Precision Entries in Volatile Markets!
- Trader Stewie
- 22 minutes ago
- 7 min read
Hi folks,
I just wanted to create this new step-by-step educational guide on some entry tactics and strategies that you, yourself can use in volatile market conditions!
Since we're now through the first month of 2026 one thing that has stood out to me early into the year is the intraday volatility that we've witnessed across many names, mid to mega cap stocks and ETFs.
I deploy two strategies on a daily basis to take advantage of this. We've covered these strategies extensively over the years on the official Art of Trading blog and at there core they can be broken down into the:
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Inherently these strategies rely on volatility within a stock, sector or market to live up to their full potential so its important to be able to identify and trade these conditions as they're happening instead of analyzing the shoulda, woulda and coulda after the fact. I think this is a fantastic time for such a guide and since we have focused on these types of trades in the past we have many prior real world examples to reference as well as new trades just from this past week!
Later in this guide we'll explore how practicing these strategies can be transformed into a hybrid strategy of sorts where you use the same precision entry tactics for high probability, low risk swing trading setups.
These strategies use a 5 minute timeframe chart for spotting & executing on entries and exits!
Lets dig into the guide!
Want to skip to a section? here is the guide broken down into 3 parts
The "Red to Green" Strategy:
Each morning I send out a morning tweet to Art of Trading private community members, usually this includes a day trading idea for the day!
Often the day trade idea is based off of the Red to Green strategy. I don't "officially" alert day trading setups because the pace in which some of these setups move is just too quick and by the time the alert has been sent and posted, even just moments after the setup has triggered it could have already made a +2% - +3% move. but since AoT members are familiar with the strategy and trade setup they can often execute on the strategy themselves, confidently and I take the extra step to see the idea through myself and update it in real time as it moves along.
There are 4 basic steps to a R2G trade:
Entry
Wait until the stock is at or near green for the entry after opening red. Ideally within the first 15 - 60 minutes of the trading day for the most powerful moves.
Set Stop
Upon entry set a stop loss just under the opening range low. If the range from R2G is wide simply size the trade smaller to reduce the size of the potential loss!
Trim Position
If the trade quickly moves +3% - +4% higher from the entry I like to reduce risk and trim the position. I like to take half of the position off and then raise the stop on the rest around breakeven to guarantee booked profits!
Close Remaining
In some R2G scenarios the stock will make a quick and strong move higher, sometimes +5%, +10% within the first 30-60 minutes after entry. In this case I just close the remaining of the trade out. This strategy is meant to be aggressive in- aggressive out! So don't be afraid to take gains quickly. Think hit & run! In the scenario where the trade starts to fizzle out your stop should be tightened up. A close out would happen when the stock fades back into flat or slightly red territory.
Here is an example from January 27th. The original idea for the day was $PL but it wasn't acting right so I transitioned to $AEHR with a detailed plan. Its important to stay flexible and have a secondary idea on the back burner in volatile markets, this is a good example of that. At the time it was sitting slightly red on the day about 70 minutes into the trading session.
Here was the plan:
The stock triggered Red to Green (R2G) and made a swift move about 4% higher. Ideally with R2G setups you're looking for 2% - 3% gains on average. I tend to like to either sell the position at that point or at minimum realize half of the gain and let the rest ride later into the day.
I kept on half for potential momentum higher but the move consolidated later into the day so I realized the second half of the trade at the $27.25 level. Here was that update!
This strategy is fantastic for short term volatility and it rewards a "quick in - Quick out" mentality. Lets move on into the Avalanche Day Trade strategy next!
The Avalanche Day Trade Strategy:
The idea behind the “Avalanche” day trade is basically to capture quick day trading opportunities in powerful stocks that sell off sharply right from the open, using the power of market algorithms to your advantage. The most ideal conditions for this setup are as follows:
Stocks that are in a strong daily uptrends that get quick, sharp intraday pullbacks.
A stock that gaps up at the open and the fade lowers in a steep and relentless manner.
Stocks that sell off and create a Falling wedge patterns between 930am est through 1045am – 11am est. Pullbacks of 8%, 10%, 12% and even 15% during this timeframe are the most ideal candidates!
Remember – The Steeper the Wedge pattern, The better the Avalanche Setup!
As for stop losses on the trade, use what you would generally use as your regular day trading risk profile. There is an Art to this strategy. As far as loss control goes, I personally, on an average avalanche wedge trade, I risk no more than 2% - 3% and will often lock in gains as the stock bounces back and recoups 1/3 to ½ of the initial decline.
Some of the most consistent avalanche day trade setups come from leveraged sector ETFs like $TQQQ and $SOXL. Lets take a look at an example from this past week on January 29th:
Again, with the day trade setups they are not "officially alerted" but I make sure to highlight the entry point, target and stop in real time so AoT members with a little less experience can make the trade themselves with confidence and with enough repetition they can become skilled at spotting and trading these setups themselves!
The reversal started off strong! I booked the trade about 90 minutes later for a +2.7% gain!
That same day an active long time AoT member @TraderZ shared $SOXL as an avalanche play around the same time (11am). He frequently contributes these type of reversal day trade and swing trading setups to the AoT community. I encourage AoT members to share their ideas and not to be afraid to ask questions. This is how strong traders through a positive community can build upon their skills in a consistent manner.
Both $TQQQ and $SOXL went on to nearly go green on the day and make near +10%~ intraday moves from lows.
Morphing these day trading entry tactics into a hybrid swing trading strategy!
Ok, now that we know the power of intraday volatility and the benefit of spotting high probability, low risk entries on smaller timeframes how can we morph these day trading strategies into hybrid swing trading strategy which promotes precision entries with tighter risk parameters?
The first rule for this tactic is the stock must qualify as being in a strong uptrend, preferably making new highs or at least near recent highs. A strong uptrend is a must. You don't want to trade this strategy on a stock that is in an extended period of consolidation or a stock making a series of lower highs or relative weakness where it fails to make a new high while the market or sector continues to make new highs.
Last week I spotted $AAOI which had attempted to make a new all time high just one day previous on January 28th. On Thursday the stock gapped down and traded sharply lower with the market at one point it was down almost 20% off the previous days high. This was a textbook example to use an "avalanche" style entry for a high probability, low risk swing entry! We did just that! This is what that looked like in real time:
The stock was down nearly 20% off of the previous day high, 90 minutes into the trading day on Thursday. I used an "Avalanche" style strategy in order to take an attractive entry. In this case the stop was set much wider then what you would typically set an avalanche day trade stop at, to account for continued volatility through out the day. This is basically the only modification to the Avalanche style day trade, for this trade here.
The Avalanche strategy rewards quick in - quick out tactics in order to reduce risk and net gains. As with this swing trade here, a gap up open would warrant an exit from the trade, knowing the potential volatility from the day previous (The entry day).
The next morning I updated AoT members with the plan with $AAOI. We took the gap up open exit and booked a +13.6% gain on the swing trade inside 24 hours!
Some members made exits at the $45 and $46 level booking over 20% in a single day.
This is the power of precision entries in the right market conditions and I think short term we'll see a lot more of these types of trades develop day to day! I'll be sure to share these ideas in the private Art of Trading feed day to day, as they pop up!
I hope this step-by-step educational guide has given you some insight on the power of volatility. With a little practice and experience you can find and execute on these style of trades with confidence!
Cheers and happy trading!
