- Here are the three tips
to buy the dip successfully
in this market condition.
Usually the best time. (vinyl scratch)
Ooh, I actually don't know if I wanna reveal this,
this is like one of the secrets.
Okay, these are some golden tips
that not a lot of people talk about.
(upbeat music)
What's going on guys.
So today I wanna recap some of my long trades
and talk about the strategy behind buying the dip
and why it's finally starting to work out quite well.
And I'm gonna talk about some key tips
when you are trying to buy the dip successfully
in this market.
We're not talking about buying the falling knife
or holding onto your bags,
and also it's like freaking hot.
("Careless Whisper" by George Michael)
All right, so now that we got my hair out of the way
let's finally dive into the market recap.
So if you kinda look at the market on SPY
we're finally starting to rally off the lows.
So if you think about it,
the long strategies and buying the dip
would naturally only work once the market,
the overall market, the S&P 500 starts bouncing.
So on these like really extended red days
there's literally no point trying to buy the dip
or going long on any of the stocks.
So that's tip number one, always check the market sentiment.
So today the market had a decent balance.
The last couple of days we're bouncing off the lows,
from the rock pole from the Fed meetings,
but we're seeing some decent rally.
You can see it went up continuously for 1, 2, 3, 4 days.
So when I see that happen,
I'm looking at a lot of what I call market stocks,
meaning the large cap stocks
that follow the market quite closely.
So it has to be the large cap stocks,
cannot be the small caps.
So that's your tip number two, stock selection.
It has to be the large cap stocks
that you're trying to buy the dip on
because when it comes to the small caps
there are strategies and the long strategies
set up specifically, it's a little bit more nuanced.
So we're gonna have to talk about that in another video.
So back to stock selection,
when you're trying to buy the dip
you wanna pick the large cap stocks
that has shown you, at least on a daily chart,
that it has the ability to bounce.
So if you look at Nvidia,
which is one of the first stocks
that started (indistinct) today around 166,
I was trying to hold on
to potentially to 169, 170s and higher.
This one, I only ended up catching
about almost two points from 166 to 168.
So you can see I'm bouncing this around the 166s area.
Now, if you look at a draw line on the daily chart
you can see this whole 155, 160, 166s area
on the daily chart, if you kinda zoom out right here,
it's kind of like the bottom of the daily chart,
where the stock, this stock, has specifically, in the past,
shown that it can bounce from 160s all the way to 190.
So we're talking about potential of a 30 point bounce,
at least on a daily chart.
I don't think we're gonna get that in one day
but for us, day traders, we're trying to capture
that bounce for $1, $2, sometimes 3 or 4
or even more when the market really rallies.
So that's an important key takeaway,
stock selection, large cap stocks that can actually bounce,
no trashy small cap stocks
and of course the market sentiment,
you wanna look at long lean and buying the dips
when the market started to bounce.
So this is the first trade I did on alongside Nvidia.
And this is one, you know, I did okay,
but I didn't time it that well
because I wanna show you the second one, NIO.
This one I timed a lot better.
Now, if you look at the intra day chart of NIO and Nvidia
I know they're are different sectors,
one is a Chinese stock, one is American stock.
But if you look at intra day
it kind of has a similar chart structure,
because if you kinda look at both of them,
both of them gaped up overnight with the market.
Nvidia gaped up from prior days close 177
to 174 pre-market.
Sold off to the 166 area I was looking at for the long,
for the bounce, right?
You can see this sold off from
like almost 10 points, 8 points,
to a downside before the bounce.
Now for NIO, it's a very similar story.
If you look at the way it gaped up,
it gaped up from prior days, closed $24 to 24.60,
24.70s.
So decent amount of gap up.
And then this thing also sold off at the open.
So they both react similarly to the market.
So whenever I see like a market sells off happens
after a significant gap up on the individual stocks,
usually the best time. (vinyl scratch)
Ooh, I actually don't know if I wanna reveal this,
this is like one of the secrets.
Okay, these are some golden tips that not a lot
of people talk about.
So if you're still watching here,
make sure to hit the like button
and comment down below buy the dip
so I will know that you are actually watching this
and I'll make more recap videos
with more of these golden tips in the future.
Now, the big difference.
So even though the chart and entries are long,
they are all long on NIO and Nvidia,
even though on the surface they may look quite similar,
but what differs is the timing.
So you can see, I went long around, like if you look at,
I know the dash chart is like really small,
but this is almost just above 10 o'clock.
10 o'clock and this thing bounced from 166 to 169
and then pulled all the way back 167s
around this, what, 10:30 to 10:40.
