I'm a swing-trader at heart but when I started researching trading blogs to learn more about daytrading, I was amazed to see traders like Stewie, Pinoy, Jamie, etc...catching monster moves day-in and day-out. It was hard to believe at first but when I opened my mind to it, I started to see potential set-ups everyday. Each daytrader trades different set-ups but I wanted to highlight CME's move today as to MY perfect candidate. Unfortunately, I DID NOT take this because I was managing my other positions.
1. Pick a stock/sector with some momentum (there must be a catalyst) whether it be strength or weakness - CME announced good earnings today and has been beaten up lately (see chart in 7/17 post). There is probably a high short position.
2. Look for a low-risk set-up (look at my past trades, I'm always looking for a low-risk entry) - CME traded in a narrow range between 343 and 345 for 2 hours.
3. Wait for confirmation (I have the most trouble with this because I get in too early) - CME volume picked up before 12PM PST and the 15-min bar closed above 346...confirmation
4. Pull the trigger and place the trade - CME is expensive so I would have bought the Aug 390 Call with a stop at $345. This would have returned $20 on the calls if sold at the close.
At the end of the day, it is all about risk/reward and managing your stops. When I daytrade, I get stopped out all the time but as long as I keep my losses small, a big move like CME will more than make up for 5-10 small losses.
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4 comments:
nick. thanks for calling out WB today bro. i nice a nice chunk of that run and went in with big size. CME was a great call too but that stock scares me.
Anytime buddy. A few of you guys kicked assed on the late day run-up!
OE, call me crazy, but been doing this a long time (that really doesn't mean anything in this illogical market)-mm's look to be trying to shake and bake longs for WM shares. Just doubled up on my wmhv calls. Good money after bad? we'll see. I think more rumors will start swirling around this one as an aquisition candidate (along with bk). Bought a few JBLU Sep 7.5's to add to my growing airline portfolio.....and no, I didn't pick up any CAL, yikes!
Hey Darwin, that may not be a bad call. The upside outweighs the downside at this point. I'm going to sit tight with my current position.
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