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Video Lesson: Being Wrong on a Trade and Flipping Direction 

 December 3, 2018

By  ejbc4

Have you ever been in a trade after a gap up where you bought the dip and then it kept selling?  In this video I talk about that exact situation that happened to me on PANW.  The important thing to remember is to recognize when that happens and how to find a good risk reward.  I use vwap and timeframes to help with that.

Here is a video where I talk about this.  Scroll Down to see the process I follow.

The Process I use to recognize I should flip.

Follow these steps during the first hour.  It can also be used in the afternoon after vwap fails during lunch to early afternoon.

  1.  Define support/resistance from premarket action.  IF you had a large spike on the open and testing support/resistance and it breaks, continue with this process.
  2. Identify where the retrace starts and look for a  retrace to vwap during first hour, check if it is at the support/resistance. if it is, probably 70% chance it will reject and that will be a great entry.
  3. Define max/loss and risk when sizing as usual.  If doing options, consider a 30-50% loss
  4. During the retrace consider using the new support/resistance to identify a strike price if trading options.
  5. Place your order entries during the vwap test.
  6. Hold for the end of the day or meeting targets.
  7. If trading options consider selling half at 100% gains.  This way you can’t lose.  With shares, sell the amount that will cover you in case your stops get hit.
  8. Consider letting the rest ride until a BIG parabolic like move.

 

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