Scalping the First Wash on Big Percentage Gainer

Should note the similarities here compared to scalping against the trend. Also note that this isn't the best example, but one of few I have on hand.

Note that this can be a great way to recycle some of position if expect it to go onto new highs. But the actual high probability setup is to sell all into pop.

Very important to remember that you are better off catching 5 of these (with near 100% probability), then trying to catch a big 50-100% move. The only time I have ever messed up this setup is when I got fomo near the top and bought a little bit there (and even then I have managed to bring the entire trade to scratch).

The way I like to think of this trade is that the big percentage gainers go up on "air", and the moment a big seller hits it collapses, before buyers resume. It is pretty important to have the order entries in place so that you get hit on the "collapse" rather than trying to react and buy some when it happens.

Note: It can sometimes be amazing how much they go down on these moves. So you can get some pretty crazy entries!.

Steps: 

(1) Identify where the the up-move started the accelerate, and the "air-pocket" was created. In a textbook world this where it would flush to. However, have seen some monster ones, and some smaller ones.

(2) Stagger orders around this area. Want to be careful that first entry is still significant enough that a 50% retracement would yield decent profits. If it's not then there's probably not enough "air" in the move. Last order should be around a level where uptrend would be violated if it held below.

(3) Get rid of any size into first pop. Should almost be in profit immediately on this setup.

(4) Cannot define a specific stop-loss on this setup, however it should be obvious when it isn't working.

Example:

On the coin AEON.  At roughly 7am the uptrend accelerated around 3.75 into 5.00. It then washed out to 4.00 before an immediate bounce. Again this isn't the best example... But it works for illustrative purposes. Note that although it did go on to make a new high, this is not the setup we are looking for.

It is also interesting to note that when it made a new high, each time it washed out again; punishing the people who chased the new high. This is why we buy washouts instead of breakouts. Structurally breakouts mean a lot, but just not for entry.