Hi folks,
I just wanted to make a quick post on a Red to Green (R2G) trade that I and I'm sure many AoT private community members made this morning. A Red to Green setup on $IONQ!
Each morning I send out a morning tweet to Art of Trading private community members, usually this includes a day trading idea for the day!
Lately we have been focusing on PEG R2G and R2G day trading setups. I don't "officially" alert day trading setups because the pace in which some of these setups move is just too quick and by the time the alert has been sent and posted, even just moments after the setup has triggered it could have already made a +2% - +3% move.
Our core strategies and alerts are built around swing trading but I do share potential day trading setups like this one for Art of Trading members to take on themselves.
Since we focus on these setups frequently, Art of Trading members have many prior examples of what to look for in these setups. They use these prior examples and experience to execute on these setups themselves. I think $IONQ is a great example from today and I would like to break it down for you here!
Here is the morning tweet from the Art of Trading Private feed on September 12th 2023:
The focus this morning was $IONQ. It made an ideal R2G candidate because of its prior strength and proven momentum from the past 2 trading weeks. On top of these strong characteristics it was also trading very close to a potential breakout over the $20 pivot.
These morning tweets help put actionable trade ideas and setups in front of Art of Trading members screens. Many Art of Trading members are quite skilled at this technique so when presented with the idea they know how to manage it.
There are 4 basic steps to a R2G trade:
Step 1 Entry
Wait until the stock is at or near green for the entry after opening red. Ideally within the first 15 - 60 minutes of the trading day for the most powerful moves.
Step 2 Set Stop
Upon entry set a stop loss just under the opening range low. If the range from R2G is wide simply size the trade smaller to reduce the size of the potential loss!
Step 3 Trim Position
If the trade quickly moves +3% - +4% higher from the entry I like to reduce risk and trim the position. I like to take half of the position off and then raise the stop on the rest around breakeven to guarantee booked profits!
Step 4 Close Remaining
In some R2G scenarios the stock will make a quick and strong move higher, sometimes +5%, +10% within the first 30-60 minutes after entry. In this case I just close the remaining of the trade out. This strategy is meant to be aggressive in- aggressive out! So don't be afraid to take gains quickly. Think hit & run! In the scenario where the trade starts to fizzle out your stop should be tightened up. A close out would happen when the stock fades back into flat or slightly red territory.
Here is how the $IONQ trade went today:
15 minutes after the open $IONQ made a strong R2G move!
Take note of the steps outlined on the chart. They follow the same steps mentioned above!
$IONQ continued to move on relative strength giving a very nice opportunity to book sizable gains shortly out of todays open. I updated AoT members on that here:
Many Art of Trading members did well on this setup today! Some even shared their success!
This is a powerful day trading setup and best of all it isn't complicated to trade! With a little practice I'm sure many traders could benefit from this strategy! It works great for Power Earnings Gap second day trades too. Read more about that here:
I hope you found this guide useful! Cheers and Happy Trading!
Art of Trading