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Strategies & Market Trends : Trading From Main Street.
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To: Brandon who started this subject5/11/2001 1:35:29 AM
From: Brandon  Read Replies (1) of 226
 
Though we always caution traders not to trade on the news, there are many ways to capitalize on a news catalyst in the market. If a piece of great news comes out, I will of course look for intraday breakout and 2T patterns, but my favorite setup is one that will allow me to short the greed. The basic premise here is that if it should go up, well then, it should. If it does not people will start to get nervous, if it in fact starts to move down, they will get downright scared and that is the place that we as traders can find profits.
THE SHORT SETUP

1) Good news comes out in a stock. Again this can be earnings, upgrades, new products etc.
2) The stock gaps up above the prior days high.
3) I will set two alarms. The first is set 1/8 below the high of the prior day. If this price is violated I will look to enter a short. The second is placed right below the 30 minute low. If this price is broken to the downside I will enter partial lots.
4) I place my stop 5/16 above the high of the day at the time the setup occurs.

The same thing will apply in reverse if bad news comes out and a stock goes up.

The BUY SETUP

1) Bad news comes out in a stock, this can be earnings, warnings, downgrades ect.
2) The stock gaps down below the low of the prior day.
3) I set two alarms. The first is setup 1/8 above the low of the prior day. If this price is violated I will look to enter on the long side. The second is placed right above the 30 minute high if this is lower than the prior days low. If this price target is hit I will enter partial lots.
4) I place my stop 5/16 below the low at the time the setup occurs.

Brandon
teachmetotrade.com
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