How to use multiple time frames to spot huge trades (technical analysis)

in this video learn how to use multiple time frames to spot huge trades hi i'm mike bella fury co-founder of sme capital and we're a proprietary trading firm located in midtown manhattan and i'm also the author of the trading classic one good trade and the playbook in this video see how an essential technical analysis principle is used to find trades professional traders make with confidence let's get to work on teaching you this important trading technique so you can grow your trading account this is a flag break across multiple time frames that's setting up on the 1 5 15 minute and there's also a dead cap bounce that's taking place on the daily on mkla and we'll get a little bit more into detail on what a dead cat bounce really is and this took place on 7 8 2020 and down below you could kind of see over the last 30 days this these are my stats on this particular tag on this particular setup i've taken 13 total positions about a 70 win rate um i lose about 30 of the time and this is pretty consistent over the last couple years with this setup on the ones that are working i'm holding for about an hour on the ones that aren't you know pretty short cutting within 20 25 minutes and you can see over the last 30 days you know this is something that i want to continue to focus on and continue to get a lot bigger on okay so i should mention that we did this playbook together however we're gonna be overviewing a trade that kyle took in it so on the morning of the trade there was really only one play we were looking at for nkla and that was looking for a price to consolidate with range tightening hopefully trapping shorts in this longer term time frame setting up a wedge break for us to get along into a potential breakout to the upside now it's important to note that this is meant to be taken as an intraday swing so we're gonna have to be patient with our position sit on our hands at points and really allow price action to work in our favor in the morning nkla had a nice opening drive on unusually high volume which really set the stage for the price action later on in the day now in general this strong opening drive is going to be a point of conviction for these flag breakout trades and it's almost necessary when it's done on these longer time frames because that opening drive sort of sets the height of the flag and since many shorts are looking to build into what they perceive to be the blow off top on a stop that's overextended and in a longer term downtrend many shorts are going to base their positions using that high of day as their stop out point so this concept often leads to aggressive short squeezes and in essence it's those it's that short squeeze idea that really makes this trade work so for a bigger picture idea at this point spy was ranging just over 315 and has been in an intermediate term uptrend since the march sell-off however the ev names have been dramatically outperforming the market and somewhat moving in tandem so throughout the day we're going to be putting less emphasis on spies price action and more emphasis on the price action of nio and tesla some of the stronger names in the sector because if we're trying to take a breakout trade in nkla but tesla and nao are starting to roll over and look like they might be seeing their backside our win rate and expected value for the trade is going to be a decent bit lower so we just want to be aware of how the overall sector is trading now the eva names i think everyone's been watching them for the last two or three weeks and they've been very in play with names like tesla workhorse nao and nicola having very extreme parabolic run-ups and given how extreme the moves have been a lot of people have been looking have been getting interested in getting short looking for a rollover of the sector and of these ev names nkla was the only one yet to experience a severe reversal from its run-up so as the weakest name in the sector when nkla puts in this price action of gapping up in the morning and having a strong opening drive many players are going to be looking to build into short positions on nkla using it as a vehicle for an overextended sector and as a little side point we've been in a elevated vix environment for the last couple months and when we see that and when we see vix in the upper 20s like we saw on this day we're going to be more keen to look for trend trades since individual stocks as well as the overall market are more prone to putting in directional movement so for internet fundamentals nicole as i said is an ev name they're mostly focused on their hybrid trucks as far as intraday catalysts we saw an upgrade from jp morgan citing nicola as saying the the stock is starting to look attractive for long-term investors however from my experience these statements from the banks as well as bank price upgrades while they can add fuel to the fire they're rarely the real catalyst for big moves instead we've seen the theme the eevee names for the last couple weeks which has been that they haven't necessarily been fueled so much by changing fundamentals rather we've just seen that it's a hot sector shorts are continually getting squeezed lungs continue to chase it and we've just had a general supply and demand imbalance so we're not really treating this as a changing fundamental strategy just on that point fair to say tesla has run up a ton causing a lot of interest in the sector and people are looking for other ev plays to perhaps be i don't want to say the next tesla but to really gain some interest totally okay so these are the statistics on nkla the volume at the time was where on the day was 51 million almost 52 the daily volume is 12.28 million the relative volume on this up on the day was 4.21 so so fair to say that the one of the catalysts is that the leader in the space is not only up a lot but up more than lots of people think in the marketplace totally