the pre-market news that was
released
and it showed that hey they had
completed patient enrollment for two
separate studies in the coming months
and also attached to that was that 98
percent effective
and here i also put some stats about
alzheimer’s
and the biggest another big one on here
is the short floats almost 20 i think
that’s a really big point which you
glossed over alzheimer’s
affects roughly 50 million people
worldwide
what you’ve done here is you’ve asked
yourself
the next question all right so the first
question is hey is this news relevant
and you’re saying yes it is because of
the
efficacy of the study
and then the next question is all right
well they’ve got this great effective
study
well what’s the market
possibility
and what you’re saying here is well it’s
very large
this is a huge market
this is a huge market if somebody were
to actually get this right
it would be
it’d be a trillion dollar plus drug it’d
be a huge drug
huge it would change the company
and so
adding that in there right there is is
well done right there it’s it’s a it’s a
huge opportunity if they get this right
as opposed to look we’ll see other stuff
like
i’m not necessarily a doctor or anything
but
where the market possibilities are much
lower it’s an effective drug great it
will help some people but not a lot of
people have this particular disease and
it’s not going to really make a lot of
money and that’s not going to be seen as
possible by the market all right good so
you got a high short float as well
that’s 20
which is
when i kind of started looking at
taking a potential long when you have a
short float that high and as we’ll get
into the technicals in a little bit when
you have a short float that high
and you have something positive like
positive catalysts like that it
that’s how i was thinking about taking
it long and we’ll get into the
technicals also sometimes i take the
average analyst price target i know i’ve
seen some traders here say hey analyst
price target came out at 180 but i saw
so many different price ranges that i
just took the average i don’t know what
you think about that but
yeah i think let’s just skip that for
another video the i’ll say one thing
about that which is uh you wanna the
better question is
is there room for people to upgrade
their
price targets and are there people who
haven’t covered the stock who are going
to come in and start to cover it which
will bring a new catalyst to it so once
i analyze the some of the fundamentals i
started looking at a breakout
and these are the variables for the
optimal breakout
you obviously like elevator arvol
volume is the fuel of the fire per se so
i’ll get into why i chose five later but
this this was going to need a lot of
volume to break through some of the
levels that we’ll see
um low volume on pullbacks kind of goes
without saying you don’t want to see a
whole lot of sailing even on pullbacks
i wanted to see a strong move into the
breakout area
news catalyst that checks out critical
levels broken
and it was breaking in the pre-market it
was breaking 90.
i also want to see market in favor and
sector in favor so here’s spy and this
is generally what i look at in terms of
the mar how the overall market’s doing
you can look at queues and whatnot but
this is what i was looking at for this
and the previous two days were pretty
interesting it came down at 420 and
balanced at 425 and then
the previous day it held that 425 and
came up back into the 430s
and close it closed pretty strong and
then futures held up as well
but with this delta variant and a few
other economic indicators
that were going to be released this week
i thought maybe it could usher in some
uncertainty
and i’m just trying to gather a big
picture i’m not actually saying hey
because it’s at 4 30 then self is not
going to break it or break out i just
wanted to
get as much information as i could and
then make an educated decision based on
that and here’s xlv which is the
healthcare sector
and the previous two days were kind of
like spy a little bit but this one
tapped all-time highs and retraced us a
little bit
at near that 130 mark so i thought hey
maybe
maybe another 130 test could be on
horizon and if xlv’s breaking out i mean
salva could break out so i just tried to
maybe connect the dots a little bit and
look
now here is the sava daily
as you can see
when their alzheimer’s drug news was
initially released um on february 1st
this had a pretty high short flow i
don’t remember exactly what it was but
it was i think in the at least 25 30
percent it was really high and as soon
as that news was released this thing
shot up 500 percent and i don’t remember
exactly what the news was that caused
that move down because there’s been so
much news released in this stock
but it made a pretty quick retracement
back and then it’s just been a little
bit consolidating tap 30 and then as
more news has been released about these
trials and the efficacy of that
it started to make some moves up and
what i’m gonna the point i’m gonna make
on this one is that
a week before
i made this trade as you can see
