After some disappointing days for the long side, the market is gapping up .60% an hour before the open. One thing to remember about breakout trades is large gap ups are not the best environment for trading them. You need a gap and go to get a tail wind and those days are few and far between. Typically you either get an attempted gap fill or a consolidation after the open.
So the trick is to figure out the potential for a gap and go. $ADD can give you a good clue but is not conclusive. If your position sizing with the ability to take a loss you will be fine, though. Breakout trades have quite a few small losses so you have to be mentally able to trade a method that might have 45% of your trades are losses.
From my handicapping side of this site, I can tell you there are quite a few Bettors that can barely stand one loss let alone 45%. Or on the Poker playing side, there are plenty of players that cannot take even one “bad beat”. However, let me digress a bit. Flop kk4 in Omaha 8. Two out of town female players that are pure action are in the game. Capped before the flop. 5 bets on the flop if you can imagine it. A on turn 3 bets on turn. A on river.
Local flopped 4 kings. One of the action out of town female players had AA and made four aces. To the locals credit not one word. A little grimace but not a word…put his cards down …played the next hand like nothing happened.
It’s a rare player that can take a beat like that but that is the mindset you have to be in if you are going to gamble every day. There are no bad beats. In the short run it is strictly variance either positive or negative and in the long run, you either have a positive EV or you do not. It’s that simple!
Ok, I digressed but you get the point I hope. The person you need to model your thinking like if you gamble daily is “Spock”. A Vulcan mindset is essential. A human mindset is a disaster. If you do not know who Spock is then your in for a real treat if you go back from the first episode and then chronologically the movies.
As Spock would say” To hunt a species to extinction, that is illogical” or ” Or when evaluating signals from space which turned out to be communication to a humpback whale ” Only humans are arrogant enough to think this signal has to be for them” Star Trek was way ahead of its time.
Remember Vulcan Mindset:)
I am well positioned now for a good day. I have several index positions along with some dec 2 45 calls in twlo which is gapping up 2% premarket.
I will be looking for breakout trades today depending on how the first 5 to 15 min of the market setups up. I also have a rule of no trades in the first 5 min.
Good Luck in the Markets today!!!
If you want to follow some of my trades along with my thoughts typically given after the open you can go to @rickjswings. It’s my private twitter feed for the stock market and its free. Sports Handicapping is the subscription-based part of this site. But considering the cost of joining it’s almost free:)
Good Luck Today
RickJ’s Handicapping Picks