BIDU Trade on Feb 22, 2023 11:06 from Maarten: Tradervue User Stock Trades.


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BIDU 22-2-23
Catalyst: Earnings beat (small), good growth surprsise.
Setup: positive earnings reaction reversal, 6.66%. Up just over 1ATR
Technicals: LT technicals are very strong. ST it just had undercut the 20EMA but the pattern is still looking strong, kind of two legged PB. Gapping up below the high which leaves some resistance areas.
Pre volume buzz: 12.6%
Very strong alignment on all aspects. 8.5-9/10. Beat could be bigger. Volume is great. Technicals I like.

10-11 Preparation

A) Describe current market structure and conditions present. 16:07
-ATR & volume: 1000% volume buzz, down 1.4ATR
-Price action (market environment)
Very strong bearish drive. Not a green candle yet. Extremely weak. Cleared the gap
-PB/Trend Conditions
B) Project forward a path showing my expectations from here.
-What will happen if the environment doesn’t change?
We trend lower all day and have a GS scenario.
-How could it change into favorable/non-favorable market environment?
So far it’s very favorable. Will need a clean PB after this extreme selling, but it might likely involve some buying volume.
-What would be the ideal/worst scenario?
Worst scenario would be a reversal on high volume followed by a reclaim of VWAP. Then it would trade above VWAP all day.
Best scenario would be a clean PB into the 5m 20EMA. It would show shallow volume and trade lower all day.

Review the signals that led you to identify the trade opportunity (PATTERN +SETUP)?

Positive earnings reaction reversal
-Earnings beat, solid news.
-1ATR gap up.
-8/10 long setup
Everything was aligning for a long setup premarket. But then the price action completely reversed with an EXTREMELY weak open.
- Strong bearish drive; 8 consecutive red bar all making lower lows.
-1.84ATR down move.
-Went from outside gap up, to a bearish engulfing pattern: It broke down the PDL. It didn’t even clear the gap, it did more.

-Shallow PB
-No strong volume reclaiming PDL
-Shallow volume in retracement.

-How successful were you in identifying the environment and playbook variables during the trading session?

Good setup; grade it next time.
Did very well on recognizing the strength of the reversal. I wasn’t game planning this as a reversal, which is something I am not good at, but it was obvious from the extremely weak open that EVERYONE was selling. It was a clear countertrend which I wanted to follow. If everybody goes countertrend then joining them is the same as joining the trend. I didn’t grade this setup as a reversal. I should have done this mostly of the intraday price action. Would have given it at least an 8.5/10.
Good PB pick BUT..
I did well on picking a good PB in terms of shallow volume. The retracement had some above average volume bars, but those turned into shallow volume very quick. Relative to the opening drive volume the above average volume bars were not very significant.
.. market structure not in my favor.
BUT when I am zooming out, it was obvious that the move was already very significant in terms of S&R structure. Price went from a 1ATR gap up, breaking down PDH, breaking down PDL, and pulled back reclaiming the PDL. That reclaim wasn’t significant, and I saw that. But it brings some extra risk. I don’t know how much further it will go. Had BIDU pulled into the PDL and bounced of this level, I would have been a stronger setup. Or had it pulled in when it was in between yesterday’s range. Then there would have been more RR as well.
Changing trade management:
So these were perhaps conditions that favored taking off some risk when the trade is working, just I did on the GOOGL short recently. Then there was also a risk of reversal, and I made a small win when the trade didn’t reach my core target. I should still keep my core, but I can take some risk off. There is nothing wrong with paying yourself if the trade isn’t working as expected.

What signs were present to indicate this environment?
-Unfavorable market structure: reclaim of PDL.
- Changing market conditions.
- Reclaim 9EMA was a small CHOCH.

What was the ideal entry point? How does that compare to your entry? What signals (if any) did the market provide, which could have led to an improved entry?
Only second bullet was very poor. Neglected my system which led to random trading and a 1.25R loss. Not good. Was up over 3R on my last entry, no BIDU is trading at less than 1R. Looks like I might get stopped out here. That’s a shame, but I have followed my rules and that’s a win. It’s not about the money, it’s about the process. Following these rules and holding on until there is a reason2sell will lead to big profits that I need.

Potential new edge and entry rules
Too often I have entered after the first candle that ran into the EMA. This candle did below average volume but it wasn’t too shallow either. I want to measure the % of the average volume in excel again, like I used to with low float PB’s. Also I should track how many trades immediately start working after the first candle that interacts with the EMA (and basically don’t provide another opportunity to get in). I bet this percentage is very low. This means I could have a new entry rule which would force me to be more patient and get stopped out less frequently.
Also I could add another rule that IF I think the PB will be shallow and want to chase quickly because I might miss it, THEN I will only enter when the candle makes a new high/low AND set a tight stop as soon as the trade goes against me.
-If this was a great setup and works immediately then I could add size on the next candle for bigger RR.
-If I get stopped out because it seems like a false break out/down, then
I lose small 0.5ATR and can wait for more confirmation.

What was the optimal exit location or locations, in order to minimize risk when wrong or maximize gain when right? How does this compare to your exit location? What signals (if any) did the market provide to identify this ideal exit location?

A part from the second trade I executed okay. I should have taken off 33% of my position as we reclaimed 9EMA. I can always add back if the trade turns in my favor again! This was a CHOCH. This is also something I could track; how many tickers broke down/reclaimed the 9EMA AFTER the trade made broke the PB high/low.

Paying yourself
I should also be able to pay myself as the trade works, but there are some variables/indications that price might not hit my ATR core profit target. I think it’s reasonable to take off risk. When the conditions change or perhaps the trade is of lower quality this is something I should be able to do. I could add back to the position if the trade starts working again.

Execution detail:

Date/time Symbol Side Price Position
2023-02-22 11:06:17 BIDU sell $136.260 short
2023-02-22 11:08:57 BIDU buy $136.840 0
2023-02-22 11:17:43 BIDU sell $136.220 short
2023-02-22 11:24:36 BIDU buy $136.930 0
2023-02-22 11:26:06 BIDU sell $136.630 short
2023-02-22 13:28:45 BIDU buy $136.580 0

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