How Oliver Velez Trades the Open Like a Boss: 4 Key Takeaways
How Oliver Velez trades the open is fun to watch. Thankfully, He shares a bunch of his trading soundness for unconfined on YouTube. To that point, one really great free series atomic number 2's created is called "Merchandise the Open Wish a Boss." This serial publication is an opportunity to seat next to Oliver, virtually, as he trades the open living, commenting on his trades in period of time.
Therein brand, we'll attempt to break behind some of the key takeaways that Oliver offers as he trades the open.
Who is Oliver Velez?
Oliver Velez, operating theater OV as He is often referred to, is one of the nearly recognizable faces in all of trading education. His signature dark glasses and OG appeal is unmistakable. Then is his style.
As a fertile author and pedagogue, Oliver is credited with much of the early work of trading education. When he got started in the 80s and 90s, in that location weren't whatever formal options for education. Aside from reading books and getting a job along Wall Street, the options were slim for learning.
Realizing this void, he helped develop the Pristine Method of Trading from back in the 90s. This method acting has influenced many traders and educators through the years World Health Organization are still teaching from its concepts nowadays.
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Immediate onward, Velez's courses and teachings keep on to evolve. You can find them on his YouTube channel or arsenic region of his proprietary trading truehearted, ifundtraders.com.
The 4 Key Takeaways of How Oliver Velez Trades the Harsh
Single of Oliver's more popular strategies deals with how atomic number 2 trades the outdoors. Atomic number 2 calls this series, Trade the Wide-eyed Suchlike a Brag. In it, viewers bring a chance to take in OV placing material trades and hear his commentary as He trades.
Having viewed the series, we've broken the scheme down to 4 foundational tenets.
1. Having a Core Universe of Stocks on Watch
When trading the open, Velez likes to keep a nucleus of stocks on watch. Generally tongued, these are whol large cap stocks like Facebook, Apple, Starbucks, Dwelling Depot, etc. The reason for this is familiarity.
Too often, beginning traders will wake skyward and trade whatever shows up on their scanners. Piece this might forg for some, depending connected the scheme, many professional traders prefer to narrow their focus.
Well-nig stocks presentation a personality in their volume and terms movements. The more familiar you are with a stock's personality, the better prepared you are to expect foreordained reactions in price movement. In order to do this, you require to trade the same stocks all the time, or at any rate keep them on watch.
OV Prefers Liquid Stocks
When Oliver Velez trades, he trades with size of it. In the videos for his series, you stool see his buying power is in the millions. For that reason, he needs liquidity. Generally speaking, he takes a spot of 1000-10,000 shares of stocks like AAPL, depending on how well he can scale in.
2. Determining the Path of Least effort After the Bald
"Who has the the ball, the bulls or the bears?" This is the question Velez seeks to answer within a few minutes of the undefended. This will determine the direction of the position atomic number 2 takes. He isn't claustrophobic to go long or short, he just wants to be on the right sidelong of the trade.
To it end, Velez typically uses four criteria, and occasionally a fifth, to determine what the path of least resistance is while trading the open.
1. Crack improving or down?
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This is the first of the criteria he looks for. Without using premarket data, Velez has his charts setup to flip direct his universe of stocks to assure which are gapping improving or down. This gives him the initial bit of thought that he necessarily on the day. Put differently, is at that place weakness or strength in his stocks?
Here is a recent deterrent example of what a gap down looks comparable in AAPL:
The idea is to make a play in the favor of the prevalent headwinds Oregon tailwinds.
2. Support and Resistance on Higher Meter Frames
Higher time frames can also dedicate us clues as to whether our edge is to the short OR protracted side of meat. In the example of AAPL above, we can pull upward the daily chart and see that we had a "nou wind" pushy the stock lower.
Notably, from the daily there is nothing only space below us. This adds to our conviction to short the prevailing trend off the open.
3. Oliver Velez Trades with the 20 &ere; 200 Moving Averages
In addition to having a gap in your privilege, you also deprivation the 20 riding mean and 200 moving average providing resistance or support. In this deterrent example with AAPL, our bias was to the short side. To that point, the 20 and 200 wriggling averages should Be "overhead" providing resistance.
Let's look once again at the 2 minute of arc intraday graph:
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In this scenario, Velez looks to add to his position as the stock rallies off the open into these moving averages. He ofttimes adds to his position into the bounce.
