Monday, May 7, 2018

How To Trade an AOT Setup !

Hey folks!

As most readers of this trading blog know by now, I post many trading setups whether it be for 'Art Of Trading' members and/or also on the my @TraderStewie public twitter!

Trading setups I post come in various forms such as 'Falling Wedge' patterns, Bull Flags, Pennants, Bear Flags, Cup and Handles etc etc!

So today, I want to talk about HOW, WHY and WHEN we trade a breakout that "triggers" from one of the setups I shared. I'll show you how, when and why a setup triggers?
What's the call to action?

Let's take this SQ for example:

Posted numerous setups in SQ in the past but this recent 'Falling Wedge' setup in SQ was tweeted out on my @TraderStewie twitter feed on Friday and was also sent to Art Of Trading members on Friday as well....

SQ, was actually the 'AOT Top Pick' for Friday!! 

.......Fast forward to today, Monday May 7th 2018..... 

SQ triggered this morning about 5 minutes after the opening bell.... and here's HOW and WHY it triggered an entry and how it was traded with 'ART OF TRADING' members.... 

Below is the 5 minute chart to show you exactly WHY and HOW we took SQ long ....

Important things to know before taking an AOT setup: the stock in question cannot GAP UP over the trigger price, if it does gap up above the trigger price, I tell AOT members to "skip the trade temporarily" and wait for a new intra-day setup to emerge. This helps to avoid chasing gap ups at the open. The stock must open BELOW the trigger and move higher thru the 'Breakout Price' or 'Trigger Price' to trigger a "proper long" entry! 

Once the stock triggers a proper entry, the stop loss usually goes a few pennies BELOW the breakout day's lows(in some cases though, a stop loss can be wider and use a smaller position to compensate for market volatility, a stock's volatility, its specific liquidity etc)...

.... here's what the updated daily SQ chart looked like now..... 

Beautiful breakout today and we got into it at a great price while patiently waiting for the breakout! 

I hope this post was helpful!! 

Happy Trading!! 

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