Hey everyone, Ross Cameron here! Today, we’re diving into the continuation setup, a vital part of my day trading strategy. As traders, we’re always on the lookout for patterns, and continuation setups let us capitalize on multi-day momentum. Let’s break it down.
What is a Continuation Setup?
A continuation setup happens when a stock that surged on significant news keeps climbing in the following days. Think of it as the stock saying, “I’m not done yet!” This setup is powerful because it often leads to increased buying, causing short sellers to cover and pushing the price even higher. But keep in mind, trading is risky and not every trade will pan out the same way. My results are not typical, and it’s all about learning to manage the risks involved.
Day Trading and Continuation Setups
In the world of day trading, I focus on finding high volatility stocks—those that are on everyone’s radar. These stocks typically see big price swings, which is ideal for day trading. Continuation setups fit perfectly into this strategy. They offer multiple chances to jump in as momentum continues. For me, trading is all about seizing these chances while keeping a close eye on potential risks.
Breaking News and Day One Excitement
On the first day, a stock might spike 50%, 75%, or even more when breaking news hits. These can be huge opportunities from my experience, fueled by fresh news and hype. However, sometimes a stock moves too much, too fast, reducing chances for further continuation. For the past few weeks, I’ve noticed big day one moves often settle down quickly, but when they don’t, continuation setups are born.
Continuation on Days Two and Three
By day two or three, if a stock remains strong, it’s clear it’s in a continuation phase. Such moves often lead to a short squeeze. Traders who bet against the stock get forced to buy back, pushing prices higher. This creates awesome opportunities to trade these moves successfully. Yet, it’s important to remember that such stocks can be unpredictable.
Risk Management in Day Trading
Managing risk is crucial in day trading. For continuation setups, a lack of fresh news could mean less trading volume. Without sufficient volume, prices can swing unexpectedly, making trades dangerous. My goal is always to protect my trading capital. I set limits and stick to them to survive in the volatile trading environment. When executed well, continuation setups can lead to substantial profits, even doubling my daily targets at times (results not typical).
Techniques for Profitable Trades
Utilizing effective techniques is key to success. I focus on identifying powerful indicators like relative volume and float rotation to spot continuation setups. Stocks with high relative volume often see significant moves, allowing for better trading chances.
The Warrior Trading Community
As a trader, learning from those with a proven track record is invaluable. My journey has shown that practical experience trumps theoretical knowledge. I’ve been trading actively for years, translating market queues into real trading opportunities. At Warrior Trading, my mission is to share this experience, helping others navigate the unpredictable market. For those interested, I encourage you to join our community and enhance your trading skills. You can check out a 14-day trial of my Warrior Pro here.
Final Thoughts
In summary, continuation setups play a significant role in my day trading strategy. By understanding the risks and rewards, and applying effective techniques, you can harness this powerful trading approach. Remember, my results aren’t typical, but with careful risk management and strategic execution, the continuation setup can be a valuable addition to your trading toolkit. Stay safe, trade smart, and I’ll see you back here soon!
Stay Connected
Warrior Trading was founded by Ross Cameron in 2012. Today Warrior Trading is a thriving community of thousands of day traders learning to trade under the curriculum designed by Ross
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Disclaimer: The results shared are based on my personal trading experiences and are not typical. Trading involves significant risk, and past performance is not indicative of future results. Always practice in a simulator before trading with real money.