and fair to say that is a potentially one of our catalysts yes okay okay so the relative volume on nkla nkla on this day was 4.21 what this tells us is you know the stock is certainly in play um it's doing four times it's you know normal volume over a period of days the atr is 9.91 and this gives you a good idea of what you should be looking for in terms of a target the short flow is a percent shares flow is 107 million not too high not too low you know the stock can certainly move with the amount of volume that it's doing about half of its float on the day the institutional ownership is 5 and the insider ownership is very low at 0.7 so the daily on nkla it started with this massive volume day and it's kind of this blow off type of action after a number number of days that it ran up putting some shorts you know getting some shorts involved and stopping out some longs and then we kind of pull into this 90ma and get really tight on the daily and we begin begin to make higher lows slowly squeezing out some shorts and we break over this daily flag on a gap up on elevated volume blowing out shorts and the stock goes parabolic that's certainly something you want to see um on a daily if you're looking to maybe find a long setup and then later you know 20 10 to 20 days later we see that sharp sell-off for three days once that support has snapped and then we see the stock it stops making lower lows on the daily and bases over the previous day high on high volume and that's kind of that dead cap bounce type of action on very high volume and what this means is you know the stock has sold off for a number of days on relatively high volume we're starting to see you know some shorts take some profits cover buying back that stock we're seeing some dip buyers get involved who maybe think this is a good price so that's the day that we're actually involved in it on the long set up if you want to learn three real world setups that our traders use including the simple setup that we teach all of our new traders and the setup that turned one of our traders into a seven figure big money earner check out the free webinar that we're currently running just go ahead and click the link that should be appearing right now at the top right hand corner of your screen that's going to open up this free registration page in the new window so don't worry you're not going to lose this video you're going to learn more in a couple of hours from this trading workshop than from years of online education okay and if we zoom in a little bit to the 15 day hourly two things really stand out to us so one is the volume which is if you look left very uncharacteristic with respect to the last couple weeks of price action um so this tells us that we might be seeing a change of character in the stock we hadn't seen volume like this since the two-day run-up up to 94 in nkoa so definitely a change in character for the name as well as when we open within the first 30 minutes we get above our pre-market highs and for the rest of the day we never get back to those levels so showing some real strength in the name as we can't put any significant meaningful push downwards okay so this is a five minute on the given day that we were involved in it or that i was involved in it and you could kind of see that some longs take this early flag um it was a tad extended on the 15 minute and hourly i was taking a look at it it was just a little bit too extended for me um the risk to reward didn't really make sense but you know you saw some volume come in so you know some longs took it um as well as some shorts getting stopped out there you know over that lower high and we now know you know some low overhead longs are involved here and where they're probably risking off that previous five-minute low and then we see you know it break down puts in a lower high and shorts hidden on the breakdown with risk off the lower high and we don't really break down any further than v-wap and that's actually right where the 15-minute time frame is at the 9 ema and it's holding that level really well and then we get bought back up and that quickly puts you know shorts underwater at break even and with a decision to make so then there's a few spots that i note that we'll get into later where i end up getting long with risk off 49.69 and i'll show that level in a little bit we pull into the 15 minute 90ma and hold at around 49.80 stop is at 49.69 it holds his 15 minute and builds higher lows and something that's really important to note i can tell you when i first got involved in the market i certainly was not looking at you know multiple time frames i was looking at you know the one minute and the five minute and really that was it so we know that you know a lot of other people also do that you know newer people to the market aren't really looking at you know a handful of time frames or looking at the one minute maybe the five minute and that's really it but you know if you zoom out to the 15 minute it's actually holding up really well and if you use you know the 90ma as a reference point you can see that you know it's in fact still really bullish and it's not breaking down right so as kyle was just saying using the 15 minute is useful kyle does a very good job of this in general of not just using the one minute and the five minute but also zooming out to the 15 minute and the hourly and making sure that the trend is still intact and it's aligned across all of these time frames because a lot of people if they just look at the one minute in five minute especially later in the day here at 2pmish it's going to be really easy to chop yourself around without much meaningful price action so zooming out like this is useful and another thing that's important to note is everyone is going to draw their wedges or flags a little bit differently with their trend lines so i don't like to get too exacting with how i treat uh price movement above or below those trend lines but it is