So you can see the big bounce on Nvidia
is actually around 10:30 to 11 o'clock right here.
You can see it bounce from 167.
This is a big bounce to 170.
Now, NIO on the other hand,
I'm saying that this is a better executed trade
because the timing's better.
You can see this one actually executed around 10:30
and held it for the bounce from $23 all the way to 23.20s,
I sold some, re-added back to full size around 23.10s
and I sold it into 23.40s.
So my ultimate price target was actually
23.50, 23.60, VWAP area,
but I caught as close to 23.44.
So that's pretty good too.
But the big difference here is the timing.
So there's something
about being 10:30 to 11 o'clock.
That is usually the golden time for bounces.
If you are (indistinct) stocks
and buying the dip, right?
We're talking about buying the dip on the huge pullback
that we're seeing right now on NIO.
You can see gap up, sell off,
Nvidia same thing, gap up, sell off.
So that's a golden time to buy the dip
whenever you see the stock sell off after a huge gap up.
Now, that's not the same as buying the breakout.
Buying the breakout is a losing strategy
in this kind of market condition.
Just don't do it.
I know it worked well in 2021, 2020,
but if you buy the breakout in this kind of market in 2022,
like 8 out of 10 times you're gonna get a rock pole.
So that's a third golden tip
and not a lot of people know about this,
is the 10:30 to 11 o'clock is the perfect timing
to buy the dip on these large cap stocks.
You can see it even on the stocks I shorted.
So I went long on NIO and Nvidia,
the stocks I shorted are Alibaba and Chewy.
Notice that my short entry is a lot earlier than my longs.
You can see, I shorted Alibaba from 120 starter.
I got a little bit chopped up here,
but ultimately added into the VWAP bounce around 120s
and down here 119s ensured it into the lows to 117.80.
And notice when I've covered all my shorts around here.
If you look at a timeframe, this is also 10:30 to 10:40.
I covered everything here
because I know that it's about to bounce.
So even though I didn't go long on Alibaba,
the idea, the concept is exactly the same, right?
If you are a short seller you wanna cover
when you know the buyers are coming in
so that's gonna help you protect your profit
if you are short.
Now, one more example here is Chewy
and notice all of these stocks are in different industries.
They're all just large cap stocks.
So Chewy, same idea.
I only went short on the stock but the balance
also only started to happen around 10:30, 10:40.
Coincidence, I think not.
So Chewy, this is also one of my favorite strategies
but it's on the short side.
It's when a stock is also gaping up on very thin volume
after multiple days of a run.
A lot of times you see kind of like a rejection
of the pre-market highs around 40s over here,
little wick here, I was actually late.
I got in around 39.70s and this one just fell off
to intent to prior days close.
So I covered some of it around 38.90s
and all of it around 38.20s.
The one thing I could improve on this short
is to hold it all the way to 10:30
kinda like what I did for Alibaba.
So that would improve my profit ratio for the short setup.
So as you can see it's really beneficial
to understand both long, whether it's buying the dip
or buying breakout, and also the shorting,
because you wanna balance the two psychology, right?
Remember as a short seller you wanna cover your shorts
when the buyers are coming in.
And if you are a buyer you wanna buy the stocks
when the shorts are covering,
when the shorts are getting squeezed
and that's just how the market works.
So just to recap on these three golden tips
for buying the dip strategy
that's working out really well in the current market.
So number one, again, market sentiment,
the market needs to be starting to bounce.
If you look at the S&P 500 or the QQQ
it needs to show you a bottom on the daily chart
and not a falling knife.
So if that happens, if you see a falling knife,
do not go long.
Second tip is a stock selection.
Stop trading these trashy penny stocks,
they might go up but they also might go down.
So, whether they go up or sideways
it's anyone's guess.
It's the large cap stocks that can show you historically
they have a good chance of bouncing off the lows.
So that's tip number two.
Tip number three is the golden timeframe
of 10:30 to 11 o'clock.
Usually that 30 minute period, give or take,
is the best time to go long and bounce the stocks.
So as you can see, even though the market,
officially were in a bear market right now,
there's still money to be made going long and short.
And if you're trading with a small account
make sure to watch my latest video on the best way
to grow your account in 2022.
If you learn a few things on my buying and shorting strategy
make sure to comment down below buy the dip
and remember to hit the like button on this video,
especially if you want to see more trading recaps
like these in the future.
Thank you guys so much for watching us always.
I'm the Humble Trader and I'll see you guys next time.
(upbeat music)