Shorting a Lower High Setup on Day 1 Runners

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Shorting a Lower High Setup on Day 1 Runners:

In this blog post I'll quickly go over a straightforward example of how to short a big day 1 mover, using $BLFS as an example.

Usually, one (especially beginners) should avoid shorting day 1 runners altogether, however in this example I'll show how, so as long as you have a set risk and good r/r it can be a very lucrative trade.

I should note I had no borrows all day, so could not act on it.

A few important points: Do not try to pick the top! See how it spiked two points in a matter of minutes

Rather, wait for it to set a lower high; the closer it gets to the prior high the better, in terms of r/r, as you set your stop at the prior high; In this case short 4.20s with risk 4.40s; Your initial target is 3.70s, making it a decent r/r trade, with potential to fade even more

Another thing to be mindful of is the 10:30-11 reverse; note how on each bounce, $BLFS couldn't break thru VWAP. This means you can either add to your position on those pops, or stay in the trade until a higher low has been made, or if it breaks thru VWAP eventually

Late day when it was basing and again couldn't break thru VWAP was a perfect opportunity to short/add to your position. Risk being VWAP line (only a few cents away), and target is a retest of the support line which is 30c away

In this case you even got the flush after support was broken, so while you'd perhaps have taken half off on that bounce off support, you had the potential of riding partial on that eventual breakdown