When the market is near all-time highs (like it is right now), the debates start. Bears start calling for an immediate crash, and bulls think it can’t stop running. Both of them are probably wrong, but nobody knows what’s gonna happen next. And that’s fine.
You don’t have to be a prophet to make consistent gains. Let them debate. I don’t need to pick a side to find winning trades…
I just need to wait for certain conditions.
It’s all based on “if, then” signals. I have an “if, then” written down for every setup.
“If Stock XYZ crosses $40, I’m going long.”
“If Stock ABC drops below the 21-day moving average, I’m going short.”
Once my “if” happens, I execute my “then.” Until then, I do nothing. I’ve made $27 million trading this way (and it works in any kind of market).*
This is how I play both sides…
How To Play Both Sides of the Chart
Look at any chart. See how the candles go up and down?
Most retail traders don’t make any money on those red candles. They only play the green.
But they’re literally leaving half the money on the table.
If that sounds like you, listen…
One of the most valuable skills a trader can have is the ability to nail both the upside and the downside of a chart.
You’ve gotta be nimble, ready to strike on both sides of the momentum cycle.
To play both sides, you need to remove emotions from your mindset.
Don’t EVER fall in love with a particular stock. Or hold a grudge against one.
I see this all the time with new traders. They’ve got blinders on. They’ll only go long, or only short, and they miss everything happening on the other side.
That kind of bias will cost you. You’ll only see half the setups on any given chart.
Trading one direction limits you, especially when the market cycle flips.
If you only go long and the market starts tanking, what’s your move?
And if you’re a perma-bear in a rip-roaring bull market, good luck finding enough short setups to pay the bills.
Let me inspire you to look at both sides of the chart.
I’m watching 2 setups: one long and one short…
My Short Setup
CODX is the short I’m watching. The stock ran from $1.26 on May 15 and posted a peak session gain of over 100% on May 26 on Ebola outbreak headlines. It’s sitting around $9 now, up 230% in 5 days…
So I already tried to short this stock yesterday (on the gap above $6) and took a $46,902 loss.
But I might take another stab at shorting this (if my conditions are met).
I’m waiting for this stock to lose $10. If that happens, I short from the high or the VWAP snap.
VWAP is the average price weighted by volume across the session. When a stock gaps above it and snaps back, that’s the signal I want.
My target is 10 to 20% down.
I’m not in yet. Conditions, conditions, conditions. The break below $10 has to happen first.
My Long Setup
Last week, I wrote about my almost too obvious idea for trading Virgin Galactic Holdings Inc. (NASDAQ: SPCE).
My idea: SpaceX IPO will get people searching for, looking at, and potentially buying SPCE shares.
But again, I had conditions. If SpaceX filed its IPO officially, the SPCE trade was on. Not before.
Well, SpaceX filed its IPO last week. I bought SPCE.
The stock has gained more than 50% since then…
And I made $80,789 gains.*
That’s what trading with “if, then” conditions can do for your approach.
Wait for your “ifs” to happen, then pull the trigger.
Stay focused,
Jack Kellogg
*Past performance does not indicate future results
