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Jul 22, 2020 09:32

Shares traded: 720
Closed Gross P&L: $-60.32
Gross Return: -0.45R


trend reversal etrade earnings


SNAP got crushed on earnings after hours, despite a beat, due to slowing user growth and views. Was looking for a trend reversal opportunity, and when SNAP opened above the 5min 20ma, I started looking at the 1min chart for an entry signal, which I thought I saw, but in hindsight realize I jumped the gun. While on the 1min chart, it looked like we were going to get a 1min cup, per my strategy, I was supposed to wait until the first 5min bar closed, and then buy above it's high, which never materialized. In fact, when looking back over the trade, I can see that the short entry signal triggered on the 5min chart, although not much meat was on that bone.

Anyhow, started a long position, and quickly added on the next 1min candle as it appeared to be going up. Unfortunately, this trade idea did not work, and I got stopped out shortly after. I noticed some immediate buying/support after I got stopped out, so I jumped back in, and was able to catch an immediate bounce attempt up through VWAP, and sold into strength above VWAP as the stock started to stall; this ultimately helped me cut the loss in half. Although, had I set a tighter stop as I was supposed to, per my strategy, I may have actually made money on this trade, as opposed to taking a sizable loss.

The one thing I want to point out in this trade is that it brought up those same frustration feelings that normally put me on tilt, but this time I was able to maintain control and coach myself through it. Super proud of that, which is mostly thanks to Meech and Trading in the Zone. Looking forward to continue building up this mental muscle!

Did Right
  • Had premeditated bias, and game plan
  • Waited for an entry signal, although jumped the gun before it fully appeared.
  • Had a hard stop in place, and stopped out as planned.
  • Mostly importantly, I didn't let this trade put me on-tilt as it easily could have, given the loss gave back my gains from morning, and put me red on the day. Instead, I was simply able to see it as a trade that just didn't work out, and moved on to my next trade opportunity.
Did Wrong
  • Jumped the gun on the entry signal
  • Didn't set my stop tight enough, per my entry strategy. Given that I entered on up down up move/cup, on the 1min 20ma, my stop should have been $23.16 instead of the crazy wide stop of $22.86, which was pre-market low. This would have limited the loss to $79.20 as opposed to nearly $140, which would have made it possible to turn a profit on the bounce trade.
  • Probably shouldn't have re-entered the trade after getting stopped out, although this issue is partly due to the fact that my stop was so far away, I didn't want to miss a chance to minimize the loss. I think an initial attempt might be ok only if I immediately set a stop for the low, and don't try again if it doesn't work, but the better solution is to set tight stops, and wait for entry signal to re-enter or start a separate trade all-together i.e. an opening trend bounce in this case.
  • Wait for the entry signal to form! The absolute earliest I should be getting in, is on the break of the first 5min high candle, and that's only if the 5min 20ma is on my side, and the entry is above the 1min 20ma, and there is a 1min cup or up/down or down/up motion (basically each side getting their turn)
  • Set stops based on the entry strategy used, at a max of 3 cents from the level, but +1 if on a nickel.
Next Trade

SNAP held fairly firm today, and also a couple upgrades reiterated at around $27.50-$30, so expecting a continuation of the reversal started in 2nd part of day 1.

Execution detail:

Date/time Symbol Qty Price Position
2020-07-22 09:32:33 SNAP 90 $23.545 90
2020-07-22 09:33:28 SNAP 90 $23.655 180
2020-07-22 09:46:09 SNAP -96 $22.870 84
2020-07-22 09:46:09 SNAP -84 $22.860 0
2020-07-22 09:47:29 SNAP 80 $22.868 80
2020-07-22 09:47:29 SNAP 100 $22.870 180
2020-07-22 09:56:46 SNAP -90 $23.265 90
2020-07-22 09:56:57 SNAP -90 $23.272 0

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