AMC Trade on Feb 18, 2021 09:59 from tjmiller2001: Tradervue User Stock Trades.

Every once in a while, AMC spikes premarket based on rumors that Amazon is going to buy it. That'd be awesome if they did, but this is not a catalyst that will make big money institutions actually buy and hold. This is a catalyst that in the past has pumped the price premarket and then AMC fades all day. I was glad to see that news this morning, and my plan was to fade trade this before the market even opened.

My plan was to wait for weakness on the open then wait for a move up to VWAP, followed by consolidation or an inability to push higher, where I would then enter short and hold most of the day. That was one scenario I was ready for, but I should've had a plan ready for more.

What truly happened was: It opened strong, touched a premarket resistance at 6.25, pulled back then tested it again 3 minutes later. This second attempt was followed by a large, high-volume red 1m candle. This was a perfect opportunity to take my short entry. Even if the red 1m candle was large, I could've still opened the trade with a 3:1 RR based on my fade thesis. I need to have multiple scenarios ready.

It started to fade downward and couldn't hold above the 6.00 level. My plan was to enter on a wick up to 6, with a tight stop and 5:1 RR. It never got back up there. I saw the weakness and wanted to fight for price. But the better strategy was to enter when I saw weakness, with plans to add a lot at 6.00 with a tight stop. There have been too many times where I see the trade and don't act on it because I want to enter on a retracement exactly to VWAP. It's good to fight for price but stocks don't trade off exact levels. You have to take what you can get sometimes.

Entered at 6:59 (9:59 on here), expecting a LOD break, price starting rising on higher volume while SPY was weak from 7:01-7:03. This could've been a change in character but I added into my short position at a better price to help my dollar cost average. I don't think this was a smart decision but I got lucky and SPY went big red for almost 15 minutes straight, helping push AMC down with it.

I didn't sell any contracts at 7:09 when it bounced from the lows. I didn't sell any contracts at 7:15 when it made a higher low on the 1m. That would've been a good time to sell at least 1 lot. I had 2 at that point, there are times when it makes sense to take some profits and let your core ride. I think I didn't want to admit this thing could reverse on me so I held. That's a common issue for me I'm trying to work on. I'd rather be right than profitable sometimes, and that needs to change. The past few days I've struggled taking profits into strength, trimming back a position, and realizing some gains. That will likely be my focus on my daily report card after 2 weeks of focusing on cutting losers quickly.

I did finally sell 1 lot at 7:19, when I saw a high volume green candle close above a level of recent short-term resistance. It failed to hold this level for long and a big red 1m candle followed. The fact that this level couldn't hold suggested the stock was putting in a lower high. I didn't reenter though because I felt that I wouldn't have a good RR if I entered on a big red candle. In the future, my mindset should be, "I just got stopped out, but if I get back in short, my SL doesn't have to be a higher high above where I got stopped out. Instead, I could make this a momentum lot with plans to scalp a move down or sell if the big red candle was a fakeout and a green candle follows." SPY was red at the time supporting that move.

Bought a put contract at 7:49. The idea was that this was a resistance put at the top of a downward trendline. I was quickly stopped out but I stayed open-minded about a reentry. I got back in at 7:56 when that breakout of the 5.74 level couldn't hold. There was high selling volume before this candle so I felt good getting short.

At first glance, these 3 trades in a short period of time looked like overtrading. Looking back on them, their trade thesis was decent. The 7:49 entry was a good fight for price given a trendline connecting the tops of recent highs. When it didn't work out I cut my loss quickly. When the breakout failed, I got back in, which takes conviction and clarity of mind. This reenty is what I needed at 7:21 but failed to do.

The stock ended up consolidating for a long time, so I put my stop at the top of the range and planned to TP on 1 lot at the LOD or bottom of the range. I was stopped out of my short when that level eventually broke on high volume, good exit there.

My trade thesis was strong, my first entry was late because I missed the 7:36 short, second entry was bad, first exit was late and I missed the opportunity to reenter, third entry was strong, second exit was strong, third entry showed great mental clarity. Trade direction didn't work in my favor and then my last exit was strong. A strong exit is defined here as, "Exiting quickly when your level is broken."

Lesson Learned: During the premarket, make a plan for multiple scenarios, not just the one you want to see or the one you think is most likely. If you have conviction in an idea and the RR is decent, enter when you see something meaningful, don't always wait for that perfect pullback to your level. This isn't about making rash decisions, it's about putting on risk when you should. Be willing to enter momentum lots where your Stop Loss isn't a higher high, but a loss of momentum. Being afraid to enter on opportunities you see is a weakness.