So many traders have been getting chopped up the last few days with the market stuck in a tight range. There was a ton of volatility in the markets the last couple months, and recently we have seen a major contraction in the range of the overall market. We are too overbought to have a high probability of long trade, but there has been no weakness to suggest that short plays are on as well.
Today we are going to talk about how to develop the patience for the best opportunities, and how to capitalize on them in the current market conditions:
Patience For the Right Opportunity
The ability to know when to trade or not is the most important skill a trader can have. When you look back at your PNL at the end of the month, you will realize that a lot of your losses came from subpar setups, that you know deep down you shouldn’t be trading.
Everyone has different A+ setups, because everyone has a different style of trading. You have to define your trading style to the point where you can distinguish between low probability and high probability setups. Once you can identify all the characteristics of a high probability setup, you will know what stocks to avoid, and which ones to really size up on.
Getting Back In
The best opportunities will often setup more than once. Don’t make the mistake of thinking that the trade is over after you get in and out once. Until there is an obvious sign of the trend changing, there is no reason to not keep buying dips until it stops working. Adding to winners as a distinguishing trait of all winning traders.
A+ setups do not come along every day, and when they do, it is your duty to capitalize on them. It only takes one good day with one of these opportunities to make your week’s pay. You cannot control when these opportunities will appear, but you can control whether or not you capitalize on them.
MBOT is a great example of the kind of A+ opportunity to wait for, and one which you need to hit multiple times. After it had the opening range breakout, it had multiple opportunities for a reentry:
When you see a former runner like MBOT rotate its float in the first 5 minutes of trading, you know it will be high probability play to the long side. Stocks like this can run further than you think, so don’t be afraid to reenter, especially once you are in the green and have some cushion.
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