um
on july 5th and july 2 actually i think
was july 12th some news was released
some negative news was released
about the alzheimer’s drug and it made a
really sharp sharp downturn and then
another news was released and it came
back up so i thought
in terms of this big picture that
on the morning that it opened it was
opening around 95 and it made it it
gapped up a little bit over a 90 and so
i thought if this goes over 100 with
this news with this short float with
everything combined that it could make a
real move back up to maybe even all-time
highs but it just needed the volume and
so that’s kind of what my
my rationale was going into this into
this trade
and here is the multi-time frames i’ll
draw your attention to the hourly chart
60 day as you can see that 90 that 90
mark was key and when it was started to
move up
in pre-market above that 90
the only thing that it didn’t really do
a lot of pre-market volume and salvage
just doesn’t really do a lot of
pre-market volume even when it makes
strong moves so it’s not really
something i could have taken into
account
i would have liked to but
i just kind of had to go with what i was
given and i just really liked that it
was making a move above 90 and into that
95 area
and here are some of the intraday
fundamentals um average volume is
formulating shares which means it’s
liquid
uh arvol
this is this is the one that i was
looking at on other breakout days saying
hey what was arvol like when it broke
out on that what was harvard like when
it broke out on that and it looked like
it was around four to four and a half to
five which is really awesome for this i
thought that that that was key
atr is 7.6 which
the reason one of the reasons i look at
atr well multiple reasons but in this
case it’s just to manage risk and to
know hey if it drops down 7.6 it could
it could make a reversal or you just got
to kind of keep in mind atr when you’re
trading as it’s just a general range
that
just good to keep in the general range
of the stock
short flow we talked about institutional
ownership 80 which is pretty high
actually it’s really high
float market cap and beta
so here is my battle plan going to sava
i generally like to look at gappers that
have gone up five five percent or gap
down five percent for a gap and go
strategy i wanted it to open
with a strong move on high orville
the pre-market volume like we talked
about was
one only 1.5 of its average daily volume
which is pretty low but um that’s just
not a variable that i could have really
taken into account because it doesn’t do
a lot of pre-market volume
i thought the catalyst should see shorts
covering but the most important factor
will be if volume is high enough to
carry saba through the overhead
resistance
one of my worries with this
actually with a lot of stocks especially
volatile ones is if it reaches a
critical level and you take the break
out you just get rug pulled down i mean
multiple points and so that was
that was one of my worries but i thought
if i keep tight stops
the probabilities that they could have
kept going was higher than a potential
rug pull so
i just kept in mind that hey it’s going
to be volatile at some of these critical
points
and just to
size accordingly and if i’d also if i
don’t know if it doesn’t work i’ll know
rather quickly and exit the position
these are my entry rules holding above
v-wep
obviously i wanted to hold above v-wap
it we’ll get into the trend candles that
i use it’s like a variation of high
kenashi
if you’ve ever heard of those or seen
those
tape shows buyers in control i wanted a
strong move though i mean this is the
big one i wanted a strong move i wanted
like a door ramp through it i didn’t
want something less chopping and
grinding into it i just wanted a just a
bulldozer straight through 100
high volume candles and this is kind of
what i was willing to risk if it was low
conviction 10 percent of my daily stop
medium conviction 20 and high conviction
um upwards of 40. probably 30. i like
how you’re making that distinction there
before the trade and
deciding to allocate different risks
based on your conviction level i like
how
you thought through that
these are just a few questions that i
asked myself and some sayings that i
repeat to myself
the only one answered no to this was do
i feel 100 confident with this trade i’m
going to take and so that’s kind of how
i judge my conviction and how much i’m
willing to risk
and the picture on the right is
something i say to myself some mornings
because i think when you repeat
something it helps improve memory and so
i just repeat this aloud to myself
yeah i don’t know if you want to feel
100 confident in the trade well it’s
good ever that’s true
i think you want to be having a
conversation with yourself
before
in the middle
before the trade and and while you’re in
the trade
about
hey here are the reasons why it’s a good
trade here are the reasons why this
trade may not work
i i think for i mean yesterday we had a
big bounce trade in baba and it worked
out and it was looking good
but you want to have a dialogue about
