AoT Short Term Trades Review: $TSLA, $HUT and $JMIA
Happy new year!
I've decided to reintroduce an Active Trader type portfolio for 2022. Hit and Run type trades if you will. I think this will be great for short term traders who are looking to improve their skills and knowledge on shorter time frames.
Basically, this is how I plan to handle the shorter-term trading portfolio.
These trades will be labeled "SHORT TERM TRADES". These will be trades that last a few days in duration, and we will be booking profits and losses much more actively. Holding no more than 3 active positions at a time. we will look to capitalize on long positions and potential short positions when the occasions are right.
I started implementing this style in the final weeks of 2021. We used it on the $TSLA trade we placed on 12/21/21. We will look at this trade plus the $HUT, $TSLA and $JMIA trade we placed this week!
$TSLA Trade Review: From 12/21/21 into 12/23/21 Position Closed (Long side trade)
$HUT Trade Review: From 1/05/22 into 1/06/22 Position Closed (Short selling trade)
$TSLA Trade Review: From 1/06/22 into 1/07/22 Position Closed (Long side trade)
$JMIA Trade Review: From 1/07/22 Position Open (Short selling trade)
Ok, let’s get started with the trade reviews! This review guide should cover the reasoning and the technicals behind each one of these trades!
$TSLA Trade Review – Long Side Trade
From 12/21/21 into 12/23/21 – Position Closed
One stock that I keep a close eye on (and I’m sure many of you do to) is $TSLA. This stock has been a consistent leader for a few years now and when it sets a decent pullback accompanied by strong technical characteristics, I try to catch these moves. So, what did I see on 12/21/21 that caught my eye and ultimately initiated a long side trade in $TSLA?
On 12/21/2021 $TSLA made a 2B reversal on the daily timeframe, tagged the 100 Day EMA and was setting up a beautiful falling wedge pattern! This sort of pullback trade is a LOW RISK, HIGH REWARD setup and this is exactly what you want to be looking for when trading a pullback in a market leading stock!
Now that we’ve spotted the setup how did we trade it?
I entered $TSLA at $910 with an IDEAL STOP @ $880
Why was the stop loss placed at $880?
The stop loss was placed at $880 because this was slightly below the LOW of the daily reversal candle. If the reversal were to fail, it would be likely slightly below the low that it established!
The very next day $TSLA made a Gap and Go type move. A Gap and Go is where the stock gaps up, holds the gap up low and the trends for the majority of the day steadily higher.
We took advantage of the GAP and Go move and sold half into strength.
Why did we sell half of the position and not the whole thing?
We sold half to manage our risk to the downside. We stayed involved with a half size position take advantage of a possible momentum trend. This is a great way to capitalize on momentum stocks and manage risk at the same time.
On December 23rd we sold the remainder of the position into strength. We averaged a 12.69% gain (+$115~ per share)
We completed this trade inside 3 days.
This is a perfect example of what we will be trying to accomplish with the short term trade portfolio in 2022! Quick in and out trades with sound technical characteristics and tight, strict stop losses!
$HUT Trade Review - Short Sell Side Trade
From 1/05/22 into 1/06/22 – Position Closed
There were a couple of technical characteristics in this $HUT trade that caught my eye, and ultimately why I went short this name on January 5th.
The first technical characteristic to note was the descending triangle pattern that the stock set up (Refer to the chart in the alert for this highlighted pattern).
The second technical characteristic was the loss of support, and ultimately the loss of the 200 day EMA. Usually when a stock starts trading below the 200 day EMA nothing good from a bullish perspective happens, hence the reason why we took this trade SHORT.
$HUT, the very next day, gapped down!
How was this gap down managed and why did we manage it the way we did?
Since these trades are short term in nature, it is very important to take advantage of quick gains when we have them.
I emailed out, early that morning before the market opened:
"Looking to cover this short position shortly after the open and take the +10% gain on this Short Term Trade."
We know that gap down opens oftentimes have a tendency to go green. Knowing this, we reacted accordingly and took the quick gains on this short selling side trade!
$TSLA Trade Review – Long Side Trade
From 1/06/22 into 1/07/22 – Position Closed
$TSLA tested the back side of the bullish flag pattern it had established from its previous run (Which we traded and reviewed at the beginning of this post)
With this trade we were going for a breakout and retest type of play. A break out and retest is exactly the way it reads. It`s when a stock breaks out and then pulls back to retest the breakout area.
Again, our stop loss was placed slightly below the reversal candle low at $1020. If the low was breached, chances are the setup was broken and we move on.
Friday the market started strong with a Red 2 Green open, but quickly reversed and this translated into the majority of the market getting hammered lower. Unfortunately, $TSLA wasn’t spared and out stop loss hit at $1020. We move on! Strict stop losses are a must for the short term trading portfolio strategy!
Sticking to our stop losses in this volatile market is the key to the short term trading portfolio strategy!
$JMIA Trade Review - Short Sell Side Trade
From 1/07/22 - Position Open
We went short $JMIA at $10.36 Friday with a strict stop $11.10 and a downside target of $8. This setup is quite similar to the $HUT short trade we executed earlier in the week.
This trade has two important technical attributes to note!
It setup a bearish PEG in Mid November
It has a descending triangle pattern just like $HUT did and this pattern looks to be losing the $10 support zone.
That’s it for this week’s trade review!
Cheers and Happy Trading,
Art of Trading
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