Here’s how I built a big position in $META – July 5, 2024
Dan Fitzpatrick here at StockMarketMentor.com. I want to look at Meta ( NASDAQ: META ) today. This stock really, really broke out nicely today.
I’ll show you my intraday screen that I typically use in the morning. I’ve got it set here at five minutes, 15, 30 minutes, and then a day. Depending on what I’m looking at, I’ll shift them throughout the day, Usually, even first thing in the morning I’ll start with a one-minute chart, then a five-minute, then a 15, and then an hour, something like that. That’s so I can get a sense of what I’m doing.
If I’m day trading, you might say, Well, I’m not a day trader, I don’t want to day trade. By the way, neither do I, day trading is the biggest grind imaginable. Ask anybody who does it, who truly does it, not just lies about it, ask anybody who truly day trades and they will tell you the same thing; it sounds like it’s easy and cool, it’s fun. Oh, I get to go home every night, flat. I don’t have any overnight risk.
Yeah, you don’t risk making any money because the stock that you were in today opens up tomorrow 3 percent higher, or the market opens up 3 percent higher, or something. So there’s a definite downside to day trading, more than most people think about. I don’t look at day trading as day trading. I look at 59-minute trading as a separate discipline, and that is trading the first hour. But not to just make money, like day trading, per se. I’m talking about, if I own a stock like Meta ( NASDAQ: META ) here.
If I own a stock here already and I see it moving, do I want to build an oversized position in it? That’s what I did today, by the way. Do I want to build an oversized position in it or not? I’m not going to make that decision by looking at a weekly chart. I’ll look at a weekly chart to decide whether I want to be in that stock, but I have to have some serious skills if I want to maximize being right about a stock.
It’s like I’ve had this stock for a while, we put it on an active trade idea back here. It’s not like it was back here, that was another trade back here. Let’s say we get in here, we’re up about 10 percent, not a big deal, nothing to write home about. But this is a major move today on double average volume. And so, I’m seeing this going and I’m saying, Well, maybe I want to really, really increase my position size.
You look at the weekly chart and, okay, that’s fine. I’ve got a 600.00 target on this. But that’s not really what I want to do, so I’ll look here at the intraday chart and see how things are trading. Like, how are things looking? As you can see, this was today’s price action, right here, it’s on a 5-minute chart, it started here. Right out of the gates, this thing starts blowing up. So I’m looking at this chart, and I’m already long but I’m not comfortable long.
And what I meant by that is, I’m thinking that I need to increase my position size. So 15 minutes in, the stock’s still going. I had bought a little down here, as I think about it, I bought more than a little. But then, when I saw this, I sold some of the calls that I bought here. I see the stock moving up, I know what the weekly chart looks like, and I know what the daily chart looks like. So this looks good to me, I’m buying some
And then when I see this, red, that’s 9:50 in the morning, 9:45-9:50, maybe it’s time for me to take some profits. Listen to me because I think this is important. I’m not looking at this saying, Oh my gosh, I’m afraid the stock is going to reverse and I’m going to lose money. No, I’m looking at this as a matter of risk management, position risk management. I don’t want to deal with the position size that I would have.
I don’t want to deal with the stock pulling back a lot. And so what do I do? I will sell some of my position. And then the stock does this, fine, then it’s doing that, and I’m back in bigger than ever because this was it. You get three five-minute bars up, one five-minute bar that’s kind of a doji, and then I get a move higher. Now we’re at 9:55, and now we’re at 10:00 and this thing is still moving higher.
And then I look at the overall market, and this is working too. So I’m saying, All right, this is my horse, and then the rest of the day is the rest of the day. My point is, you see this breakout and I think this is something, that if you’re not in it I think you still could buy it. Even though it’s up almost 6 percent today this is a very clean breakout on a really, really bullish weekly chart. But what I was talking about is, how to see something like this. And like I said, get paid for being right.
You’re going to lose money when you’re wrong. You’re going to get penalized for being wrong. A good trader focuses on taking the least penalty necessary to be wrong. Because you’re in the business of making mistakes. You want your penalties for being wrong to be small. But you want your rewards for being right to be really, really big. You don’t want even-steven on both sides.
When I’m right about something, and the chart’s telling me this, it’s not me telling me this, I think I’m right every time. When the chart tells me the price and the volume tells me that I’m right, I want to start packing it on. I want to be looking for opportunities to increase my position size because I’m right. One of the ways you can do that is to understand how stocks trade in the morning hours. Like I said, I call that a 59-minute trader, you’re trading the first hour.
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