why it may not work out
so i
you know i i and you know
you don’t i think if you
[Music]
feel a hundred percent confident in the
trade you may
not be as open-minded as you need to be
that’s true uh you may not be asking
yourself the questions you need to be
asking yourself about how this trade may
not work
you may not be taking in the information
that
gets you to make a trade decision you
know maybe there’s information coming in
to the trade where you need to take some
off
if you’re just 100 confident you just
sit with it
and that’s not good i mean you should be
confident
that this is a good risk reward trade
that’s how you want to be thinking this
is worth me putting risk on
i should be in this trade it’s worth it
my win rate is
okay
my risk reward is is good
i should i should t if i take this trade
100 times i’m going to do well
but there’s just a lot not in your
control and you’ll accept that
so this is uh something i also do
just visualizing the potential openings
what i want to see versus kind of what i
don’t want to see and obviously number
one is exactly what i wanted to see
i wanted to see it open and possibly a
v-blap retracement entry i didn’t want
to see
[Music]
it open lower than vr it open lower and
then maybe do a v-robot retracement and
kind of grind back up or start to look
heavy v-wap i wanted it to just
open strong maybe pull back the v-wap
and just and show that buyers were in
control and do an immediate bounce from
b web
i just wanted to see real strength
both on the charts and on the date yeah
i would add one more pattern for you to
think about which is
a value buying
support
so value buying comma support
uh or an area where it’s just not
trading below
i think if you really like the idea you
really like the setup i want to add that
pattern there as well like they’re
trying to push it below a certain level
and they can’t
and time is going by and you’re seeing
that accumulation around a certain area
i think that’s that’s worth it i think
that’s particularly true
in stocks that have a high short float
um
and those can be those can be pretty
good winners because you’re
and i don’t think the stock necessarily
has to be
super strong intraday for it to be
holding up certain areas that you can
trade off of so this is opening bell
xlv kind of sold off a little bit i mean
pretty sharply but it was at all time
highs so i wasn’t too concerned
and volume was was okay it was it’s not
like it was real heavy uh spy on the
other hand it opened pretty strong um i
was comfortable with that
and so i took that into account if spy
had opened real weak i probably would
have been a little bit more apprehensive
about it i put more weight on the market
as opposed to the sector
but obviously i know some people that
put more weight on the sector as opposed
to the market too so
i was comfortable taking the trade
considering that the market was was in
my favor a little bit more
so here’s the trade uh
i first off i’ll point out i use trend
candles so that’s why the candles are
all green they weren’t actually all
green on that day if you were to regular
candlesticks but
just kind of helps me visualize things a
little bit better and then i have color
changing moving averages too so
um but anyways
also pivot points as well those are the
red lines but
this opened very strong and so when i
was when it opened i was thinking okay
we got 100 we got 100 on deck and so
i’ll see what happens at that
but
as soon as it hit 100 there’s a few
things that were going on here it was at
one atr which means i thought it could
reverse here it was also at 100 and so
it’s kind of a little bit of battle in
my mind thinking okay this is a critical
level it’s that one atr
and so i’ll just see how it reacts and
so if it didn’t
if it didn’t have as clean a break of
100 and the bid stepped up and large
aspirants and offers lifted and all
these other things happened i probably
wouldn’t have taken it but this thing
was so strong didn’t even pull back to v
web it didn’t even hesitated a hundred
it just blew right past it and from what
i was saying earlier in
some of the pre-market uh anal or when i
was analyzing at some pre-market
that’s exactly what i wanted to see
maybe maybe a little bit of a pullback
but this was already at i mean i think
it’s a five arvol or four and a half rv
which was absolutely perfect so blew
right past the hundred and i entered
and
uh my my initial profit target was
around one probably at least
108 110 i don’t remember exactly where
our profit target on that was but
usually it’s around maybe the next pivot
point or the the overhead resistance
but i started to take profit when i
thought hey this is this is due for a
pullback it’s pretty extended from view
app it’s at the pivot point um and so i
scaled out a little bit there and
i was kind of awesome honestly i was
thinking maybe if it maybe if we see a b
by retracement could possibly even add
to it but we didn’t and so i thought
this is due for a reversal i didn’t
anticipate it going past the 100
110 and going all the way to 120 but i
held and eventually ended up selling at