important to note that some people saw that action there when it breaks out and then moves back down might have gotten some long stopped out and might have gotten some shorts into the play so we want to be staying looking at the 15 minute to make sure that that's not having a detrimental impact on the trend idea we're having and a very easy way to do this now is if you see that the candle the second arrow is pointing to while the next bar after that an easy way of gauging whether the trend is broken for the short term at least is if we get a red candle close above that 9 ema we would both immediately be out of our positions if it's gonna break out we'll have time to get in later but for the short term it looks like it would be breaking down and then while that 15 minute candle is being formed that's when you want to be hopping down to your one minute and five minute charts and making sure that short term price action isn't showing you something detrimental to the trade something that's showing you that no that really was a false breakout and were likely to roll over and that would allow us to perhaps get out of our trade before we hit our hard stop print our hard stop placement and avoid taking a full unit of risk unnecessarily hey guys so can we go back to the daily chart sure i like what you're doing here saying hey we're not just going to use the one minute in the five minute on an intraday chart we want to use more information we want to use multiple time frames so let's look at a 15-minute let's look at an hour late even on the intraday and if we do that we're going to get information as to how more players are looking at this particular trade us broadening the time frame that we're looking at not just the one and the five but adding others is us seeing how the other players are voting as to this trade as to the strength of the stock on the intraday so we're getting more people involved by doing that one thing that i'd like you guys to clean up when looking at your daily chart is i heard you say it broke a short-term momentum indicator good to use that i heard you say we got involved again because it started to go back up and the volume was elevated all of that is terrific all of that i encourage you to do i'd clean up your analysis here by adding one thing in particular which is the way that you're demarcating that this is that this is still on the daily chart in a long-term uptrend and showing that and and being specific about that and that i actually didn't hear you say i know you're thinking it but how are you going to demark that how are you going to express that idea to yourselves so you're clear about that does that make sense absolutely and a good way to gauge that would just be showing that we're still regardless of this short term action in the last couple days we're still holding above the level from which we broke out at the beginning of june we're still holding above that 37ish area holding above 40. yeah and that's fine that's a simple way to do it in the playbook i'd like for you to say that in your analysis i'd like for you to look for it expect it and say that gotcha because it's not just that it started to go back up after going down it started to go back up after going down still above an important breakout price right if it had been below an important breakout price this would be a different trade correct yes so we got to be clear all right so we got to be clear about that all right good back to where you are so a couple things we're looking for a little checklist for this trade as we've kind of alluded to our well being over three and bix being over 20 is really nice as well as the alignment of the trends among the 1 5 15 and 16 minute chart one thing i'd like to say that i enjoy quite a bit about this trade and these swing ideas is that they work for a broad a broad variety of markets so they work on a bunch of different prices stocks of different floats as well as just completely different instruments um the price action tends to follow through in all these different markets which is which is good to look for as well as price not dramatically extended from the 9 ema on these time frames we're looking to see a breakout so if we're too extended from the 90ma it might be difficult for us to see much more upside as well as a reason for shorts to be entering into positions whether that's due to changing fundamentals or just technical analysis or over-extension in this case we're seeing an over-extended stock in an over-extended sector as well as successive higher lows forming the structure of that flag lower volume relative to the uptrends when we see the pullbacks which we saw throughout the day showing that sellers are less eager about this trade than buyers are and we're more likely to see higher upside as well as volume and price acceleration on the flag breakout this is a breakout trade so we want that to be seen both in price and volume hey guys if i could just jump in i'd love for you guys to be thinking about as a as a group as a team what percentage of volume was done on the offer in the up move and working to see if you can use that as another variable in your favor so what percentage was done in the offer what percentage was done on the bid what was done what was what percent was done in the midpoint let's get that reading and there are guys at the firm who have done this and you can reach out to them and start to work on that and see if that that variable will help you in this trade so for instance if we're getting a lot of buying on the offer compared to the way the stock normally trades can you use that as a variable in this trade to make a better trade decision yeah i actually was just reaching out to houston about that exact thing a couple days ago i definitely want to be looking into that on cloud quan testing out a couple different ideas okay so this is how i handled getting involved and first i take that break of 50 50 as a previous lower high as a