More on the “5 Minute Rule”
I have posted the “5 minute rule” earlier, showing I do not enter any trades the opening 5 minutes of the stock market. When a stock hits the engaged price during this time (the open), it changes the engaged price to the highs of that opening 5 minute candle. This means the stock “triggered” but did not engage. This is only from 9:30-9:35 Eastern Standard Time Zone. If the listed engaged price is not triggered on the opening 5 minutes, then the setups from CWUS (and Daily updates) engage immediately at their listed prices. When these stocks engage, day traders use the lows of the day (opposite for shorts) as their stops. Swing traders will use the suggested stops from the spreadsheet posted.
Stop orders do not apply to the 5 minute rule. All your stop orders should execute immediately and not wait for price confirmation. You can always re-enter a trade, when it setup up again.
Here is one illustration from the FCPS website
Scaling profits is an important part of risk management. I am a short term trader and I usually scale half when the options go up +5-7%. In quick markets (like BIIB and PCLN) I often scale after larger gains.
A 5-7% move in the options (with a >.70 delta) is usually only a .5% (half of a percent) move in the equity. Options are highly leveraged and I am able to capitalize on smaller movements in the underlying stock. Many of the debriefs I provide are meant for short term traders, as swing traders are looking for much more upside potential When I am able to scale fast +5-7%, I reduce my risk while rewarding my trade. In addition, it is imperative that you hold the balance of your position (your runner) to keep paying you (verse your stop). This type of trading is not meant for everyone, but is very rewarding for my trading style. You need to identify what trades meet your risk profile and trading time horizon. We have had a ton of setups over the last 11 weeks with some huge option winners (+50-165%). It is important to rider your winners (with runners) to increase your odds of long term trading success. It is inevitable that you will have some losing trades also and it is critical that you manage these well.