Course: Bear Bull Traders Trade of the Week September 11, 2020

Bear Bull Traders Trade of the Week September 11, 2020

$DOCU Trade.

Strategy Name – 5min ORB (Opening Range Breakout)

It’s a simple strategy. First 5min candle has to print (open & closed), if the next candle takes out high or low of previous candle it’s called opening range breakout.

Time: 9:30 – 10:00 am

Indicators:

  • First 5min Candle has to print.
  • Making new 5min High/Low.
  • Prefer 2min/1min candle making direction to high or low (making HH/LH, LL/HL). Price action is above/below MAs & VWAP (not swinging up & down).

Confirmations:

  • Prefer 2min/1min candle making direction to high or low (making HH/LH, LL/HL). Price action is above/below MAs & VWAP (not swinging up & down).
  • The sooner second candle breaks out 5min range the better chance it will continue the same direction.
  • Prefer small body candle.

Entry Signal:

  • Making new 5min High/Low with confirmation based on 2min/1min.
  • Preferably price action close to MAs/VWAP & inside BB/VWAP deviation band.
  • Small body (lower that daily ATR).

Stop Loss:

  • Max stop loss is based on ATR (last 6 candle-5min).
  • Technical stop loss is based on high/low of ORB:
    • If entry candle closes above entry but below max loss & next candle takes the of previous candle the trade is dead.

Target:

  • 2/3 off at 1R (summer time), otherwise 1/4 off at 1R.
  • Depending on stocks: 2/3 off at 1.00 or 0.50 for most of the time.
  • After base hit, 1/2 off at daily levels/MAs/VWAP.

Rules:

  • Avoid stocks with big swing high & low candles within first 30 min.
  • Avoid stocks with big wick tail.
  • Avoid stocks with big range above their daily ATR.
  • No ORB after 10 am.
  • Prefer 2min/1min candle making direction to high or low (making HH/LH, LL/HL). Price action is above/below Mas & VWAP (not swinging up & down).
  • Small body (lower that daily ATR).

The sooner second candle breaks out 5min range the better chance it will continue the same direction.

Trade Management:

$DOCU was on my gapper scanner with citeria that I like:

Price = 232.21

Float = 177M

Gap= – 5%  gapped down

Volume= 500K

Chg close $ = 9.80

today Vol. % = 5.1%

ATR  = 16

avg daily vol (10D) = 9.9M

it was interesting because it was gapped down from close by -10 points. I was looking for continuation play if it was getting set up for 5min ORB below level that identified that had enough room to move (223-215 was the window of opportunity to play it out).

My entry was based on 5min ORB below 224 level with confirmation from 1min/2min charts – price action making LL/LH & price direction in one direction ( no swing high/low or chop chop price action up & down). Considering windows of opportunity of 224-215.

First entry – 222.6, but I got stopped out due to hotkey stoploss hotkey error. I waited patiently for another setup since stock was showing weakness. I was able to get back in at better price 223.53 with max stop loss of 5 dollars due to last ATR (6) – 5min candle & volitility, I had to give it wide stop with less amount of share for riking $100 on this trade.

Entry = 223.53

Max Stop loss = 228.53

Tech. stop = if it closes above my entry & next candle take high of previous candle -> trade is dead.!

Targets = in general my targets are based on daily levels/MA from daily/Premarket lows. However, for a base hit I take 1/4 or 2/3 off depending on stocks. Initial plan was to take some off at premarket 220 level, but since SPY (market) was weak & dropping quickly, I took advantage of that to let it run for bigger move to next level 215 area as my first partial!. Then after that I was watching price action and daily levels to partial out at daily levels.

TG1=215 (due to SPY dropping I let it run for bigger move from 223.53)

TG2= 212 (daily level)

TG3= 209 (daily level)

TG4= 206 (daily level)

TG5 = 217 (vwap – breaking trend)

What was good about this trade

Planning my trade/execution of my plan/to stay focus/ stay calm during trade.

What was bad about this trade

That I got stopped out by mistake.

Last partial should have been taken out earlier not at VWAP

What are areas of improvement for this trade

  • How to manage last partial well if it is not going to work out for holding to the close. I should be able to take it off or not to take off if I use higher time frame – 30min or 60 min.
  • More discipline on my entry and taking partials.
  • More focus to manage trade well.

Charts
(Click to view larger)