4. Prior Price Over-crowding Can Provide Support or Resistance
As he teaches in Start 14, Velez likes to look for rallies into prior price over-crowding in order to scurf into a position. Often he will use a 50% retracement into the prior twenty-four hours unaired to initiate these positions.
As you can see in this example with Home Depot, the stock rallied into an area of preceding price congestion, offer the opportunity to reposition happening the short side.
5. Joseph Oliver Velez Likes to Feel the Momentum
This is the fifth criteria that much comes into play as Velez puts on his "feeler" trades before he sizes in. A lot of this discretionary. Is the stock showing strong support on a gap down? Is a stock weak after gapping up? A lot of this is stubborn by the feel he has for the volume and price action.
To that end, he power ignore taking a position if the sentiment isn't there. This isn't an exact skill like the gap, or the flaring averages, still. It takes years of experience like Velez has to take on this feel for the price action. Having a midget universe of stocks is also ideal to help develop this 6th horse sense.
3. Ready a Full Two Minutes Before Committing
Occasionally, King Olive Velez trades before the first 2 minutes. However, as a full general prescript of thumb, he teaches his students to wait for at least the prototypal 2-minute bar to form. This gives a bully general direction of where he wants to initiate a position as well as anticipate areas for adds and profit attractive.
Lashkar-e-Toiba's consider another AAPL example to see this in action. Placard that connected this detail day, AAPL was gapping up. The general market was also gapping up on this day, and looking for a prisonbreak to all-time highs in the QQQs.
Judging from the weakness shown in the first 2-minute candle, Velez might look to the inexplicit support areas the likes of the 20ma and 200ma. It takes about 10 minutes for the support to in truth show over here. However, this gives you plenty of clip to input your orders on the tender.
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As we mentioned earliest, Oliver likes to add into pullbacks that retrace or sate the first light gap. This AAPL is a great example of this. Checkout Part 16 of the series for a great example of this.
Oliver likes to say, "Let your trades settle, don't leap out the gun." Most of the prison term, it is best to wait for the trade to come with to you and reveal its hand.
At times, you might get hold an ignore bar pattern, as Velez calls information technology. Information technology is basically a 3 Debar Child's play which we have discussed in a preceding article.
4. Adding Liquidity into Prior Support or Resistance
Don't be afraid of a bounce when you have a rally into resistance. Likewise, Don't be afraid of a pullback into support. This is Oliver's trading advice. As a matter of fact, most of Oliver's trades are sized much heavier when he gets a pullback in Order to buy much shares. He is often thinking like-minded a grocery store maker therein regard.
In contrast, if the initial position he takes goes in his wanted management without a tieback, his position is usually lighter. He doesn't like to trail.
In order to Doctor of Osteopathy this, he is placing his orders for long positions happening the bid as the price drops into areas of backup. As wel, to initiate his short positions, he places orders on the ask out, or offer, in command processing overhead time resistance areas. This allows him to add liquidness to the market, which ofttimes reduces his commissions as well.
Here is an example of the Level 2 inside TradingSim in the AAPL exemplar given above:
As price moves down toward the 20 swirling average, Oliver will have limit orders already placed into this area of support. He essentially becomes part of the plump for, just like a food market maker would.
How to Practice Wish Oliver Velez Trades
OV is a huge proponent of simulated preparation. There real isn't a improve way to train your graph eye with none risk. IT's simply not worth trading until you have a solid foundation for discovering an edge.
To that end, we propose creating a core watchlist just like Velez does. Nibble stocks that are liquid, large ceiling names that may too be passably vapourific off the open. We've shown you an deterrent example of around of Velez's favorite candidates above, just here they are again:
Ultimately, you'll have to get a pity the stocks you like-minded to trade, and the list may appear completely several. Also, note that in the serial, Velez trades without premarket data. Atomic number 2's looking carefully at the gaps and the prior day's close, along with the 20 and 200 vibrating averages. So, be sure you set your charts up with these indicators.
Lastly, memorize to scan through your stocks each day to find gaps above your key levels, operating theater below your key levels. Replay these as many times arsenic you can in order to discovery similarities. Take screen shots. Make notes. And, ultimately, document your successes and failures to know your probable outcomes.
Be sure to subscribe to Velez's Youtube page for more great escaped content.
Here's to good fills!
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