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Today we take a look at one of Clay’s trades on WMB on the 2 minute chart. The chart has gapped down significantly and from there we design the trade plan. We talk about a new form of risk that we call ‘stop out risk’ which talks about how much leeway we give it. This means we risk very small to gain much more. Remember, this usually gives you a higher probability of stopping out. When we let this chart play out, we see that we took an extremely small loss as this stock completely reversed against us.
We finish the evening with a top down analysis on SPY. Starting off on the daily we work our way into shorter time frames. As we get through the various time frames we see why we appeared to stop at certain locations (lined up with trend lines, moving averages, etc.).