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This email might be a little longer than normal, so just hang in there, but I want to really go over some educational stuff on trading these tough stocks. For example, lets take a trade I took on IRD on Jan 2. To me, this initially looked strong. It was a sizable purchase (160k) on a smaller volume stock, with a low stock price. This high volatility can mean strong market reactions. It can also mean a terrible opening price if you play the Market – on – open order route. Additionally, I saw that this stock was already up close to 10% on the previous opening price. Noticing an unusually tight bid/ask spread around 9AM, I pulled the trigger on it at 9:15. This quickly turned into a good decision, as at the opening The price spiked to a high of 2.33. I quickly set my limits once I was about 5% up, and ended up netting only 3%. However, the stock fell the rest of the day, magnetized back to that previous close price. This is why I wanted to go over this otherwise unremarkable trade. I want to point out the warning signs I saw: High price increase premarket without much volume to back it up High volatility, low price stock And it turned into a trap for those who bought into the first 15 minutes of buying imbalance at market open. Sometimes these stocks can be real winners, but it’s always important to set limits, and remember that “if you wouldn’t buy in at this price, then don’t hold on to it” Happy trading, and good luck out there this week! submitted by /u/RelevantAside_ |
