Trading News
May. 17, 20224 min read

Why failed setups don’t mean failure

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Written by Tim Bohen

If you’re not prepared to take losses while trading, you might as well give up now…

Because not every pattern or setup works 100% of the time.

But that doesn’t mean your opportunities are over…

In fact, there could be another setup ready to trade today. (More on what I’m watching for shortly…)

If you let losses get out of control because a setup didn’t work, you might not get the chance to take that next trade. 

So before you deviate from your plan and start bag holding, keep reading… 

Failed setups aren’t the end of the world. And if you keep your losses small, you’ll still be there to catch the next opportunity. 

Here’s how you can have multiple chances to nail your best trade…

Get rapid-fire trade plan ideas every morning here

Why Failed Setups Don’t Matter

On Monday, Data Storage Corporation (NASDAQ: DTST) was my top watch. It checked a lot of boxes…

  • Low float
  • Earnings winner
  • Volume 
  • Gap up in premarket
  • Former runner
  • It was Money Monday

I loved it. And in premarket, I was excited for a post 9:45 a.m. Eastern dip and rip

$DTST

The recipe is there for a ‘Money Monday low float runner’ good volume to float ratio, nice hold in pre, ‘earnings winner’ keep in mind that’s in quotes for a reason, this is just daytrade… don’t fall for believing in this. Also getting ready to break out to 6 month high which also correlates to a whole dollar/half dollar area of $3.50

Target: $3.50

Stop: $3.20 fail (current VWAP)

Goal: High $4’s MAYBE $5.50 ‘Oracle level’ if this gets ‘insane volume’

It was a solid trade idea… 

DTST broke above $3.50 in premarket and made a high of $3.80. 

If you took the trade, you could’ve ended up with a small win if you sold before the goal. If you held and got stopped out, you took a small loss… 

But if you didn’t trade in premarket and wait for the post 9:45 a.m. dip and rip over the premarket high, the move never happened. The plan kept you safe.

Yesterday, I liked DTST again…

It was hanging around and I liked that it closed near its highs on Monday. So I told SteadyTrade Team members to watch it for a weak open red-to-green move

Because DTST reminded me of another stock…

On the first day of Cyngn Inc.’s (NASDAQ: CYN) run on April 21, it was also a failed dip and rip…

But look at day two, day three, day four … you get the idea…

CYN chart: April 21, 2022 – May 2, 2022, 2-minute candle — courtesy of StocksToTrade.com

My point is that you can get as excited as you want about a setup…

But they don’t work 100% of the time. That’s why we set plans and stops

And even though CYN didn’t have a dip and rip on day one … the opportunities weren’t over. 

It’s just one day and one setup…

You can keep recent runners on your watchlist and wait for your next shot. 

That’s why I’ll keep watching DTST until it dies…

It held up yesterday with low volume, perking in the afternoon. Then, it broke through the high of the day and stayed above VWAP… 

…and that can mean trapped short sellers.

DTST is worth watching for a potential day three surge today. (If you don’t know about the day three surge, watch this…)

But remember, if the setup isn’t there, having a plan can keep you safe. 

And if you take your shot and a setup fails, taking a small loss is completely acceptable. 

Have a great day and I’ll see you back here tomorrow.

Tim Bohen

Lead Trainer, StocksToTrade