🎲 How to play trigger watchlists 🎲

1. How/When to enter:

This is NOT an exact science, there is no way to avoid fakeouts. These are KEY levels, and for that reason, provide strong moves. However, they can be hard to break due to their significance. You must manage risk.

There are two strategies I follow.
a) Conservative: Wait for a 5 minute candle to close through the trigger level. Ex: if an $AMD put trigger is under 100 and 5 minute candle closes at 10:45AM at 99.85, take the position.

b) Risky: Playing the first sign of follow through. Ex: $AMD closes 5m candle at 10:45AM at 100.15 - No trigger. At 10:47AM, $AMD fails 100 support and closes 10:47 1m candle at 99.80. I would likely take a position off of key support failure.

2. Fakeouts/Stop losses

Taking losses is inevitable in trading. Our job is to minimize them. My rule here is -10% hard stop loss because you can always re-add the position.

Suppose you take a position from Ex a) $AMD immediately reverses and closes 10:50 5m candle at 110.15…

Your position is red, likely down ~10%. Cut the loser and reassess. Your reason for playing was the 100 breakdown, it is now INVALID. As soon as your thesis becomes invalid, cut, take a deep breath, reassess, watch.

🏆 TRADE EXECUTION 🏆

You do NOT have to know what's going to happen next in order to make money. We MUST identify our edge, and act on the edge with proper sizing and risk management.

In this thread I will go through multiple different trade situations and how to process them.

First and foremost, my RULES (tailor to your liking):

- No more than 10% of account in a trade (usually 5-7%)
- No more than 1 full position at a time
- No averaging down
- HARD stop loss @ -10% (you can always re-add the position)
- I do not hold overnight (100% cash)

Scaling in profit situations:
(I like to sell in 1/3's most of the time)

1. 15-20% scale 1/3

2. Scale next 1/3 into momentum on next leg (35-40%) or if it starts to reverse I will sell remaining position +10% or have breakeven stop

3. Next leg scale into momo. or stop out +20%

Stopping out:

KEEP LOSSES SMALL. If your max loss is -10% and average gain is 20%, then you can lose more trades than you win and STILL be profitable.

You must think of each trade as "playing an edge." The trade either works or it doesn't. Accept it.

My goal is to get an entry as close as possible to my trigger. That way if it goes against me, my loss is minimal. I am not looking for any sort of confirmation to take losses.

Suppose I enter just past my call trigger, but the very next minute, it drops back below. I'm OUT.

📚Thread: How I Make Watchlists📝

There are countless ways to make watchlists. Each trader looks for particular things in a setup that fits their style. There is no science here. My goal is to share a simplistic strategy on how to become SELF-SUFFICIENT with watchlists. 🤝

There are 3 points I want to speak to:

1. I have extensive stock watchlists based on tickers I have either played in the past or have been watching with the intent of playing in the future. Especially with options, it is hard to jump into a stock not knowing how it acts.

For me, is crucial to study the price action of a stock, as well as how its premium and options spreads move before I am fully comfortable trading it regularly.

Start with sector watchlists. In addition, have one "general" watchlist with assortments of familiar & trending stocks

2. Now that I have a large sample size of stocks I have kept an eye on for some time, I will shuffle through their charts when looking for possible high risk/reward plays.

I look for charts with significant breakout or breakdown potential. If it is easy to identify both

support AND resistance targets without too much choppiness in the chart (small distance between targets), I would consider it high risk/reward. When a chart displays ample movement in the past, they can be great plays either way, which is why I give both call and put targets.

🐳 Watchlists + @unusual_whales 🐳

Unusual Whales is an incredible tool that can take anyone's trading to the next level. It presents a ton of data, which can often be hard to synthesize.

This thread will provide a simplistic approach to analyzing and utilizing flow data. 🌊

1. Where To Start

Start with the "Hot Chains & Tickers" page. Not only does this display the tickers with the most option volume, but it also shows the most active chains. Better yet, you can filter by sector and market cap.

Below are some specific filter examples:

2. Analysis

The "Intraday Analyst" page is your best friend here. The first thing I do is scroll down to the "Most Active Chains" table.

I'm looking for short-term exp. OTM contracts with heavy volume that look "unusual."

Examples are included below:

$LCID - Closed Wed. 11/3 ~$36.50. 40c weeklies required a 10% move in 2 days to go ITM. $LCID closed at $41.80 on Friday.

$AMD - Closed Tues. 11/2 ~$127.60. 130c got hit hard. Closed the week over $136.

$NVDA - Closed Thurs. 10/28 ~249.40, 250c 🔨. Closed Friday ~255.70.

Weekly OTM strikes with heavy volume can lead to huge moves. Now what makes these so unusual?

- OTM with little time to exp. = urgency
- Heavy volume on a certain strike can mean volatility in that area = good for options
- Vol. much greater OTM than ATM = big move possibility