How to Trade Level to Level

This is a question I must get at least 10 times a day. So I am going to indepth do my best to explain to
you guys what a Level to Level or L2L play is for me.

The whole reason I started including more of these is that despite this being a scalpers market I realize
its nearly impossible for someone to mirror a scalp. While it can be done the reward generally will never
be as great as mine for the mirror. These plays are more of a set it and forget it sort of play and a play
that due to the longer DTE and longer time held everyone can play them while still having a great risk to
reward play.

Picking a DTE

First off this is NOT a scalp this is a play that will usually take a while to develop and very well could
develop overnight too. With that in mind that immediately means we need a slightly longer DTE to
utilize. For SPY I prefer a 3-5dte, however, this also greatly varies on the actual way premiums and theta
are hitting. When I play a Tesla or Apple L2L I prefer at least 3dte or longer. Since general stocks only
expire on Fridays that means pretty much after Tuesday I will refer to the next weeks DTE. The issue
especially with a stock like Tesla is that it moves like Wildfire so if you are wrong or the play does move
against you then you will need to your way you will get wrecked before its ever worth it.

You have to weigh a short enough DTE that the move nets you profits quickly but not so short that if the
play takes time to develop as it usually does that you don’t end up missing out hugely.

Choosing the correct position size

This is the one tricky thing about the L2L plays. We have to chose a size big enough that the risk to
reward is there and that we get a nice pay out. However, we can not immediately open such a large
position size that we end up with a big loss if it goes against us.

The way I enter my position sizes is of a normal scalp size (which is about $2000-$2500 for me). I like to
open at least 50-75% immediately depending on how strongly I feel about the play. If I feel its going to
be a pretty aggressive move and that im timing pretty much right before the bounce then I will open
closer to 75% if not more and end up near $2000 for the trade. However, if like Friday I expect it to
consolidate first possibly then I will usually start with about $1000-$1500 initially opened. This allows
me to average down if I feel the play is valid and it holds my stop loss.

But wait! DD you say averaging down a loser is just making a loser a bigger loser!? Correct! I did say
that… however, that applies mostly for a scalp. I NEVER add to my scalps because those are 0dte… And
those are pretty much hit or miss. I either immediately hit profits and close or im pretty much
immediately wrong too. So averaging that down is not smart. However, this play factors in an average
down on purpose and also uses clear support/ resistance levels to average down.

When to stop loss out

The thing about these level to level plays that I enjoy is that they have a built in stop. So let me post an
example of that from Friday.
So here you can see I already KNEW that my stop loss was going to be if a candle closes below 370.6.
Now you gotta be forgiving with this too. So within reason because we did have a candle close near
370.5. So if we had closed under 370 I would have closed this play. The important thing I factor into this
also is that I want my stop loss to be somewhere around 20% still. That’s just how my risk to reward and
win rate works. I don’t want one L2L loss to wipe out numerous L2L wins.

When to average down?

Lets take a look at a Tesla L2L I took on Friday also and this will be a great example of a time where
averaging down works. Friday when tesla on the daily had appeared to be holding 210 support and
forming a nice double bottom I entered a 7dte ATM Call. My take profit target was near 215 to 219.3.
Looking back at the daily and weekly charts I know that Tesla for the last 2 weeks has broken through
205.6 support numerous times but everytime it has popped back up and refused to close below it. So
what I did was purposefully make my stop loss closing UNDER 205.6 EOD. This gave me enough room
where at the LOD I still only saw about -30%
Okay above you can see my call out on the play. Now lets look at how it actually played out intraday.

So with this Tesla L2L you REALLY had to trust the levels. You had to trust that even though we broke key
support that we were going to see a recovery by EOD which has historically happened time and time
again. This was a great Risk to reward play as this is probably one of the strongest levels tesla has.

