Even More Setups

Double top or M formation

Figure 29 Double top M Formation Daily

Double bottom or W formation

Figure 30 Double Bottom W formation daily> 

Notice the pennant forming at the far right of the chart

Double bottoms and tops are fairly self-explanatory. You can identify these patterns by because of the M and W they create. They are created at the peak or bottom of a longer term trend marking the peak of an uptrend or the reversal of a downtrend. The stock has to break through a support line with significant volume in order for the trend reversal to be confirmed.

Red to Green play

Figure 31 Red to Green Play 5 Minute

Red to green play was taught to me by Kunal from Bulls on Wallstreet and I am pretty sure he created the trade. It is meant to be a day trade where you have a stock that broke out the day prior on good volume and then flushes lower after the open on the following day to a level of support where price is actually in the red and volume tapering off during the decline. Then you have a reversal with volume building as it retakes the high of the day and then continues in to green territory.

Snap back plays

Figure 32 Daily Snap back play

Parabolic Short

Figure 33 Parabolic Short >Notice gap and Fill

Both parabolic shorts and snapback plays incorporate the same concept. They occur after you have an irrational move to either the upside or downside in a very short period of time. The price goes parabolic overshooting and becoming overly stretched and primed for a sharp and swift reversal. This is meant to be more of a day trade. However, as you can see from the examples above, swing trades will also work, you have the patience and risk tolerance to stay in the trade.

 What is your Favorite Setup?

Each of the examples above has their own unique characteristics not all of the setups will work for you. Some of the setups like the cup and handle, double top, double bottom formations are better suited for swing or longer term time frames. However you will probably be able to identify those patterns in shorter time frames. There are many more setups out there like the head and shoulders; squeeze play and probably about 1000 more that I don’t even know exist.  

The objective is to focus on two or three setups and learn as much as you can about them. The ones I have listed above are some of my favorites. I use some of them for my swing and long term hold account, I use others for strictly day trading. There are certain setups that I consistently play better than others and those have become my Go To setups.

Train your eye to recognize these patterns as you go through your scans each day. As you run more and more scans it will become second nature and you won’t have to fabricate the setup it will just appear.

When I first started running scans it would take me hours to complete. Reading a chart is very subjective and it’s easy to get caught up in your own interpretation.  I spent so much time on each chart trying to identify patterns that if I stared at a chart long enough and I could make it say anything I wanted it to say. I learned the hard way that if you have to create a setup then it’s most likely not a very good setup. Going through 1500 scans used to take me a better part of a day and now it takes about a half hour. I have trained my eye to recognize the setups I excel at and those are the ones I focus on. I use the daily time frame to do all my scans for idea generation.

Even when you identify a pattern it is still difficult to know with any kind of certainty how it will develop as it builds out the far right of the chart over time. That is why I use the daily for idea generation and shorter time frames to pinpoint entry and exit strategies. Always being cognizant of the overall markets conditions and how that may impact the setup and performance of my trades. Try to identify and master one or two setups. When you can consistently execute trading them you will experience tremendous success.

Stocks on my radar this morning 

Looks like we are going to have a gap up day in the markets these are typically the hardest days for me to trade. 

My gut feeling is that this could be a dead cat bounce and that the markets are likely heading a bit lower. I plan to keep my position sizing on the lighter side. Today could actually be a better day for shorts if the gap fades and the markets resume their move lower. I plan to let the markets settle and I would be extra cautious of chasing anything> Wait for a setup! 

CYBR ipo today, MACK pr nice daily, BLDP PLUG ZBB FCEL HPJ KNDI sector heating up, 

GLMD continuation, HIMX  flaggin daily, RITT continuation, JRJC continuation, SINO, STXS pr bottom bounce, AVNR priced its offering possible flag break, IMUC pr bounce play 1 dollar roll, NOK already a swing but looking to add pr, GCA pr possible bounce play, 

Best of Success 

If you are interested in getting my trades entries and exits REAL TIME for both day trades and swing trades sent to you in email and in text . You can join me @ the Stock Aviator chat room. It is a paid site and if you use this link https://www.stockaviator.com/79-90-a-month-for-premium-membership your first 30 days will be at a discounted price of $79.90. After your initial 30 days it will be $99.00. I recommend trying out the free 14 day trial.

I encourage people to take their own trades with their own setups.

However, chat rooms are great for idea generation and learning the style and strategies of other traders. If you sign up say hello and let me know in the chat room. My handle is "Vegastrader66" I will walk you through how to get set up for my email alerts.