A "Deep Dive" Into Technical Trades!

Trader Stewie
Sep 21
4 min read

Updated: Sep 21

Hi folks,

I wanted to make this educational post this week covering a trade we made in the Art of Trading private group as well as covering some insight into the daily and weekly dynamic of how the group operates, the types of trades I look for and the knowledge and insight that I aim to share!

Lets dive into the flow of the group and how I manage things day to day. First off, my number one rule is to keep things simple. I try to provide material that takes into consideration the range of skill and experience that my core group possesses. I provide material and ideas that are easily understood to someone who may be new to this business but at the same time add more advanced concepts into those core ideas that a more experienced trader can nibble away at and still build upon the skill that they possess.

Each morning before the market opens I scan for potential day trading setups and I share 1 of those ideas each day. These particular trades aren't made into official alerts but I do outline exactly what I'm looking for in order to execute upon the trade. Ideally I'm looking for 3% - 4% moves in these ideas with strict stops and parameters in place! Those ideas look something like this:

The strategies used for these ideas also have in depth step by step educational guides with prior examples found on the Art of Trading Blog. For example this setup utilized the "Red to Green" strategy that I've been utilizing for many years. Its been a consistent strategy that regularly produces results. You can read about the "R2G" strategy on the Art of Trading Blog here - [LINK]

Occasionally these day trade setups warrant a quick overview the same day so I follow up on these ideas by providing a quick break down of how they were executed, why they may have not triggered and how we can build upon it for next time. In turn this helps build experience and shorten learning curves.

Aside from the day trading setup I share each morning our primary focus is short term swing trades. These trades average 3 - 7 day holds and I aim to alert 2 - 3 new setups each week. All swing trades are emailed and tweeted in the private twitter in a timely manner.

Here is the breakdown of a short term swing trading setup that we took last week.

This setup caught my eye for two primary reasons:

A swift intraday pullback that started to test the 20 EMA on the daily timeframe
An intraday avalanche trade setup

The first part of the setup that I spotted was the intraday pullback which was a classic "avalanche" trade setup. In short I start to scan for Avalanche trade setups every day around 10:30AM EST.

I'm looking for:

Stocks that are in strong daily uptrends that are experiencing sharp intraday pullbacks
A stock that gaps up and fades lower in a steep and relentless manner
Stocks that sell off and create a defined falling wedge pattern between 9:30AM through 10:45 - 11:00 AM EST

Pullbacks of 8%, 10%, 12% and even 15% are the most idea candidates. You can read more about the "avalanche" strategy on the Art of Trading Blog here - [LINK]

The second part of the setup that I spotted was a result of the intraday pullback. Which was a test of the 20 EMA. Stocks that are in strong daily uptrends tend to find support off of the 20 EMA. It's the basis of the "Holy Grail" setup. Which we have talked about and covered on the Art of Trading blog many times in the past. You can read more about the "Holy Grail" strategy on the Art of Trading Blog here - [LINK]

Shortly after the entry the trade began to gain ground quickly and bounce with authority! I used this opportunity to book partial profits which helped cover risk and would allow the trader to hold the secondary part of the trade for potentially larger, short term gains! This is a common tactic I use with AoT Short Term Swing trades!

As the trade progressed throughout the day it actually ended up going Red to Green! This helped solidify our entry and add confidence to a multi-day swing trading hold, the chances of a continuation day with a close on the high of the day greatly increased with the stock going green into the close!

The next day $UEC opened red and went R2G shortly after the open. We used this early momentum to capitalize on the remaining position. Selling the remaining at $12.50.

From the initial entry of $11.35 and the two exits at $11.80 and $12.50 the average exit price was $12.15. The average realized gain was +7.05% inside 1 trading day. Admittedly a much quicker swing trade then the 3 - 7 day hold average. In the case where a stock rapidly bounces I usually err on the side of caution and make sure to book quick gains especially if I feel that the indices are getting a bit extended on the upside.

The "Trading the Pullback" strategy in a strong trending market is a fantastic way to mitigate risk on high flying stocks. Which was exactly what was used with the $UEC trade. It allows you get into low risk high reward setups without just chasing anything that moves, higher. We talked about this very strategy in a recent Art of Trading Blog post. When I create new blog posts I try to intertwine each topic so traders can continue to build on their knowledge and abilities through current market trends. This way traders can apply fresh knowledge to current market conditions instead of just reading about it after the fact!

Read more about "How to Trade the Pullback" below:

I hope this guide helps!

Cheers and Happy Trading!