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Today Clay goes over a ‘shorting’ scan today to start the webinar. After setting up the primary trend we desire to find, we further refine it by searching for a specific candlestick formation. We discuss what looks good from a shorting perspective and take a look at a few tickers that meet the criteria.
We look at BABA on the 5 minute chart to do our first trade plan analysis. A quick poll of the students reveals a mixed bag of answers, long and short. While this stock started out over extended, it has now pulled back and formed a flag. We set up a logical entry, stop loss and target locations and determine it does meet our RvR requirements. The trade reaches our target relatively fast and now we must trail our winners to capture the most profit the trade is going to offer.
Clay pulls up another BABA example and walks us through what he is looking for while setting up his trade plan. We setup our RvR just as we do in all our examples and we get the ideal candlestick we were looking for in the next candle formation. It is a strong rubber band setup which gives us a good chance of the upside we were looking for. As we come to see, the next candle is an extremely bearish candle that without proper risk management would have wiped people out with a huge loss. This is why we focus on risk management.