level shorts likely have their stops wanting to be in on the break break out of the flag at 50 51 as likely some shorts will hop out early on this technical breakout as well as longs across multiple time frames hopping in so it's kind of that flag break it's also getting close to that lower high and something you have to note on this stock is it can get really thin um or it can get really spready at you know when prices lift on the offer key prices like 50 50 that half dollar whole dollar lower highs so i was thinking that a lot of shorts you know are worried about getting slipped through that lower high so i was thinking maybe some of them are going to be covering through this flag that's why i kind of took that 50 50 break as opposed to waiting for that lower high to break and this is and i'm risking all of my earlier p l on the day plus 20 of my daily stop this is an a plus set up for me so i want to get relatively big i'm willing to use my p l from earlier in the day to do that it's not something i used to do in the past and it certainly hindered my success you know if you're up earlier in the day and you get an a plus setup well you want to make sure you're getting big enough in it so then the second ad i bring down my cost basis a bit and this is an ad that i'm going to talk about a little bit later that i don't really like on the one minute there's a quick spike and it looks like it's going to reclaim and then break out but it didn't really do that and it bounced off the 15 minute 90ma and again it was a bit of a fake out for me on the one minute so i added a little bit more risk than i would have liked and i'm now risking all of my earlier p l plus 40 of my daily stop and this is a position that i'm probably gonna take a full unit of risk if i'm wrong and i'm okay with that um more times than not you know if you're going in risking x there's usually a spot that you can get out where you don't have to lose that full unit of risk i did come to terms that this is probably going to be one of the times where i do and that's okay um so we hold the 15 minute and get another at and i get another ad bringing down my cost basis to 50 40 with risk off 49.68 um still although if the next 15 minute bar opens and breaks below 49.80 that low that we talked about on that low that you can see there if that 15 minute bar opens below i'm gonna hit out i'm gonna bid out of it so i'm gonna save myself a little bit on it you know maybe 10 20 cents i'm not gonna end up taking that four unit of risk because if it doesn't in fact end up breaking below that the idea is dead at least for the short term so risk is now all of earlier p l plus 52 percent of daily stop that is from the hard stop and then i have one more ad but the new risk is off 49.80 um we'll get into that we're going to show the tape a little bit to clear this up and risk is all off earlier p l plus 40 of daily stop higher low as new stop allowed you to risk less now so this this higher low um on this final ad finally gave me conviction that okay i could put my hard stop there if i am wrong um you know i need to move out of the way and that's okay the first exit i have this is a big mistake that i have i throw an order out in the market to sell one-fourth right over 51. and this is not okay because 51 is the breakout zone this is where i'm most convinced that this is working so this is a spot that it should really open up as short stop out and longs are hopping in i want to cover some risk on the first turn usually a fourth or a third to pay myself and to cover some risk but that first turn really isn't until 53. so i'm doing doing myself a big disservice by covering a fourth right over 51 right when i'm most convinced that this is going to work and that's really only at one r so it's not even really doing a lot in terms of taking risk off the table because again it's only one fourth and then i split up the second quarter and two even lots again there's no sign of a turn here so i should not be selling any especially with the idea that this can go to 56 maybe even 60 bucks and there's no turn so there's no reason for me to be selling anything here and then i covered the third quarter and three even lots this 53 stuff is where you should be selling your first quarter so you can see it kind of breaks over 53 and then pulls back in that should really be my first exit on my first quarter as opposed to the exits prior that's the first turn it broke over that whole dollar offer stepped up and it pulled back in it couldn't hold that 53 level so when that 53 level gives out that's where i should be you know throwing out one fourth and still looking to ride most of my position and then i get flat into 54 big offers and there was a good likelihood that it was going to retest the 15 minute we were getting super late in the day and there's just more of a possibility of it pulling back in two to three bucks to that 15 minute time frame as opposed to making it all the way to 56. it did in fact make it to 56. you know the risk to reward got a little bit wonky where all of a sudden i'm kind of risking two to three bucks to maybe make another 50 cents to a dollar into the end of the day so that's kind of why i ended up getting flat hey guys i just want to use the same length make sure we're on the same page with the same language when we're short and we take some of our position off the table that's us covering so we're short 3000 shares and we take one third off the position that means we're covering one third if we're long 3000 shares and we sell uh a third you know that means we're offering it out we're selling it uh we're taking some profits now we don't use the word cover unless we're short and we're buying back uh some of our uh short position yeah sorry bad common yeah pretty common okay so i'm already long at 50 46 from that initial spot um and then you can kind of see that it gets back over fifty dollars it's starting to get tight this is again where