Congratulations, traders! Another big win in the books.
This market is red hot, and we’re using textbook patterns to take sizeable gains.
We’ve covered this pattern before, but it’s always worth revisiting the setup for anyone new.
I’ve got a specific checklist to make sure you stay on track.
Follow the rules. And these trade setups will fall right into your lap.
Support and Resistance
Support and resistance are the foundation of every trade I make.
These are the levels where buyers and sellers fought their last big battle. The chart remembers. And it tells you exactly where the next fight is likely to happen.
A stock pushing into resistance without volume? That’s a stock running out of gas. A stock holding above support after multiple tests? That’s a stock with conviction underneath it.
I’m not guessing where prices will go. I’m watching where it has to make a decision.
- The $100 level.
- The prior breakout.
- A big dip and bounce.
These are the areas where trades trigger or fail. Everything else is noise between major levels.
Mark them on your chart. Wait for the price to come to you. And let the stock prove which side is in control before you commit a single dollar.
My Trade on AMD
On May 11, one of the strongest stocks in the market gave us a perfect trade opportunity when it bounced off prior support.
Advanced Micro Devices Inc. (NASDAQ: AMD) is up 130% since April 1.
The AI buildout is underway, and semiconductors are in huge demand. AMD isn’t the only semiconductor stock running, but it’s certainly one of the most recognized in the headlines.
And on May 11, I sent out an alert to buy calls, even though the stock already looked overextended.
What would make me enter a bullish position on a stock that’s already sky high?
The price action.
My alert at 10:33 A.M. EST:
My alert overlaid on the chart:
Right after the stock hit a triple bottom, it surged higher.
The premarket lows and the lows after the market opened acted as the first two bounces off a popular support.
I bought the third bounce.
How To Manage These Trades
My trade on AMD worked perfectly. But nothing is guaranteed in the market…
My initial stop loss sits around a 25% loss.
That’s a good level considering I stand to make 100%+ on some intraday options trades.
But once the play starts working in my favor and I take my first profit, the stop loss moves to break-even, or within $0.05 of break-even.
I don’t want to overstay my welcome. My winners could become losers… this strategy helps keep my account in the green.
There’s a common saying in the market: “Patient people take money from impatient people.”
At face value, it might look like I’m impatient…
- Quick intraday trades.
- Taking quick gains.
- Moving up my stop loss.
This is a common misconception.
I’m trading patiently because I’m OK with a few percent gains here, and a break-even there… versus impatient traders who just want to buy and hold the biggest mover in the market until they become a millionaire.
I’m using a strategy, and they’re gambling.
Exercise patience. Use a tested strategy to trade these setups.
Be good (and be good to others),
Ben Sturgill
*Past performance does not indicate future results. Not typical.
