October 19th, 2022
1yr:1d
1d:2m
1st Trade: Trend Continuation Short
-Everything about this trade is absolutely perfect other than the fact that I used the size of a 1st year trader and I also scalped the living shit out of the trade without ever re-entering. Checkout the chart below.
-We have a perfect distribution pattern that has been forming in the last 3 days. We have this huge ranging resistance that we found large supply at 2 days ago. We had a huge selloff at the open yesterday then we continued higher in the after hours followed by a big selloff in the premarket this morning. I noticed we had a gap down on the daily so we should most likely go up, fill the gap, then continue down. This alone creates a B trade then when you combine the fact that we are sitting right at the mid range of the current distribution AND we are sitting right below the oval area which was the previous distribution then this is an A+ trade. Sadly in the moment I wanted to just scalp it because it was my first day in webull with options and I really wanted to just get a green day and let it be. It would suck to be below 5k on the very first day of trading haha but then again its also stupid to be trading my $P/L so its just wrong on many levels. Ideally I shouldve taken this with 2 separate positions. I couldve taken it with a smaller 25 delta contract that is further out and used that as my long hold trade to see low of day where I couldve made a very nice 3.5 points then I couldve scalped a large 50 delta position on the move that I ended up taking.
Solutions to problem:
1. Take 2 positions in this scenario. 1 low delta long hold. 1 high delta scalp trade.
2. Skip out on the longer hold low delta trade and just scalp then continue scalping on the way down with trend continuation trades.
Missed Trades:
Trend Continuation Short
-This is by far the easiest money trade setup of the day. We have a clear fakeout at the previous day close, sitting in the center of the 3 day range, below the weekly range and very well setup for a big short position. I couldve taken this and made a full point on a 50 delta contract and wouldve walked away with a 1% growth on account day. This wouldve been the best trade of the day. My entry I took on the trade I ended up taking was slightly early compared to this trade.
Trend Continuation Short
-Again here is another really nice lower high to lower low setup where couldve scalped for a very nice profit.
Trend Continuation Short
-This wouldve been much harder to take but again we used this lower high to create the next lower low.
Trend Continuation Short
-This is another example of lower high and formation to lower lows.
Trend Continuation Short
-Another really tricky trade to take because we dont have much to base the lower high off of but if did take this and hold then wow what a move lower. This is somewhat of an anomoly though so probably not much worth to studying something like this unless I was doing some crazy 2 hour supply hold.
IF I WAS A GOD AT TRADING
-This represents the absolutely ideal way to trade the day. This would be the scenario where I have 10 years under my belt and I see this big move lower coming from days away and truly sized into it with very strong conviction and heavy risk. I couldve bought the previous day close fail, added on lower highs multiple times, then sold all of the position at the premarket low just to protect myself from a crazy reversal. This would be the ideal way to trade this day and truly if I was a few more years into large cap trading I do think this is 100% possible. If I took 5 contracts at the top, added 2 at a time in those add spots then sold full position at the green arrows. Assuming I would be taking the first in the money contract, I would have about 50x15=750 shares of exposure to the underlying asset with an average gain of about 2 points which would give me about a $1300 win on the day. I do think that is somewhat ridiculous though to think I would only take taht much size and hold for that long. Ideally I would just take 35 contracts at the top and sell most of it at vwap where Id probably make much more than this huge trade. Perhaps someday in the future I would be able to take 50 at the top then add 10 per lower high which would give me about 100 contracts total equalling 50 shares per contract with an average gain of about 2 points it would be a 10k gain in 1 day. That is the future I want to live in lol.
Takeaways:
I really shouldve kept trading those lower highs and scalped more but I dont hate the idea that I took a green day and let it go on my first day trading in webull. I know I have strong potential but everything about trading makes you want to size up and trade more and make more money but usually the slow and steady route actually is the best way to do it. Making a lot will be fun but instead of forcing it I think its much better to just let it be organic. Let the size come from you doing it without question, not you having to make sure you are constantly emotionally in balance. Not saying that isnt important but trading cannot be my sole source of income and me be emotionally balanced and ready to size at the same time. I need side money to supplement my life then trading will be much more of a fun and easy thing compared to the "holy shit this is how I have to make all of my money" ordeal.
