On Friday October 16th 2015 $PWR was on our short gap list. We had few ‘Tier 1’ Candidates to short at the open, $PWR was one of the favorites:
Unlike the $SAVE trade, the setups in $PWR were very aggressive. However graduate students of our Gap Trading Seminar program took advantage of those nice setups and shared with the others in the G6 Trader’s Hub (Come join, it’s FREE!!)
In today trading lesson we will look into $PWR and see how one can learn to trade those setups. First of all, everything in our system starts from the Daily Chart:
When we have a Tier 1 gap like $PWR we know we can be very aggressive with it at the open if it sets up, that mean trading on the 1 min chart looking to continuation of the pre market move and levels. The first setup we teach is G1 and it’s the most aggressive one and can be trade only on very specific conditions , all of them came into play in $PWR. The first setup of the day consider to be aggressive in our eyes since you don’t have a trend yet (unless a lot of volume was made pre market with a clear trend), being aggressive means to either take cover fast if the trade goes against you according to your planned stop and cover profits early as well if you get a big move down and old some for the ‘real’ trend once you recognize one.
After the fact it’s really easy to say that the: ‘Trend was clear’, but in real time during trading , when the Adrenalin rush, only the experienced traders and those who are able to put aside their emotions will be able to enjoy the big profits of a stock like $PWR.
The 2nd set up was Easier, Cleaner and Nicer to trade, the trend was already intact, you got around 5-6 Narrow Range consolidation to put plan your trade , put your orders and enjoy another big move down. A trade like in $PWR can make a big difference in a trader’s week and even a month the trader is able to maximize the profit. It’s all about Risk/Reward , Trade Management and experience, once you have all the package and that piece of mind to trade , than trading can be the most satisfying profession in the world!
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