On May 9, 2014, we received an Ichimoku SP500 7 time frame Sell email alert on Morgan Stanley Stock from www.ichimokutrade.com 1 hour before market close. Here is the email alert
With this example, we wanted to “walk everyone” through the entire process of Day trading off the email alerts. The trader can use ATM options to trade this instruments which will be the safest way instead of shorting the stock which has unlimited risk. The email alert shows the 4h timeframe as a cloud breakout strategy so we will setup the trade on that time frame. The higher time frames indicate that a possible major pull back can occur now since we have been consolidating at a major resistance and because the daily time frame is showing signs of breaking down. As a result, we are going to setup a pull back trade within the consolidation pattern to see if it is ready to start it movement down for the major pull back. If we lose in this trade, it will indicate that the instrument is going to continue to consolidate instead of break down.
Since we are trading an “ugly” chart pattern and also within a consolidation pattern, we will setup a pull back trade with an entry at 30.23, initial stop of 30.51, preserve mode of 29.01 and a target of 28.30. This would give us a max risk of 0.23 and a min. reward of 1.22 to the preserve mode. The reward/risk to preserve mode would be 5:1 i.e. 530%. Here is the chart setup;
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