In early April, my trading account was around $350. Over the last few weeks, I have been practicing The Strat, and I found my way to Jim Bradley. I had a solid start, and I have decided to share my trading here.
Today's trade was a long in AAPL. I got stopped out pretty quickly, resulting in a 2.5% loss.
I posted something similar last week, but I thought it was worth sharing this again. It's always more enjoyable to post your winners, but I have learned that small losses are much more essential than any size winner. This post, once again, shows how understanding The Strat naturally results in small losses.
Once again, you always have to start out with the larger timeframes and see who is most likely to be in control. If you look at AAPL's chart at the open, I can build a pretty strong narrative to have a long bias. Today's a Monday, so the week does not really count, but the month still looks strong with a hammer counter shooter, and the daily chart shows a potential 2d, Momo Counter Shooter.
So we have established our long bias. If we zoom into the 1 min charts...
When the stock broke the red line, which was the daily high, I looked for an actionable signal. A few minutes after I got it, with a 3 (Broadening formation and price discovery), 2d, and then a 1. However, this trade was not meant to be. But I want to once again go into a bit more depth as to how I knew this would be a small loss. If you break out the mechanics of The Strat, the whole goal is to determine the aggressiveness of buyers versus sellers. Everything I have posted here expresses that we have a long bias. And here you get a classic actionable signal, a 3-2d-1-2u. This is telling me that the aggression has shifted back to the buyers. Now look at the result:
When I trade, I have an automated 1-min candle trail to exit on a break of the low of the previous candle (basically looking for a 2d). I got a push up to the first target, which unfortunately was a resistance point. But because the sellers had dried up, by the time the next candle hit, my candle trail had already crept up to the price where I had bought the stock. You can see this below in the video. Although the stock didn't go up the way I liked, the stock was super reluctant to actually reverse.
This is a great way to use The Strat to naturally build tight stops into your trading.
Results (note I made another smaller trade resulting in a $2 gain, nothing noteworthy though):
I am only bringing this up because someone else that read my posts brought it up to me. Another great way to ensure small losses when option trading is to avoid options where the spread collapses beneath you. Trade Unafraid allows you to automate things like: if the stock triggers a 1-min candle high, find me the best option that would result in a qty of 5 with a spread less than 5%.
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Shoutout to @RobInTheBlack. I will never see another chart again without seeing #TheStrat. See More.
And, shoutout to @_JamesBradley__ whose approach to trading has made a tremendous impact on how I trade. See More.