{"id":345,"date":"2009-01-31T11:59:10","date_gmt":"2009-01-31T16:59:10","guid":{"rendered":"http:\/\/www.smbtraining.com\/blog\/?p=345"},"modified":"2009-01-31T13:33:01","modified_gmt":"2009-01-31T18:33:01","slug":"do-not-give-up-on-the-best-setups","status":"publish","type":"post","link":"https:\/\/www.smbtraining.com\/blog\/do-not-give-up-on-the-best-setups","title":{"rendered":"Do Not Give Up On The Best Setups"},"content":{"rendered":"<p><a href=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2009\/01\/cat1.bmp\" title=\"cat\"><\/a>There are several <a href=\"http:\/\/www.smbtraining.com\">setups<\/a> for intraday traders that offer the greatest risk\/reward.\u00a0 An essential part of our job is being able to identify these setups and not to abandon them if they fail to reap a reward initially.\u00a0 One such setup was offered in CAT this past week.\u00a0 CAT gapped down on abysmal earnings.\u00a0 It spent several days flirting with breaking down below 32.\u00a0 But it just wouldn&#8217;t break down.\u00a0 The first few times it dropped 32 it wouldn&#8217;t stay below for very long.\u00a0 And on Thursday when it finally cleanly broke below 32 it only dropped 30 cents.\u00a0 31.70 became a support level.<\/p>\n<p>There were several traders on the desk who got ripped up around the 32 level.\u00a0 All of the bids at 32 would get hit out so many traders would get short to play the momentum.\u00a0 But CAT would trade back above the 32 level every time.\u00a0 At this point as a trader you need to make an adjustment.\u00a0 You can no longer short CAT unless it trades below 31.90.\u00a0 You need this extra confirmation of the downward momentum before establishing a short position.<\/p>\n<p>Some might ask why I would continue to maintain a short bias in light of the fact that CAT failed to break down for several days.\u00a0 The answer is simple.\u00a0 One,\u00a0 stocks that gap down on poor earnings and fail to bounce significantly that day trade lower in the trading days immediately following the gap down.\u00a0 Two, stocks that consolidate near the low after a large gap down usually get hammered once they drop below the consolidation range.\u00a0 Three, under current market conditions stocks that are set up to trade lower do so over 80% of the time.<\/p>\n<p>On Friday, CAT opened below the 31.70 support.\u00a0 After briefly popping above 31.70 it dropped to 30.\u00a0 I have to admit that I missed this trade.\u00a0 It would be easy to say it was the end of the week and I just wanted to focus on AMZN.\u00a0 But the reality is that I had been waiting for CAT to break all week.\u00a0 I should have seen that it was opening below 31.70 and set an alert for 31.70.\u00a0 When it failed to stay above that level I could have put on a small short position since it wasn&#8217;t my primary stock for the Open.\u00a0 The first time I looked at it on Friday was at 30.10 when my alert that I had set earlier in the week was triggered.\u00a0 I set that alert on Monday expecting that when CAT eventually broke hard below 32 that it wouldn&#8217;t stop until 30.<\/p>\n<p>At the end of the month if you fail to make these high reward low risk trades your results won&#8217;t be nearly as good as they should be.\u00a0 It is understandable that some may become frustrated if their setups don&#8217;t work as planned initially.\u00a0 The proper response is to make the adjustment to your plan and put the trade on when your new criteria are met.<\/p>\n<p><a href=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2009\/01\/cat1.bmp\" title=\"cat\"><img decoding=\"async\" src=\"http:\/\/www.smbtraining.com\/blog\/wp-content\/uploads\/2009\/01\/cat1.bmp\" alt=\"cat\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>There are several setups for intraday traders that offer the greatest risk\/reward.\u00a0 An essential part of our job is being able to identify these setups and not to abandon them if they fail to reap a reward initially.\u00a0 One such setup was offered in CAT this past week.\u00a0 CAT gapped down on abysmal earnings.\u00a0 It spent several days flirting with &#8230; <a href=\"https:\/\/www.smbtraining.com\/blog\/do-not-give-up-on-the-best-setups\" class=\"more-link\">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":[4,8,15],"tags":[230,4676,18],"class_list":["post-345","post","type-post","status-publish","format-standard","hentry","category-fundamental-plays","category-steven_spencer_steves_blogs","category-trading_theory","tag-cat","tag-day-trading","tag-smb-capital","no-post-thumbnail"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.1.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Do Not Give Up On The Best Setups | 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\/do-not-give-up-on-the-best-setups\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Do Not Give Up On The Best Setups | SMB Training\" \/>\n<meta property=\"og:description\" content=\"There are several setups for intraday traders that offer the greatest risk\/reward.\u00a0 An essential part of our job is being able to identify these setups and not to abandon them if they fail to reap a reward initially.\u00a0 One such setup was offered in CAT this past week.\u00a0 CAT gapped down on abysmal earnings.\u00a0 It spent several days flirting with ... 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