Sometimes a trade works very well. Often they don’t, but sometimes they do. In this case, it did. Almost perfectly. The trade was simple. Trading never should be complicated. Complicated strategies don’t make it easier to make money, I promise.
The set-up I traded was simple:
- Up a lot on the day
- Above the upper BB (overbought)
- Weak intraday; broke 21 ema (5-min)
- Held below 21 ema
- Within a compressed consolidation (price contraction, indicated by BBs)
- Therefore, short initiated
- Stop above the high of the day
- Target VWAP
This is the set-up, it’s the same trade every time. It’s just a matter of when it shows up. Below are some charts to explain the above bullet points.
The first arrow represents the spot in which the short was initiated, the second was the spot in which the position was covered. It was covered there because that’s where the VWAP laid, it was a good target. Often times these overbought short trades don’t come down alot so we wanted to get in and out quick.