once the trend candle started to
started to or once the sentiment started
to change and you see that big
cell sale candle right there
after the rejection from the 120
resistance and the pivot point
um so i scaled out most there
when you entered what was your stop
95 it was low a day
it was also another pivot point right
down there but it was essentially low of
day
i mean i got pretty good rr out of it i
mean it’s one but
yeah i’m not sold on the 100 technical
level
go back to your daily chart so you can
see it it held 100 and then i mean it’s
got a little bit of resistance right
around that 100 area it’s not
necessarily a line in the sand but it’s
just that area right there
yeah i mean it broke down from that
100 area didn’t it
i don’t know if that’s really even 100
where it really breaks down from
look anyway it looks like it could be a
little bit lower than that
um
but it does start to break that uptrend
near it looks like around
ish and start to go down and has a
pretty big down move
so that area
is going to be resistance
i don’t know that it’s exactly a hundred
i think that’s something to think about
i also do think when it gets back above
90 the momentum is back to the upside
yeah you know when i look at that chart
when i look at that daily chart
the momentum comes out of it around 98
and and trades down and then if it
reclaims 90
the short-term and medium-term momentum
are back to the upside
so i don’t know that i love your 100
level uh from technical analysis
uh and i do think when you think about
the stock i mean this is a momentum
stock overall
momentum stocks trade differently when
they’re in their growth stage than other
stocks it’s super important for you to
understand when the momentum to the
upside is back on
it’s above 90 in this case
and so
the reason i bring that up
is because that gives you
an opportunity to think about entering
before 100. that that gives you an
opportunity for you to be thinking about
some setups for you you know maybe you
want to make an opening drive
trade right when it opens up you know
maybe there are levels you can get in if
you go to the intraday i i see better
executions
on entry for you
i see you know right away on the open as
a potential opportunity
i
see uh above that
it almost looks like it’s
i can’t read that is it what’s it’s
198.96
yeah i mean i definitely see an
opportunity above 98 to
start there i mean looks like it goes up
to 98 and
stalls and then gets above there
and holds there so
when you go back and you look at these
trades you really have to be careful
about your entries
your stop is pretty wide
i understand the uh atr is big in this
but you’ve got a five dollar stop and
something that
i’m not sure you really
couldn’t have been in earlier for the
same trade
um
which what’s your feedback there what
are your thoughts no that’s good i
i think in
in my stage of my training i’m a little
bit more hesitant to take the first 15
minutes
and it’s just because i want to see that
at least the trend is forming because
i’ve i feel like i’ve gotten caught in
so many trades where i take it and it
just rips right back down but doesn’t it
get above 100
oh yeah that’s where i took it or well i
think i took it right at 100 when it
broke yeah and what time is a day is
that
uh i think it’s around
9 50 new york central or time but
for eastern time
so you don’t want to take trades in the
first 15 minutes but you’re okay in the
first 20 minutes
yeah i just sometimes i wait for the 15
minute candle to close um it’s not an
exact science i think sometimes i just
feel it out a little bit but maybe maybe
i’m more
maybe i just need to keep stats on that
because maybe i’m more apprehensive in
the first 15 minutes to take breakouts
and maybe i need to work on that
so look if something’s really gonna run
for the day and you you have big players
that are interested in this stock a very
common pattern is the volume comes in
right away
and there’s price movement right away
because they can’t wait they’re scared
to wait the big players are scared to
wait they they want to buy this thing up
to
150 bucks or 125 bucks
and they want to buy a lot
and so they can’t really risk
waiting in certain particularly momentum
stock and so they’ll show you
their hand
they’re going to tip their hand early
on the open in the first
early okay
and
so so that’s a common
yeah so i don’t know if you needed to
get in at 100
and and the reason why i don’t like you
having to get in above 100
with a stop of five dollars is because
you’re going to judge how much you can
risk by giving it a five dollar stop
and for you to trade this with a little
bit more size
is going to require
potentially giving it a little bit of a
tighter stop okay um
that’s that’s a you know that’s a five
percent
stop that’s a five percent move in a
particular stock from 100 to 95. that’s
that’s a big stop
so
i i think about that but i like the way
you scaled out of it i think that was
pretty good yeah generally
i just think
to me this trade is to me this trade is
there’s a news catalyst
it’s above it’s above 90.
