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 last week, and I have decided to share my trading here.
Today's trade was a long in TSLA; it was a quick trade, lasting less than two minutes, and resulted in an 11% gain. This is the analysis that led me to this trade...
Today looked like it was gonna be a choppy day. As Rob has been pointing out all month, the SPY is in exhaustion risk, and so are the QQQ's, since they broke last month's high. This was followed up by yesterdays "3" on the SPY, as well as a "2down" for the QQQ's.
This signaled to me that I should be looking for shorts in my day trading, but the market opened back near all-time highs. I thought that this could end up leading to a pretty choppy morning, and the markets as a whole did not move too much for the first half hour.
Due to the choppiness, I could not find my "perfect setup." However, I found a setup that I thought was just good enough. One of the most powerful setups The Strat has taught me is the "Machine Gun Pivot." Let's analyze the situation. It's a Thursday, which means I am very vulnerable to implied volatility getting crushed. Couple this with the use of far out of the money options in a small account, and you double the risk. I know I need a very fast move in my direction, and ideally, I can hit some resting orders even on a small move on the stock because of the volatility of options this late in the week. This is the setup that I found in TSLA:
I didn't love this setup, because I was trading off an inside candle that needed a good amount to break to the upside. But the following candle went green with good momentum, and the machine gun pivot was perfect. You can see the stacked candle highs. As each stop is hit, covering by the sellers propels the stock rapidly higher which increases the implied volatility as well. The option's max gain was about 17% (2.05 max, 1.75 fill) on a .2% move on the underlying. My final close of 1.9 was 8% higher than my fill of 1.75, despite the candle trail taking me out at only a 50 cent gain in the underlying. That is great scalping :)
And last but most certainly not least, I was satisfied with my gains for the day, so I walked away. Probably the most important lesson I have learned from Jim Bradley so far.
Below as always, is a video. For those reading this that like to scalp, I will point out two instances here where you can see how powerful this platform can be for you.
1. On the entry at 28 seconds into the video, notice how I got my fill at 1.75 while the option quote was 1.69-1.77. This occurred because I had set the software to "work the order." Trade Unafraid can modify an order 3 or 4 times a second to try get price improvement by getting filled inside the spread. So we are trading limit orders at the speed you on your current software are trading market orders :).
2. One of the most frustrating things with resting orders while scalping is that you'd like to have them in the market to be hit, but cancelling and replacing when flattening can take far too much time. So you are stuck with closing a few at a time on a market order. It can be very tough to react quickly to changing market conditions. Trade Unafraid handles all conflicting orders for you, so you can actually have resting orders and effortlessly change them without all the fumbling required by other trading platforms. At 1:41 into the video, you can see the benefit of this. I got a TSLA fill of an order at 2 with a bid of 1.92 and an ask of 2, meaning I sold at the ask. When you are scalping, this is a game-changing occurrance.
The material and results shared in these posts are made possible by using Trade Unafraid. Trade Unafraid evaluates personalized criteria and selects the most favorable option, allowing traders to come out on top. With a “hands-off” approach, Trade Unafraid intelligently navigates the bid-ask spread and gives users the power to place “conflicting orders.” By fully automating trade entries and exits while still allowing you to manually override anything, Trade Unafraid compels user discipline and adherence to strategies. Please checkout TradeUnafraid.com
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.