Clay explains what a xmas tree alert is (christmas tree alert) which shows stocks hitting new highs or new lows. Generally, this will be a first alert for lots of volume pouring into a stock but not always.
We take a look at student Darrens trade who made a nice sum of money on 1 great trend trade. He saw it open overextended to the upside and was looking for downside movement. Darren took a different approach to scale out and maximized the trend he saw. On top of catching this big trend, Darren shows why it is important to be disciplined. He took an extremely small loss in another trade and wasn’t willing to ‘give back house money.’
Clay forms a trade plan including entry and stop loss locations on NFLX. This example shows why we respect our stop losses and do not hold losers.
We then form a second trade plan on NFLX at a later date. Similar setup as the previous trade but you can see that the win completely wipes out the controlled loss you should have taken from the previous example. A testament to having good RvR.