When I take a trade I like to think it terms of trapped traders or investors looking for the exit to benefit my entry. I always try think like a novice trader would think and think what I could do if they were stopped out and how I could benefit "Trade the Trader." Today NUE popped up on my scanner as having some upside movement. Than I checked it was the whole steel sector catching some nice big bids. Typically when this happens it's called sector rotation. Big funds move money in and can't go unnoticed. I knew a novice trader would be thinking short NUE because of it's move up. I than saw a nice 60 min entry bar that provided a good entry. You can see the chart below. These are th
If you can think of terms like "Trapped" in regards to trading you will begin to evolve your mind to understand how successful trading works. You have to see the trade setting up in regards to if this trade triggers my entry it's going to force trapped traders to exit their position. I am giving a little bit of gold out of the bag to how I trade. I love gaps because they catch long term traders in the stock in a bit of shock. They want to exit to cover the pain they feel in their position. I recommend STOP trading if you don't have a grasp on this concept. Trade the Trap or Trade the Pain of another. Focus on Gaps. Gap Edge Trading.
Whenever you see a stock gap below the entire price of the stock it's bearish. Why? Because everyone who ever owned the stock is sitting in a negative position. I typically don't trade the open and as you know I like to trade off the 30 min chart. I saw a perfect setup on SNAP on the 30 min chart and I placed my order and once it hit the trigger there was massive volume at that price. It felt good. I let it trade away and it formed an area where I could place a second trade to the one I already had running. This trade would be treated with a tighter stock and had it's own risk. It traded nicely into my target and it was a great trading day.
TSEM had a positive gap up on earnings in a daily up trending pattern "bullish." I thought I missed most of the move from open. But I stuck to my guns and watched it on the 30 min chart an entry. On the 6th 30 min. bar it formed a nice inside bar. This was my signal get long over that high at 24.04 with a stop at 23.90 only risking .14 to collect over .60 cents on the upside. Nice trade. Gap Edge Trading
AMD classic gap down in an uptrend on the daily chart. The great thing about AMD was after the gap down at the open it still had room to drop all day. I waited for a nice 15 minute setup to get short under the green bars off the 15 min. The rest is history closed the short at the end of the day. Gap Edge Trading
