03/31/20 – Trade Review
I wanted to do something a little bit different tonight and walk through a trade setup from this morning, and detail it all in text and screenshots. There is a quote from Benjamin Franklin that reads “If you fail to plan, you are planning to fail!” That is why each and every morning I sit down and follow my trade plan sheet to create a few scenarios for the day and scan the list of stocks that I watch for the best possible plays on the day.
This particular trade idea I tweeted out this morning, and all of the MLT Team Members received it via email with the rest of my daily plan before 9am EST.
Here is what I wrote this morning on the tech company Nvidia. – “*$NVDA – This has been a super strong name lately, and isn’t getting the gap down with the rest of the markets. I like a long in here with targets up to 271.98. A gap over 266.05 with a small test of that level from the open and this could rip that $6 in the first 30 minutes of the morning.”
This trade worked out according to the plan.
Below you will see a screenshot of my fills from this morning, and a 1 minute chart of the action from today. Let’s walk through this step by step with what I wrote this morning.
✅ “…A gap over 266.05 with a small test of that level from the open…” $NVDA opened at 267.20 this morning and pulled back in the first minute to test 266.05. At 9:30:56 I bought 300 shares of $NVDA long at a fill price of 267.4599 because we had done exactly what I was looking for, and I had a target above at 271.98.
We had a good solid reaction from that 266.05 support level and pushed up into 271.55 within the first 5 minutes of the day and left a nice topping tail in place. The 1 minute chart held the uptrend and the opening print on a pullback so I held through the pullback, and then placed orders to exit the position up over that 271.55 high and just before the 271.98 target level. These were hit at 271.59, 271.67, & 271.75 on that push up into targets, and this trade was closed out.
With this trade you will notice I traded the actual shares of $NVDA as opposed to the options, and there are a couple reasons for this. It is a quick morning trade on a stock that typically has a wider options market that isn’t always the most liquid even in ‘normal’ times. For example in the first 1 minute of the day the 265 calls that expire this week only traded 18 contracts. A typical position for me is 10-25 contracts, and in the event I needed to close this position on a stop loss I knew there would be slippage there and it would just add unnecessary risk to the trade. The actual stock traded 202,178 shares in that first minute so my 300 shares is nothing more than a drop in the bucket and I can get out relatively quickly with just a click of the mouse.
The important takeaway here from this trade setup, or any trade setup really is that I had a plan coming into the trade that clearly defined exactly what I was looking for, and when it setup I executed upon it, and managed it accordingly.