STOCK SELECTION:
1. Any stock I trade must appear on my FINVIZ-Elite "In-Play" scan.
2. Stock must be breaking out of a daily chart pattern that I am in love with. My conviction on the idea must either be firmly bullish or firmly bearish based on the daily pattern alone; not either or! AVOID TRADING IDEAS WITH MEDIOCRE DAILY THESIS!
3. The stock must also have a catalyst and/or be part of a hot group/sector (and/or have a high short float % for longs) that will fuel the move on the day.
4. Stock must have a CONSISTENTLY tight spread (less than $0.05) and solid order flow in my DAS montage before I can then put it on watch in my DAS market viewer. Keep ideas that make it to my watch list on watch until 12PM EST at minimum!
SET-UP SELECTION:
5. 30-Minute chart is my BOSS! Up trending (above the 9-ema) on the 30-minute chart equals longs only and vice versa. Further more, only initiate trades as the stock is breaking out of a low volume consolidation/pullback near the 9-ema on the 30-minute chart.
6. a) WAIT, WAIT, WAIT for candle over candle confirmation on the 30 before looking for an entry! Double check risk/reward 2:1 is realistic then step down to the 5-minute chart. Price should not be extended from the 9-ema on the 5. Ideally price should also be emerging from a flag or pullback on the 5-minute as well!
7.It's okay to scale in with partials at or near important confluence of support/resistance before candle over candle confirmation on the 30-minute. Use the 5-minute ATR of the stock to determine maximum position size.
TRADE MANAGEMENT:
For every single trade I take; I will take at least 50% off at 2:1.
8. Momentum Scalp: For momentum scalps, the least I will take off will be 75% up to as much as 100% especially when I'm not confident that I will get a bigger move.
9. Intra-day Swings: Every now and again; "ideal" daily ideas with the potential for obvious large intra-day move will pop up. Instead of taking 75%-100% off at 2:1; I will only take 50% off (to pay myself) with the intention of nailing a big winner on the second half which I will manage based on the price action of the stock, support/resistance levels and market context.
RISK MANAGEMENT:
10. Do not risk more than 1R on any trade. Always enter a hard stop for 1R max loss on every trade. DO NOT OPEN MORE THAN (TWO) 2 POSITIONS AT A TIME! NEVER PUT MORE THAN MY MAX DAILY LOSS AT RISK! NEVER GIVE BACK MORE THAN HALF OF MY DAILY GAINS OR RISK GOING FROM GREEN TO RED ON THE DAY!!!
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