the 15 minute time frame is it's holding up and we're building higher lows and i'm looking to add through this flag it's kind of hard to see because it's super zoomed in zoomed in on the one minute but i'm thinking if we start to see volume here um this is a spot where shorts are thinking they're you know this might not actually break down for them and you know some longs are probably going to hop in so we're just kind of looking at the offers at this point i realized okay i should be adding here i'm going to bring down my cost basis a little bit another 10 cents and now i'm going to be able to risk off this new higher low of 49.80 and in general the bids have been sticking to this 50 level and not letting it get too far below that so this is a pretty do or die spot for us yeah and you can kind of see 50 20 breaks i add to my position this is where it should really start to work you do start to see some volume come in and we're building higher lows and you can kind of see almost like panic on the tape you can start to see you can start to see offers lift that means you know some shorts are covering some longs are thinking i need to get involved now before i end up buying this way too high um so you could almost see that panic on the tape and then we kind of just start building higher lows from it and then we want to go to one more spot and again now i'm risking off 49.80 as opposed to that stop prior at 49.69 okay we get back over that lower high and we're kind of flagging here and 51 is nearby there's probably a lot of people risking off 51 and this is where i really made one of the bigger mistakes is you can see i have an order to sell one-fourth out right over 51. and you can see volume come in you can see you know it pushes away from price and on that 51 break it actually skipped 20 cents so if you're short you're getting slipped 20 cents if you had your stop right at 51.01 if you wanted to get long at 51.01 you're filling up 5120. and again this is where i'm most convinced that this is going to work so there's no reason why i should really be selling one-fourth i have a target of 56 maybe to 60 dollars in mind there's no reason for me to be taking off one-fourth at around 1r it does nothing in terms of taking risk off the table i'm still risking off 49.83 sure i'm risking a little bit less but it doesn't make sense to be risking less um when i'm most convinced that this is working if anything this is a spot to add maybe a momentum lot through 51 or when offers decrement at 51. yeah and so we see while this is happening volume is spiking more than it has in hours so again this is conviction that this is working and also we need to recognize that this is a 50 stock and in essence this is a short squeeze idea so we're not looking to capture a 10 cent short squeeze we're looking to capture a short squeeze of a point or multiple points totally and we could kind of see that it starts to work a little bit it's going to get back over 51. there are some decent offers but we lift right back over 51 and then we're kind of just you know we're in the money so even if i you know this is a spot where okay i made that mistake of taking some off if anything i should be adding it back here you know we're going to make mistakes but there's no reason why i can't add it back right here as i'm you know most convinced that this is in fact going to work so again you could kind of just see that panic on the tape where offers are lifting shorts are thinking man i really should have stopped out on that 51 break um or earlier and you can see that you know they're throwing bids out it's holding and it's really working out nicely yeah and so we see the volume came in we broke above 51 and stuff below but pretty much immediately reclaimed with high volume and we still have that 5205 morning high above us to squeeze even more shorts out this is you know this is going well for us totally um and then you can see i throw another order out there and again there's really no sign of a turn at all so even this order doesn't make a whole lot of sense i'm throwing out some orders out there and we'll go over a quick fix for this i've been working on um and we could kind of just zoom forward a little bit and we could see how well this position is working and you can kind of see how small i'm getting and that is a mistake i really like as we focus on the new playbook i really like how you guys embedded the tape into this playbook and have those concise segments where the tape was important that you can show us and you guys can go back to and watch so that this trade makes a little bit more sense to you that you're building you're reading the tape skills and that overall this playbook trade is more impactful for you guys highly encourage you guys to keep doing that it's been a really nice addition that i'd like all right good so let's hear about how you are going to fix these exits okay so actually it starts with one of the ads so that um there's two areas that i can improve on and the first was with the second ad that was a tad early as i kind of ran after that one minute spike it added some more risk that wasn't needed at the time i can always take it off and add it back it wasn't a lot it was a couple hundred shares if that so you know i can always take it off add it right back yeah look and for those of you who've read market wizards and remember paul truder jones's chapter in market wizards who you know is one of the great all-time traders in u.s markets and global markets but one of the things he does and recommends when he's in a position that doesn't feel right to him and one of the recommendations he gives to traders is look if it doesn't feel right you can always get out get out get flat and then if things set up again you can always get back in so remembering his great advice completely supports what you were just saying but that is a part of active trading which is i'm in this trade i added to this trade that