and i’ve and and the momentum is back to
the upside again and i’ve identified a
stock that can really go up
and i need to figure out how to get into
this thing okay and i don’t want to tell
you exactly how to do that because
there’s a lot of different ways to get
in
and it’ll make more sense what makes
sense to me may not make sense to you
like i would buy the opening print
that makes sense to me i would watch the
stock it’s not going down and i would
buy it
or i would have bought that in the
pre-market
i think you did a good point you brought
up a good point though is there wasn’t a
lot of volume in the pre-market so that
might have caused me to stop but
i would have bought this right away
and given it a run
that’s that’s how i look at certain
markets and that’s a very legitimate
play i don’t want you to think that is
the way to trade it it is it is the way
that makes sense to me that will work
okay
and i think you’re right i think i’ve
just
at this stage i’m just i’m apprehensive
and so sometimes i
stall too much and i miss the trade so
at this stage i think i’m just
apprehensive about some some entries and
you’re right no and there are other
people that will say i don’t want to
trade in the first half hour it’s i want
more information and those people design
systems
to
help them then
and so all right they’re gonna have to
wait for the first 30 minutes and
and they’ll
and they’ll do that there um
so think about that i don’t know that
you need to wait to 100
but if you want to sort of wait 30
minutes or something for the open for
the market
after the market opens okay
and we’ll sort of go from there do you
think i’m chasing this entry though yeah
yeah
yeah
i do i think i think this is about i
think that you buy this right away okay
i think you had a news i think you like
i said you have the news catalyst it’s
above 90. it’s go time
you don’t want to look at charts on your
daily charts
in such a linear fashion you want to
think about them
more in terms of psychology
the psychology
is out of the stock to the upside when
it got below 98
and and starts to trade down the
momentum is out of that stock momentum
in momentum out now when momentum is out
of a stock that’s a growth stock and
going up a lot we have to now go find
where it’s going to stop going down but
the momentum is out of it when the
momentum comes back into it and the
stock is still in an uptrend on a longer
time frame
and we see the momentum come back in now
the momentum these stocks can can
skyrocket particularly in this market
and we we need to figure out how to get
in
to those momentum stocks at at good
prices and and the price is important
because the price sets how much you can
risk if you can get in
on an opening print you can give that a
dollar
you’re getting in at 100 you’ve got to
give it five dollars
all right
even if i don’t have as much conviction
getting in right away
with a particular stock i can still put
on more risk than you can
buying that stock above 100.
absolutely yeah that’s good i didn’t
look at it like that you’re you’re right
so this is my trade review
when trading a bullish news catalyst
near critical levels all arvol provides
the necessary fuel for stronger than
normal moves outside of its atr and so
that was one of the reasons for
i entered at the one atr
arval closed the day around three
we look for strong moves on high volume
into critical levels
quote unquote volume precedes price
and when we have the wind at our back
from the oval market sector etc
conviction is strengthened
i didn’t necessarily have the wind at my
back but spy looked good
you did a really good job holding that
that
50
yeah
yeah that was pretty hard for me to do
to be honest
um but there was no re i didn’t see any
reason to sell it there was no reason to
sell
um and i think this is the big one that
we just talked about is that i hesitated
a bit before entry um so i just need to
work on my confidence and i think as
time i mean even i can look back a year
ago for my playbooks and i’ve gotten so
much better at holding stuff and timing
stuff and so this is just one more area
that
i just need to work on
and like i said the feel of sofa had a
lot of energy and when we’re looking at
playbook trades
and when we’re looking at traders
people always sort of ask me hey
what gets you interested in
a trader
when somebody’s here as an intern or as
a student what gets me interested
and so
the thing that i really like about your
playbook here is one of the things that
interests us which is there’s solid
diligence
there’s solid there’s solid diligence in
this presentation there’s solid
diligence in this playbook
that’s that’s pretty strong
i don’t care
whether or not
i think the technical level
that you were looking at is right
or not for the most part
um i do think i’m right
but i’ve been doing this longer than you
yeah and i look a momentum in a momentum
out is a is an important technical
principle you’ll learn over time
uh and and it can be really powerful
but um
that’s not as important as
you thinking clearly i think you thought
clearly through this trade
i would subtract your technical level
from my technical level but that’s fine
you’re thinking clearly through this
you are
i think you did a really good job
holding on to that second tier or that
last 50 that was really really solid
i thought you did a really good job
adding vix
at the beginning of the presentation
i thought you did a really good job
looking at multiple time frames
for the presentation
and so it was easy to understand
it’s a trade that works your stock also
your stock selection was strong
so those are all the good things
and then now you just got to try and
figure out how to keep making this trade
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