Bella Fade
Why the Bella Fade works:
● Oftentimes, a big institution will place an aggressive order at the open
to take advantage of the liquidity to fill their position
● We can take advantage of this opportunity by waiting for this order to
end or get overwhelmed by an opposite player that has more size
● We will look to fade this move as the momentum dies out and trade
this for a mean reversion
Entry Rules (inverted rules for the short side):
● Enter aggressively on the trendline break
Stop Loss Rules:
● The stop should be placed one cent below the LOD
● We will give this trade two tries as this trade sometimes will break the
LOD but rebid immediately
Exit Rules:
● We are looking for two waves for this trade
● We will exit half of our position into the first wave and exit the other
half into the second wave
Factors that increase the probability of this trade working:
● We want to see a “flip” on the tape where the sellers dry up and the
buying overwhelms the selling
● We should get a relatively quick move away from the LOD
● This trade works best when taken at a support level
Factors that decrease the probability of this trade working:
● We don’t want to take this trade when there is a negative catalyst
weighing on the stock
● We also do not want to see this trade consolidate near the lows for
long as this would indicate that there is still selling pressure
● This trade won’t work well if the stock breaks support
The ideal times of day to take this trade:
● First 15 minutes of the trading day
When do we avoid this trade entirely?:
● We will avoid this trade entirely if the catalyst is more than an 8 or if
the stock is breaking a strong technical level
