Trading is simple, but it’s not easy, and requires a lot of work. Preparation for tomorrow’s trading session begins at today’s close. The more work you put in after the close, the less thinking you will have to do after the open, Leif Soreide, Momentum/Breakout Stock Trader & Founder of Champion Team Trading, said at the 2022 FinTwit Conference on Saturday. He was among the featured speakers at the event hosted by Benzinga and Lupton Capital at the ARIA Resort & Casino in Las Vegas.
On Recent Trades
Talking about his trading technique and how he tackles the day-to-day market, Soreide said, "My trading process begins with defining the market’s condition into three simple categories – green, yellow and red. Our equity curve is a crucial indicator unique to each of us."
"If my most recent trades are gaining little to no traction and my stops are being hit more frequently than my targets, it’s a clear sign that I am out of sync with the market and need to dial back risk until conditions become more favorable to my trading strategy." he added. "If my most recent trades exceed expectations, it’s clear that I am in sync with the market and need to increase risk."
On When To Sell
Soreide said closing some of his position into strength up over a risk multiple or two makes sense in challenging environments. Taking profits and looking for a new entry makes sense after a big move, he added.
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On Earnings Pivots
"Earnings create tight patterns as investors wait for clarity." he noted. Soreide looks for aggressive buying above the prior day’s high in a pullback or pivot. "The more defined pivot, the better. If a stock rolls over after earnings, holders may not have been impressed by what they heard on the call," he said.
"Pivots are a little bit like fishing expeditions. It’s going to take a lot of time. You need to do the lot of different set-ups. You need to go through a lot of earning pivots to get a good one," Soreide added.
On Pivot Reset
"A pattern I use for re-entry is derived from a false breakout where most are stopped over a short period followed by a new pivot. The shakeout clears the deck of many weak holders so that it may just be big money left supporting the stock," Soreide said, adding, “The first mouse gets the trap, and the second mouse gets the cheese. Keep track of recent pivot resets to see how many days they are averaging before breaking out again.”
On Pullback Buys
Soreide said that pullbacks are best entered after the breakout base or near it. "I want to see light volume at the lows of the pullback before buying the turn, as it suggests that sellers have disappeared," he said.
Soreide also said, “I will try pullbacks within the base more in a great environment. Usually, I prefer pullbacks on top of the base or prior volume areas higher in the base.”
On Market Risks
Soreide suggests that a trader needs to be present and alert while in the market.
“You have done your homework, don’t second guess your instincts. Doubt hinders success. Don’t allow the outcome of the previous trade to affect your next trade. Be indifferent to the outcome. Learn to recognize when you think negatively and refocus,” Soreide said.
Soreide added, “You are not paid to sit in front of the screens. You are paid to recognize and execute good risk/reward opportunities. If there are unfavorable trading conditions, don’t waste time and capital trying to make something from nothing. Opportunity will come.”
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