Let me start off with one of my most cardinal trading rules: trade the setups.
You hear me say “trade the setups” all the time, and for good reason.
Trading “No-Setup” Usually Fails
I recently studied thousands of trades placed by various traders I know and have worked with, and made a not-so-surprising observation: trades they tagged as “no setup” lost money. The second worst performing tag was not even close, with the “no setup” tag more than doubling the losses of the second worst tag. Needless to say, most traders lose when trading away from their bread and butter setups.
So you may be asking yourself, “if most traders trade poorly when trading no setup, why the heck is Paul teaching us how to trade a no-setup trade?”
It’s because a “no-setup” entry with a strategic plan factoring in the market, sector and stock specific catalyst is effective if you know what to look for. Let’s talk about how I do it.
The 5 Question “No-Setup” Test
I ask myself 5 questions when trading outside of a classic setup:
- What is the market doing?
- Which sectors are leading the market?
- What are the best stocks in those sectors?
- Which stock specific catalyst?
- What is the entry trigger?
Applying the No-Setup Test
Let’s apply this approach to the current market.
- The market is ramping, near all-time highs.
- Big tech is leading the market in late 2016/ early 2017, with $QQQ showing relative strength to $SPY and $IWM.
- The FANG stocks lead the sector with $NFLX showing relative strength.
- $NFLX is in a strong trading range after the 4th quarter earnings catalyst.
- $NFLX recently pulled back, bounced, and put in a “piercing” candle pattern at the 9ema.
As you can see, while this qualifies as a “no-setup” since we are not trading a technical pattern. However, there is a strategic plan to this trade that is stronger than many “setups”.
The Netflix Trade
Watch today’s video, for in-depth coverage of the NETFLIX trade. You will learn the art of trading without a setup.
How the Swing Trade Report Helps:
I’ve designed my swing trade report to help those who are new to part-time trading avoid the hurdles that held me back for years. First is the education. As I mentioned above, it’s easy to collect “trading trivia” that feels valuable on the surface but is functionally useless. The strategies that I use and teach have zero fluff. If something isn’t useful in the real world of trading, I don’t include it. As someone engaged in part-time trading, you must focus your limited hours and mental bandwidth on what is most useful, and my report will help you do that.
One of the biggest mistakes I made as a new trader – and it’s one that almost all new traders make – was not managing my risk properly. It’s important to understand that the way a day trader and a swing trader manage risk aren’t identical. When you are part-time trading, you can’t sit and watch every tick of a stock. Some stocks that would be fine to day trade are simply too volatile to swing trade safely. I curate my watchlist with this in mind, leaving out the craziest momentum stocks, while keeping huge movers like $FCX (19% gain, 3-day hold), $UCO (27%, 2-week hold), and $NUGT (24% 2-week hold). When I alert a stock from my report, you run little risk of missing the entry and chasing, and you won’t have to be worrying that it will make a drastic move overnight.
The swing report will help you gain confidence as a trader. Rather than trying to piece together something that works from a random collection of books, forum posts and blogs, you’ll get one concise, cohesive report that gives you everything you need. No more jumping around from one system to the next. No more blindly following the latest social media buzz. You’ll earn your confidence as a part-time trader one successful swing trade at a time.