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Today we take a look at the SPY on the 5 minute timeframe. After identifying an area of possible indecision, Clay walks us through where a logical stop loss location would be. We find possible targets and see that this trade goes on to be quite the winner but what Clay is trying to convey here is that IF this trade was to stop us out with a larger move up, it would be fine as we kept it small and controlled.
We setup a second trade plan on the same ticker and go through finding the logical entry point, stop loss location and initial target. The hardest thing about this trade will be having to wait for it to reach our entry point. After a promising candle at our entry point, this trade goes on to immediately stop us out.
As we set up our third trade plan, we have to remember that just because we’ve had a few trades that didn’t work we shouldn’t give up on our strategy. After setting up this trade we see that it fully wiped away the two prior losers and then continued into an overall profit for the day. As we always emphasize, if we keep our losers small and leave our winners open to their logical conclusion, you truly can be profitable long term in trading.