{"id":10315,"date":"2011-03-09T21:55:45","date_gmt":"2011-03-10T02:55:45","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=10315"},"modified":"2011-03-09T22:03:07","modified_gmt":"2011-03-10T03:03:07","slug":"traders-ask-how-do-you-use-the-retracement-highlow","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/traders-ask-how-do-you-use-the-retracement-highlow","title":{"rendered":"Traders Ask: How Do You Use The Retracement High\/Low?"},"content":{"rendered":"

Bella received the following email from a blog reader today<\/p>\n

Dear Mike,
\nThank you for an OUTSTANDING book. \u00a0After studying the information within\u00a0I now feel like I have a framework for improving my skills with each trade, every day.
\nSteve talked about trading the retracement high today on stocktwits TV today<\/strong>. \u00a0Could you please explain in more detail and maybe provide some examples?
\nThank you very muck for your time and attention,
\nGreg<\/span><\/p>\n

Let me try to answer your question Greg.\u00a0 I think you were referring to the question I attempted to answer from @thearmotrader regarding his trade in AMZN today.\u00a0 By the way I thought his trade idea was excellent.\u00a0 He found a market leader that had recently been beaten and decided to get long after it pulled back from a very powerful opening drive.<\/p>\n

A common way to manage your risk on a trade that has a strong opening drive is to use the retracement high\/low as a price to place your stop.\u00a0 In the case of AMZN it retraced to 166.80 after topping out at 169.20 on its opening drive.\u00a0 Once it began to consolidate above 166.80 it became a good long candidate and provided a very easy way to evaluate your risk\/reward.\u00a0 The morning high was $2.40 above the retracement low, so if you were to follow SMB\u2019s risk\/reward rule you could risk up to 48 cents and still maintain a 1:5 risk\/reward ratio.<\/p>\n

If you got long AMZN fairly close to 166.80 you would be completely justified in giving it to below 166.50.\u00a0 35 cents of risk on a market leader that had a huge opening drive on above average volume with more than $2 of upside to the intraday high is an A trade in my \u00a0playbook.<\/p>\n

\"\"<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Bella received the following email from a blog reader today Dear Mike, Thank you for an OUTSTANDING book. \u00a0After studying the information within\u00a0I now feel like I have a framework for improving my skills with each trade, every day. Steve talked about trading the retracement high today on stocktwits TV today. \u00a0Could you please explain in more detail and maybe … Read More<\/a><\/p>\n","protected":false},"author":143,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1,8,908],"tags":[1377],"class_list":["post-10315","post","type-post","status-publish","format-standard","hentry","category-general-comments-2","category-steven_spencer_steves_blogs","category-traders-ask","tag-l","no-post-thumbnail"],"yoast_head":"\nTraders Ask: How Do You Use The Retracement High\/Low? | SMB Training<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.smbtraining.com\/blog\/traders-ask-how-do-you-use-the-retracement-highlow\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Traders Ask: How Do You Use The Retracement High\/Low? | SMB Training\" \/>\n<meta property=\"og:description\" content=\"Bella received the following email from a blog reader today Dear Mike, Thank you for an OUTSTANDING book. \u00a0After studying the information within\u00a0I now feel like I have a framework for improving my skills with each trade, every day. 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