Now looking back I could have absolutely waited for 205.6 support test before initially entering the play,
but on Friday you can see we had that massive sell off after a strong morning and we had bounced off
that key 210 support are intraday and was appearing to recover. The one thing looking back that I DID
misplay on this was not waiting for the candle to break back over the 5ema before entering this play.
However, leaving room to average down and knowing the key levels we can be a little aggressive and
sometimes snag a more reward in doing so if we recognize the risk.

So here once EOD we broke back over that 205.6 level and closed back over the 5ema I was able to
average down on my call. I did end up hitting exactly break even at one point EOD before the choppiness
hit. With this support level being so strong I felt comfortable swinging this over the weekend. Knowing
that we could retest 205.6 but most likely would bounce but after that EOD recovery I expect to see a
bigger push up at open Monday to look for an exit.

How I choose the play

The way I choose my level to level plays is based off daily price action along with current intraday price
action. What I am looking for is when we find a key support area on the daily chart that the intraday
15min chart is then finding support at.

Lets take a look at another example from Friday 11/4/22 on SPY.

Taking a look at Friday here is a L2L play that I made on Friday. So you can see I clearly have highlighted
in purpose 370.6 as a key support. This is one of my levels established from my TA on the SPY daily
chart. What I saw here is that after the massive morning sell off we bounced hard off 370.6 and
continued to hold all candles closing over this level. We had about 10 candles bounce off this level total.
When I saw this extremely strong support establishing around this level I knew it was time to enter a
LEVEL TO LEVEL play.

The first thing and most important thing is we have to chose a DTE. For me I chose a 5DTE. Why did I
choose a 5DTE? When we first bounced and double bottomed off the 370.6 level at noon I Did expect a
big bounce back up near that 374.9 resistance, however, I knew it could consolidate there first (which is
exactly what ended up happening). Had I taken a 0dte play here by time EOD that move up finally
happened I would have been.

Now that I chose the correct DTE we have to set our TP target and our Stop loss target.

Take profit will for a call play be the next resistance which in this case is 374.9.

Stop loss target as I mentioned was a FULL candle closed below 370.6. As breaking that key support
would signal a bigger downside to come on SPY. On the daily 370.6 is actually a huge level support that
separates periods of price action.

Once we enter the play do we diamond hand it or do we take profits when we can? Well this is where
things get tricky. In the end PROFITS are KING.

Here is what it looks like for me at least on a few different L2L plays from earlier Friday morning. As you
can see for these I actually entered a 3dte and 5dte on SPY (I actually usually do this to show you guys
the difference in pay out not so much because I wanna play it both ways) but for tesla I did enter the
0dte because in the morning that’s how strongly I felt about the play and knew it would hit quick but
would let the 7dte tesla play out longer.

Usually I look for at least 10% but if I recognize that things have turned against me then I will exit for a
much smaller gain. There is no reason to let a play go red… 3% green is better then -20% red.

Generally I will just add some stop limit orders as you can see and I will continue to increase that level as
price moves in my direction. And if it stops me out green well it’s a win either way! Now the issue here is
that many many times I stop out way before the actual L2L ever fully plays out. Which means I miss out
on a HUGE win, however, if you look at the first stop limits here I was playing the 374.9 support to 378
breakout and got a nice win. I really thought we were going to see a huge green day and very well could
have let those run think we see 380-385. However, had I done that on Friday I would have taken a
massive loss on that sell off.

I would say the biggest risk on these L2L plays is that we can not use a hard fast and set stop loss. If we
do at say -20% like we usually do then we may stop out before key support actually holds and the play
develops. However, when the key support or resistance against us breaks we have to exit and be okay
accepting the loss.

Here is an example of when I actually followed my own stop loss and had I actually diamond handed it
this play the very next candle would have been back to profits. However, we HAVE to be mechanical in
trading. We cant be smarter then the candles or the charts. IF the play fails it fails. If it comes back to life
after we close it… then that’s something we can consider and something to take into play about perhaps
using a looser stop loss next time but in my opinion for every play that came back from the dead there
are 10 that never came back. My losers that I have held that never come back GREATLY outweigh those
that come back to life.

Hope this helps clear some things up for you guys!