In this trade review we will cover how to trade flags. This was on last night’s watchlist and we took the trade for about 40 cents in profit. When you see a pattern like this, you wait for the stock to break the trend. We had a perfect entry on this at $9.44 right as the flag was starting to break. As is typical of breakouts, the stock re-tested the breakout spot intraday and then bounced perfectly from there. If you stopped out at $9.4 then you sold right at the bounce spot; for the trade to have been a failed breakout, you would want to see that $9.4 area break.
Here is a look at the 6 month chart that I used in the watchlist to find the setup
Here is a look at the intraday chart. Note how it re-tested the bust out spot ($9.4) then went straight up to 10 bucks.
Here is a look at today’s chart, with the $9.44 entry (chart is zoomed in a bit so you can see exactly where the breakout would occur)
If you’d like to learn how to recognize and trade these setups, shoot me an email at maribeth@bullson.ws today and I’ll answer all your questions!
Hey Maribeth. Question about this one: I noticed you put the entry point around 9.44. Why did you choose there instead of the higher point like 9.70 or 9.75? If you look back at the daily this is a downward flag rather than a flat flag so with that type of flag do you typically put your entry in the middle of the range rather than the top (i.e. right where the flag started)? You still would have made money at 9.70ish but you booked a better profit at 9.44 entry so I’m just curious why you picked that spot
Thanks!