A Tuesday Trade Edition: One of the most important concepts in trading is to review your work, and learn from the good and the bad. It’s critical to identify what’s working — to do more of it. Each week, you’ll get a trade from my trading journal, in which I explain my whole thought process from start to finish. Trading is all about finding something that works, and applying it, over and over again. That’s how you find trading success. So study up on this “Tuesday Trade” and let’s get to work.
Focusing on specific industries within the market can be a great place to start when looking at potential tickers. What can make an industry ‘hot’ right now?
Well let’s think about how many people not only in the country, but the world, are continuing to work from home during all of this. Which leads to an increase in the need for home and internet security — like firewalls.
Now for a company that specializes in that…
I like this ticker for a couple different reasons. A quick Google search on the company will show you that they’re a global cloud information based security company, that provides things like firewalls.
But we can’t stop at the macro, overall view. We need technicals and a setup.
Why ZS specifically?
Because of the overall pattern. Pus if you look at a chart, I like the way it climbed off of the March lows. Whenever you’re looking at relative strength companies, you want to look at a moment in time where the market got hammered, and see how that ticker was able to climb “from the depths of despair”. ZS did this really well.
It traded from $35 to $121 over the span of only a few months.
As far as the indicators are concerned…
I love the TrendStrength Candles because you can see nice green candles on the chart and volume dots. With my TurboVZO, you can see we had positive volume all the way back to March. Plus, it had a daily squeeze, a 195 min squeeze, and a lower time frame squeeze. And let’s not forget about the high short interest.
After all, I really like to combine a variety of factors when I’m looking for a setup.
So let’s review which ones ZS showed:
- Hot industry group
- Solid pattern
- Multiple squeezes
- Positive volume on the TurboVZO
- Strength on the trend (with the TrendStrength Candles)
- High short interest
Putting The Trade In Motion
So once I knew this setup had multiple factors, I placed this trade in my Stacked Profits Mastery.
I ended up getting into this ticker for $3.25 per contract with a vertical debit spread, where I was looking for ZS to trade from $110 to $120 price point. As always, I alerted the members of a fill price of $3.25 and then yesterday, it traded the $120.
So I alerted the members that I was going to exit it at $6.52.
That’s almost an exact double to the cent, plus I was only in this trade for about a week since ZS went directly to my target.
At this point, it’s still trading pretty well. It’s holding above the 8 EMA and still has multi-time frame squeezes, but I really liked this trade because it’s cheap and doable with a small account.