As traders we have set-ups that work great for months on end and then slowly stop working when the trading season begins to change. Just as the weather changes when a new season comes upon us so goes periodic changes in the trading environment. When you become seasoned in trading, you learn the cycles of bulls and bears and learn how to trade the imbalances of supply and demand which generates you a nice P/L.
The one trade that has been working for me awhile now has been the oversold bounce. It’s been working so nicely for a long time now that I am beginning to wonder if the season is about to change. For example, earlier this week in the Gap Trading Room we went long ACAD on a sell off into $22.35. We entered the trade at $22.78 and placed our stop under the low of the day at $22.30. We trailed out of the trade into $24.08 and netted over 2.75 of our risk of .48, gaining 1.32 in price action.
Even though trading seasons change, one good thing about being an equity trader is you have over 6,000 stocks that trade their own story. Each has their own earnings each quarter and news releases that could provide a setup to day trade.