doesn't feel right let me take some off okay now it feels right again so let me get back in huge advantage we have right we're not hedge fund traders who have to hold for multiple months we're not big institutional traders who have to move millions of shares every trade we're we're flexible and we're light and we can get in we're nimble nimble is the best work we're nimble so you know even when guys get bigger they can nimbly get in and out of you know in case like this you can nimbly get in and out of 10 000 shares for something like this don't do that yet please when you're when you get a little bit more experience totally and then more and then obviously more as you get bigger but nimble the ability to be nimble is such an advantage and we want to use it that's a structural advantage that we have other over other market players it's a structural advantage that is what creates the really great trading strategies it's just a structural advantage and so one of them is we can be nimble while others can't and so if getting out and getting back in is a characteristic of a structural advantage we want to make sure that in our game in our trading system that we thought about how to maximize that for ourselves so very good point so the main issue with this is really with the exits as you guys probably saw i worked really hard to get big and to get into this a plus idea with a five to six point target in mind and i started taking cells to really come to terms with taking some risk you know at taking some risk off the table but i'm taking risk off the table when i'm most con you know when the idea is most confirmed through that 51 a lot of shorts are risking off that level a lot of longs are hopping in we saw a volume move in we saw it you know push away from price you know as soon as it broke 51 it skipped to 5120 so it doesn't make any sense to be covering taking some risk selling some risk when you're doing so at the point of being most convinced that the idea is valid um if anything you should be getting bigger you know adding a momentum law at this 51 break with a new risk for it plus you know selling a quarter of risk at around one r doesn't do a whole lot in terms of taking risk off the table as your stop is still the same level at this time so taking one fourth off at 1r around 1r and you still have the same level that you're risking off of it it might help you out a little bit mentally but it's not doing a whole lot in terms of your p l you want to be the biggest when you're most convinced um so the first turn um that you should have sold your first quarter was not until 53 broke and pulled back under and offers got heavy we saw some big offers over 53 they couldn't lift and a quick fix on this is not having that first exit out in the market and instead having you know quick shares ready to go whether it's a fourth or third i'm ready to go so you can hit the offer of the bid on the first turn this is going to allow me to make more so instead of having that first order out in the market ready to fill right over 51 let me see how it reacts over 51 if it keeps going and there's no sign of a turn until 53. well i could have made another two bucks on that first quarter and that's really going to help my bottom line good good good good good good excellent excellent excellent i really like how you're waiting to see something very different you're in the stock you're watching the stock it's working now something is different around 53. it's getting heavier as you say the tape is clearly different and because it's clearly different and we can identify what clearly different means to us it's heavy on the tape that means there's more sellers that are coming in that means it's harder to trade higher to find higher prices than previously and we've watched house the stock is trading higher and trading higher and trading higher and then we're noticing hey it's harder at 53 for it to trade higher relative to how it did from 51 to 53 that's different that's different that is something that we can point to that is something that we can describe that's something that we can build into a system that does mean that the stock is different that does mean that the risk reward is not as good based on our trading skills that does mean that we have a trade decision to take off some risk as opposed to your other positions which were a bit or a little bit more random that is a very very legitimate way for you to be thinking about a trade decision to take off some risk yeah and this is something that graham and i spoke quite a bit about and he made a really point good point and you need to be okay with handing back some unrealized gain at times to really capture the meat of the move again taking 50 cents covering a quarter doesn't make a whole lot of you know sense looking for six six points there's no sign of a turn um you know it's okay to hand back some unrealized gain at times um if it means you know more times than not you're going to capture a bigger you know portion of the move and to put that in a little bit of context this made it to 9 9r in the regular hours a lot further and after hours it made it to like 60 bucks or so a little bit over that um and that 9r really was your target of around 56 dollars and you took only 3r on the name this is just you know this is just bad look you want to measure this right so you're trying to develop a exit system for this particular type of trade and so we're going to measure how you're taking your profits and so look if it just so happens that taking profits along the way into target is going to make this system better that's fine that what we're just going to do is we're just going to raise the size overall at the beginning of the trade we can do that too yeah that makes sense so one thing to note is i was bigger in this name and i did make more than usual but that doesn't you know make it okay that i didn't capture the meat of the move i need to continue to work on this