What is a 2nd day play
How to enter and manage
Recent examples
The Tier Entry System
TradingView Scan & Indicators I use
The idea of buying a stock AFTER it makes a huge 10%+ move in one day may feel incredibly risky, however this event can lead to an even larger move. Sometimes lasting several weeks.
But, I am not interested in trying to catch these types of moves. I am only interested in catching the follow through for a fast 8% to 20% gain.
How to Identify the Entry
Stocks that trade their Highest Volume Ever (HVE) or Highest Volume in 1 Year (HV1) go on a Focus List with an alert set for the High of Day (HOD). You can set an alert at the closing price too, however that alert may not get triggered if the closing range is not high enough.
Once the price moves through the HOD, I place a Tier 1 (T1) position. A T1 position may reduce the upside gain, however it protects the downside against a failed follow through. Adjust with experience and risk tolerance.
Once the stock advances, I am looking for my next entry. In this example the stock pulls back but then is met with buying volume. This action suggests who ever is accumulating this stock does not want it to fall below this level. This triggers a buy for me. I place a Tier 2 (T2) position.
*I use 10 minutes, 9 EMA (yellow) and 20 EMA (blue) for intraday charts*
The stock trends higher and pushes to New Highs into the close.
The stock advances 22.95% for the day, 16.51% from the first buy to close.
Profits should be taken at multiples of risk. An example would be to sell 33% once the trade has reached 1R (profits are 1 x risk)
Recent 2nd day play examples:
The Tier Entry system (TES)
I base my Position size on the dollar amount I am willing to lose. This is calculated by dividing the dollar amount you are willing to risk by the difference of the entry price and Stop Loss price. (Video-How to calculate Position Size )
I created this so I can execute FAST. (Google Sheets- Free Position Size Calculator )
T1 will be a half position and a T2 will be the second half. Now, as you get more comfortable or gain traction, you can adjust the ratios. (60/40, 70/30 etc.)
TES Example
On Dec 20, 2022 VRNA Trades +37% on 2799% Volume. This qualifies as a 2nd Day Play candidate (4%+ change with 1+Rvol). Momentum Indicator (green spike) confirms the move. Alert set for HOD.
This example would net $183.36 profit on a $134.72 risk, resulting in a 1.36R Trade.
Scanner & Tools:
TradingView Scanner:
Volume Indicator: TraderLion’s Enhanced Volume
Custom Indicator:Momentum Indicator
Interesting post. If the second day, opens on a gap up, you dismiss the trade, or do you wait for a pullback and curl up, to get in? Ty
Thank you so much, Ollie!