Here’s how we traded Ipg Photonics (IPGP) today. (August 01, 2018)IPGP
I want to look at IPG Photonics ( NASDAQ: IPGP ) today and this is why: This morning we had a class on Trading the Hour of Power, the first hour of trading where all the money is made and this is one that worked out really well for a lot of people. I just wanted to recap the trade (I will be bouncing around time frames here).
You look and see where the stock closed yesterday, 164.00ish, something like that, 164.00. Today it closed at 165.56, basically flat on the day. It was up $1.50, which, for a $165.00 stock, that is a stock that didn’t really move. If we look at this, what drew me to this initially was this big, big, massive sell-off. The stock closed near the low; it is down 25 percent. If I were a rubber band I wouldn’t want to be stretched like this thing is because I would definitely snap back. That is what we were playing.
We look at the stock, how it traded first thing in the morning. The stock was already way oversold down here. This is where the stock opened here and then started to trade up; almost right away the stock was working. The pivot point was here at about almost 168.00. We got into this stock somewhere around here and then rode this thing up until finally it rolled over.
The way we had gotten into this was, buy some here, then if the stock runs above such and such a level and we were even really doing surgery on this. On a 1-minute chart, you are getting in here and then once this stock (that is where this line came from), once the stock gets above the opening bar here on the top that is when you are adding to the position. It didn’t take any time at all before this trade got going.
Then the idea is this: I am teaching a course just like you are working or doing other things. You don’t have time to sit here and look at a stock every single tick; you will absolutely get shaken out. So instead, you set your stop. You set an alert; hopefully, you are not stopped out. Hopefully you alert goes off. Your alert goes off, you look at this and say, “Huh, I think I will raise my stop a little bit. Ultimately, I want to get to where it’s break even. I want to give the stock some more room to move because there is order flow in as opposed to order flow out.”
In other words, money into the stock; buy me the stock. And so you gradually raise your stop, not too tight. The whole idea is, that if you had a 2 percent stop, which, on a day trade, that is kind of what you want because you are not looking for a 10 percent return. If you can get a 2 or 3 percent return on a quick day trade, that is pretty good as long as your win/loss record is really good and you are never taking a big loss.
The idea is, as the stock moves up every so often you raise your stop and you let the stock work. You let the stock work and you let the stock work but you are always keeping an eye on the clock; because the clock does matter. Here, the stock peaks a little bit before 10:30. There is a reason why I call it The 59-minute Trader, it’s a course that I teach, there is a reason. And it is because the first hour, The Hour of Power as I call it, it is because it is kind of a big deal. After the first hour, really the first 40-minutes or so, most of the move is over and after that you are really just kind of cleaning up the dregs.
I hope that this type of trade is one that you are making and that you also know when to get out. Because if you just bought this thing first thing in the morning, fine, maybe you are making a little bit of money but you could have made a heck of a lot more. You could have had 4, 5, 6 percent on this trade if you are just buying it and not overstaying your welcome.
Again, you are looking at the clock; and a pullback like this, a red bar, means a lot more to me at 10:30 than it does at 9:50. The same looking bars, the same thing here, 10:00, this one here has a lot more meaning than these two. Particularly when it is followed by another one. So being very, very charitable with respect to holding, this is at 10:25 in the morning, you get this pullback here; this pullback here. Now it is at 10:25, you get this pullback here, The Three Stooges here, the same kind of thing. That is when you are absolutely out, right here. Not going to stay longer than that. You missed selling at the exact top but you held it long enough to see whether this pattern was going to continue.