and be more patient especially with the early cells it's okay to hand back some unrealized gains on your best ideas once in a while if it means you're going to make a lot more over time and that's what it's really all about if you want to be explosive like this you know a few people at the firm have talked about this and some of the happy hours i've heard ralph talk about it where you know he said you know it's not fun to hand back you know a car worth of profit but you know that's something that at times you have to do especially when you get a lot bigger um so if some of the best are talking about that and they're okay with doing it it's something that i should certainly be okay with doing at times as well and raff's case a very nice car yeah definitely all right and so just one last thing we wanted to touch on is how you could use tech to help you with your trading so i've been doing a lot more coding now than i was doing last summer and i wouldn't say i'm at the level where i feel that i could make some robust automated strategy but you can still use it to help alert you when some of your favorite setups are showing up in the market so we see in the top just some basic filters for volume percent change rv price and position with relation to vue up but something that's nice about being with smb is that the tech allows us to add in some more nuanced and complex uh some more complex logic to our code so on the bottom essentially what we're seeing is a filter it's checking for all the stocks that met the criteria above we're looking over the last 60 minutes and seeing if it's consolidating in the top half of the range holding above view up as well as the lows of that consolidation range aren't you know peaking lower into the bottom half of the range and most importantly is that the highs of that consolidation range aren't themselves daily highs we want to make sure that as we've said several times this is in essence a short squeeze idea so we want the daily high to still be there so that when the breakout happens that stopout level will add fuel to the short squeeze so this is a nice thing to have it's specific enough such that we're not just getting 50 names throughout the day and hardly any of them are actually what we're looking for but it's also general enough so that we are getting two to five names throughout the day that are popping up on our alert scanner and giving us time to look at them and deciding if we want to trade them with some discretion good graeme and i like as we're building this new playbook that we're adding code for a filter in this case an alert in this case for this particular trade there's three different ways we use technology at the firm the first step in your evolution as a technology trader is one let me build a filter that will alert me to my favorite setups terrific important what if you're armed with alerts for all of your best trades as opposed to not being how much better are you going to do so that technology is going to help you make more money and you can build custom filters you can work together to build custom filters which are going to alert you to your favorite trades really love how you've added this to the new playbook and the second way is scripts so you guys may decide that there's certain setups that you really love you know they're not just very good trades they're terrific trades and you may notice from your stats that you trade them really well you may want to decide hey let me supplement my discretionary trading with building a script and a script what a script does is that every time you find specific parameters in the marketplace it's going to get you into a position and then with discretion you'll trade out of it and so there are traders at the firm for their favorite strategies who will have will make money with discretion who will make money with scripts and then we'll also make money with automated models you're not going to ever get to the point of being able to build scripts if you don't first learn how to build filters so you guys are are going through that and then you're not going to be able to build models unless you learn how to build scripts so you may find an a plus a plus a plus setup where you play book and you say you know what it's so good i want to automate that strategy so i'm going to build rules into that strategy and i'm going to build rules out to that strategy and that's going to be in a separate account and your technology is going to take care of that and you'll make money off of that in the same type of setup you may trade with discretion as well so for a a plus setup an a plus a plus setup you may push the buttons and make a discretionary trade you may have scripts that are getting you into the position as well automatically and you may have an automated model and think about for your best setups how much more you're going to make in your best setups then you just pushing the buttons and you just pushing the buttons without alerts all three of those layers help you make them help you make a lot more but this is that first step and you guys building that's in that skill building the filters to alert you to your best setups and from there you'll be able to do a lot more with technology so love how you added this to the new playbook hey go ahead and click our subscribe button so you don't miss any of the videos they were producing for you and the trading community and please take the time to add your feedback in the comments section for what videos you'd like for us to produce next and what you found helpful from this video from all of us at smb train and trade well

Channel: SMB Capital

Views: 19,542

Rating: 4.9073086 out of 5

Keywords: stock market, day trading, smb capital, trading, investing, markets, wall street, stock trading, options trading, options income, economics, finance, technical analysis, multiple time frames

Id: -7zdWTKqHuM

Length: 45min 20sec (2720 seconds)

Published: Thu Jul 16 2020