If you are trading momentum stocks on the first day only and then walking away, you may be leaving substantial profits on the table. It's a well-known fact that stocks with strong momentum can sustain their move for several days, and the best ones, often fueled by significant fundamental catalysts like an impressive earnings beat, can extend their runs for weeks. This realization poses a critical question: How can traders effectively seize these extended trade opportunities and maximize their potential gains?

One strategy that has earned its place as a favorite among experienced traders in the Trader’s Thinktank is the Second Day Play. This powerful daily timeframe setup comes into play the day after a stock experiences a substantial move. This is a great setup to watch for during earnings season.

How To Trade the SECOND-DAY Play

Finding A SECOND-DAY Play Setup

Second Day Plays (SDP) are easy to find because by their very nature, they require an outsized first day. We are looking for a broad buy or sell bar on the daily chart that is showing 2-3x relative volume (RVOL) or more. A true SDP trigger will take place through the prior day's high (if a buy bar) or the prior day's low (if a sell bar). This is one of our favorite setups to trade in the Trader’s Thinktank. If you need help finding them or just want to make it easier on yourself, join us today. High-probability SDPs are posted in our end-of-day scan and the daily Premarket Prep notes.

why does the SECOND-DAY play work so well?

The Second Day Play takes full advantage of momentum, a driving force in the stock market. When a stock demonstrates a significant move on the first day, it garners attention and interest from traders and investors. This momentum often persists, offering a potential second-day opportunity to ride the wave and capture profitable gains. When there is fresh fundamental news in a stock, many market participants need to adjust their exposure levels. One key aspect of this setup is making sure the stock has a catalyst from the first day, as well as 2-3x RVOL - This helps eliminate the lower probability setups.

The SECOND-DAY play is an easy trade

Relatively speaking, the SDP is an easy trade to master. By identifying stocks that have already made substantial moves, traders position themselves to capitalize on the continuation of the upward trend. The SDP provides traders with a clear and focused trading plan. We educate and coach traders from beginner to consistently profitable and then into high-performing traders. We do not just teach trades with edge to our new and developing trader clients. Some trades with edge are too challenging for them to understand and execute at the beginning of their career. The SDP is one of the trades that beginner and developing traders should master. It offers a structured framework for decision-making, empowering traders to identify the right entry and exit points. By patiently waiting for optimal entry opportunities and setting appropriate stop-loss levels, traders can effectively manage risks and enhance their chances of success.

Efficient Use of Time and Resources

Embracing the Second Day Play streamlines traders' efforts by enabling them to concentrate on a select few stocks that have demonstrated significant moves. Rather than spending extensive hours analyzing countless stocks and charts, traders can focus their attention and resources on these high-potential opportunities. This focused approach enhances efficiency and ensures that traders make the most of their time in pursuit of profitable trades. As we like to say, you’re only as good as the stocks that you trade. If you want to be involved in the highest probability trades every day, join our community in the Trader’s Thinktank.

In conclusion, the Second Day Play stands as a powerful day trading strategy, enabling traders to unlock substantial profit potential. By focusing on this relatively easy trade to master, traders can significantly enhance their trading success. It is important to note that successful day trading requires ongoing learning, adaptability, and discipline. Traders should conduct thorough research, stay informed about market trends, and adjust their strategies to changing market conditions. As always, make sure you have a good understanding of what you are looking for in the market before placing a trade. If you want to learn more about the Second Day Play and other strategies we use daily, check out our education offerings.