Saturday, June 16, 2018

How To Trade AOT Setups When Working Full Time!

Hey folks, 

Art Of Trading member, Zach @87Alwaysred , who some of you know from communicating with him every day in the @AOTtrades private twitter feed has BRILLIANTLY and most importantly generously/selflessly took time from his very busy work schedule to write this "guide" on how he trades the AOT setups! He asked me to share it with other AOT members who work other full-time jobs but still have that passion for trading and want to incorporate trading into their busy work schedule!

Zach, lays out HOW he does it, gives examples and gives you some good ideas and will surely inspire you! 


Hey Stew,

I've made up an easy to follow and easy to understand short "guide" on how to trade your setups if you work full time. I hope this can help a few people out!

As always, you effin ROCK stew! 


How you Could Trade AOT Setups if you Work Full Time


STEP #1: (Trading Plan) Identify and study all of the setups that are contained within the daily emails. From the list of setups identify the stocks and setups that you want to trade!
STEP #2: (Look at the Previous Day Low) Stew usually sets his stops just below the previous day low if the trigger is tight and, in some cases, (ZTO from today for example) The stop was set at the current days low.
STEP #3: (Get a Feel for the Name) Using the charts that stew provides in the daily emails look at the way the name has traded in the past. More importantly take note of the price action from the day previous. Ask yourself; How big was the previous days price swing? Am I comfortable holding full size on this name? How “tight” is the setup on this name? How far off is the “trigger” from the previous days range? These are things I look at when “planning my trades". 

"Daily Price Swing from high to low" 

"Tight Setup"

STEP #4: (Managing Your Capital Responsibly) After Identifying the setups you feel comfortable with trading you must allocate the capital and set the risk you are willing to put forward in order to enter the trade. If you work full time entering names with a 4% - 5% downside risk isn’t a good idea. These names are better played if they are “managed”, meaning tiered buy ins and updated stops through out the day if necessary. The names you want to trade are names with 1.5% - 3% down side risk. The reason for trading names with lower downside risk is because you can allocate “normal size” to these trades and feel comfortable entering the position. If you want to trade names with higher volatility and don’t care for the management side of things only ever enter “half size”. If you enter “half size” on 4% - 5% downside risk names the “loss” will feel the same as a full size 1.5% - 3% risk name. Let’s use $10 000 as full size for example ($10K FULL with 1.5% - 3% downside risk is $150 - $300 loss) if you project that same idea over to a higher volatility name ($5K HALF with a 4% - 5% downside risk is $200 - $250 loss).


This TWTR setup above would be easy to trade for a few reasons.
Reason #1: The chart consolidation just under the breakout/entry point is pretty tight. 
The previous day's action was very narrow! 

Reason #2: Down side risk within the trade would be in the 1.5% - 3% loss range.

This AAPL setup above would be easy to trade for a few reasons.
Reason #1: The chart is tight. The previous days action was very narrow.
Reason #2: Down side risk within the trade would be in the 1.5% - 3% loss range.
Reason #3: APPL is a slow-moving stock. The name only gets volatile with news on the name or MAJOR MARKET UNCERTAINTY. The trade either works or it doesn’t. No managing.

In the following charts identify reasons why these setups are easy to trade? Can you find anything within these charts that I haven’t mentioned? If so share them with other members over at AOT!

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