Using a Buy Stop to Enter a Very Risky Stock – Good Idea?

There will be many upcoming posts about my challenge for myself this year – starting with a very very small account, and having to deal with (or maybe not?), the PDT rules. There are ways around it, I’m employing 2 of those ways, but the trade sizes then must be kept extremely small. Doing a small account is something I’ve never done over my trading career, so there has been plenty to learn, and I’m really enjoying the challenge and the experience. All of this was discussed in the conference call recently. The way I’ve set this up and approached this, I am avoiding the PDT rules, small position sizing, but I do a lot of trades.

READINESS-TO-MOVE:

Why would I use a buy stop to enter long on a crappy little stock like CLWT? Because I was 100% convinced that the TREND was up….at that specific time. And this is what hurts so many people in these little stocks – you need to also get out – QUICKLY. Don’t sit in these things. They are pure trading vehicles. I traded index options for a long long time, and still do at times, but options have no quality to them, no emotions, no press releases, no company news, just pure instruments to trade. These little stocks are not the TWLOs, ZSes, CRMs, WDAYs, TEAMs, FTNTs, TTDs – all of those cloud stocks which I recommended at WAY LOWER PRICES than where they are now – all discussed here. Those are high quality, bko stocks, all at/near record highs, which you can buy and “hold” – for a while – not forever. But these little stocks – awesome awesome little very volatile trading vehicles – are like options to me.

With CLWT, I believed the TREND and the MOMENTUM were strongly..strongly UP at the time – look at first chart below. It did something, actually a few things, but something in particular which I have taught, and use, especially with these crappy little yet awesome traders. Look at the first chart below, at the time I put in that buy stop at 7.54, 2 ticks above the bko area, I was BULLISH. Period. And pulled 30 and then 50% very quick profits out. And yes, those are big moves for me, as I’m usually selling too soon, but CLWT worked well.

Every one of the following stocks at some point were huge winners, then got clobbered, but that is the point of DAYtrading – do you have a profit taking plan? But did they all do that one particular thing – SETUP – which I use, and which consistently keeps me out of the ones about to get clobbered, but allows me to enter into the ones, on a high probability basis, that then go on to have new and quick and big, sometimes huge, rallies???

So those stocks:

RBZ did it (another version of it) on 3/27,  VXRT on 3/19, PLAG on 3/28, GBR on 3/29, but SPI on 3/21, ALDX on 3/26 DID NOT do it. If you are a hard worker, you will go thru those charts and try to figure out what there is about those which stands out, and then develop a setup for yourself. Everything I’ve done well in this business is thru HARD WORK, CONSISTENCY, PUTTING IN THE TIME.

Discussed below – CLWT, along with the order types used in a winning trade in AVGR and a losing trade in FNMA, plus an update on SNSS, discussed in detail in a previous post.

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I had been monitoring AVGR for a long time, had/have deciphered very well the TREND being up. If you are one of the few people who have really studied the work I have put out, you will be able to see the TECHNICAL action which set up a very bullish situation. I had been waiting for my opportunity, traded it a couple times, but to this specific setup in AVGR, used a limit order on a DIP BUY SETUP. And this time no partial sells, out all on first sell.

SNSS setup, buy, initial sell was discussed IN DETAIL in a previous post. The 1/2 position held overnight I was wanting to sell into a big spike up. It did spike up, I tried to sell with a 1.35 limit, did not get it filled. So to plan B, wait for a small? pullback and sell into the next push up, but – that selloff after the first spike happened very quickly, as is often the case with these little stocks. The selloff was too deep, so plan C, sell the next rally, don’t be greedy, got about 10% out when waited for the next push, OK with that trade, but could have executed better.

Losing trade in FNMA, did/do believe the trend is up, bko of the 2.02 area, but bought too high and took the loss. It was a DIP BUY SETUP, in this one used a market order.