DOCU Trade on Mar 10, 2023 10:48 from Maarten: Tradervue User Stock Trades.

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Maarten

 

DOCU 10-3-23
Catalyst: Earnings beat, small
Setup: Negative earnings reaction. -13% -2.8ATR
Technicals: 50SMA gap below.
Was in a decent uptrend, now broke the prior low by gapping below the 50 SMA.
Pre volume buzz: 12.6%

Not a weak catalyst but the overall reaction is very strong: Large gap and high volume.
Technicals don’t look as strong anymore.
7/10 short bias. Reaction is very weak on high volume.
DOCU

Checks in my favor:
-1.42ATR push open
-7/10 setup.
-1100% volume
-Broke HTF support levels.
-Clean wedge pattern on HTF.

Checks against me:
-Support might reclaim

Premarket thesis: Short
Market reaction aligns: Yes
Key levels near limiting RR: Yes, still valid? Long term levels.
Potential CHOT: No
Trending on 10-15m chart: If it makes a lower high now. Also have clear stop

Trade idea quality: A+ quality if levels are no more valid, if they reclaim I should reconsider

Trade plan:
Choose best fitting trade

Trade2hold variables:
- Elevated volume.
- Trends is strong Potentially
- Room to trend on the daily, if break RR is great..
-Historical price action is similar, two not so great setups after big gap up, one large trend day.

It's a trade2hold but it’s not too strong.

Review the signals that led you to identify the trade opportunity SETUP? Screenshot the chart BEFORE and DURING it was setting up. Add notes.

Within the opening range
What I didn’t realize at the beginning is that we are still trading within the opening range. Normally this is okay for a wedge pattern, given that we have pushed 1.42ATR already. But this is something I want to pay attention to.
I was aware that the buying volume started to decrease and it didn’t look like a reversal because it held 53 HTF level.

-**How successful were you in identifying the market environment and playbook variables during the trading session?**

Did well assessing the setup. Couldn’t find anything too negative about the catalyst, but the reaction was clear: large gap below the 50SMA of almost 3ATR with very significant volume. This stock has to be in play, and it was.
Did well recognizing the wedge pattern. It differed from my other setups since we had a bearish opening drive preceding the price action. This is something I should note and track for HTF wedge breakdown setups. Want to capture these setups specifically and now all the stats!
As of the trade2hold opportunity. I like the setup and potential. I recognized that the it wasn’t a clean bounce of HTF, and therefore less significant, support. But I was hesitant, especially when the wedge broke above VWAP twice!
The wedge patten failed. But I need to stick to my thesis!
- What signs were present to indicate this environment?
-What key pattern features were present and how could they have been used to identify the market trend and bias?

What was the optimal trade management strategy, in order to minimize risk when wrong or maximize gain when right? How does that compare to your trade management strategy? What signals (if any) did the market provide for moving the stop to breakeven, or beyond?

Optimal trade management strategy was to use a 25% range entry and enter after the lower high. After the pattern fails and we get a stop run, THEN I need to wait for a re-entry once the 5m reclaimed the 20EMA.

What was the ideal entry point? How does that compare to your entry? What signals (if any) did the market provide, which could have led to an improved entry?

On my first entry I wanted to enter for the 25% range but was too late. I entered at 46% which was too low.
My second entry I wanted to quickly re-enter for a good average. But I need to see confirmation first: A hold below the 20EMA plus a 5m and 10m low. Also I need to be out as soon as price reclaims the 20EMA. There was no reason to take a full loss.

I entered on for a 5m low with a 5m stop. I think this was a bit too aggressive, should have been a 10m stop. I should expect the trade to work here. I recognized the shallow PB and used this to enter. I like this type of entry, although it can easily immediately pull into the 20EMA. But I anticipated that this was not going to be the case.

What was the optimal exit location or locations, in order to minimize risk when wrong or maximize gain when right? How does this compare to your exit location? What signals (if any) did the market provide to identify this ideal exit location?

I sold my core of 75% at a LOD-0.2ATR target.
Then I panic sold my partial once volume start to pick up: 5m above average buying. But this wasn’t a CHOCH, since it already occurred at 1PM and still were trending lower.
I trailed my stop up to 51, but we didn’t break it. We tested it and quickly faded more and made a new LOD.

Sell partial first, ride the trend with my core.
Next time I want to sell a partial at the place where I sold my core. Then I need to hold the core until LOD until there is a reason2sell. 51 was a solid place where the trend was going to fail. That’s a 2.5R core target. Also I know that it might provide an opportunity to get back in for another 3R win.
Goal: Sell 50% of your position to start with. I am going to build it up gradually.


Execution detail:

Date/time Symbol Side Price Position
2023-03-10 10:48:35 DOCU sell $52.000 short
2023-03-10 11:07:15 DOCU buy $52.800 0
2023-03-10 11:16:06 DOCU sell $52.500 short
2023-03-10 11:28:03 DOCU buy $53.088 0
2023-03-10 12:03:06 DOCU sell $52.010 short
2023-03-10 13:46:51 DOCU buy $50.440 short
2023-03-10 14:50:43 DOCU buy $50.490 0


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