$25 loss: AKLI trade – Setting stop loss effectively with 50 MA line on 1 min chart

$25 Loss, Big Lessons – AKLI Trade Breakdown

Ouch! A total loss of  $25 on the AKLI trade does sting, but the lessons learned are certainly priceless. Let’s dive into the details and explore how I can avoid similar situations in the future.

Why AKLI?

The pre-market scene was attractive: AKLI was already up 200% with quite a significant volume (15 million) on some positive news pre-market. I was eying an entry around 56 cents, aiming for a potential run to the pre-market high of 77 cents and potentially beyond, even targeting the $1 psychological level.

Identifying-support-and-resistance-AKLI-trade

Impatience Bites: A Premature Entry

I jumped the gun and entered with a market order getting filled at 71 cents. This later on proved to be a crucial mistake. It turned out that the surge was short-lived, and the price quickly reversed its course. 

Exit Strategy: Validated by the 50 MA

Before the market opened, I identified the 56-cent level as potential support for this symbol today. As the price dipped below 56 cents, it happened to coincide with the 50-period moving average (MA) on the 1-minute chart. These matching factors confirmed my decision to exit. I managed to exit at 53 cents, incurring a loss of an 18-cent per share.

summary-of-closed-position-AKLI-trade

Live trading session video:

Key Takeaways: Patience is King

This trade is an important reminder to control the urge to jump in too quickly. Here are the lessons learned:

  • Don’t chase spikes: Especially within the first few minutes of the market open. Wait for a pullback before entering as I concluded multiple times in the past. 
  • Manage expectations: A stock that is already up 200% pre-market is unlikely to continue surging immediately after market opening. Be cautious of such stocks and exercise caution.
  • Respect the 50 MA: It can serve as a valuable exit level, especially for short-term long positions in day trading. 

ZVSA: A Glimpse of Patience Rewarded

While AKLI trade did not pan out as planned, ZVSA (up only 60% pre-market) proved to be a better opportunity at the end in hindsight. It experienced a fantastic run trading 100% up within the first 20 minutes of market open –  highlighting the need for patience and selective entry points in day trading. 

Every trade presents an opportunity to learn and grow in day trading. By analysing our mistakes and successes after every trade, we can continuously refine our trading approach and become successful in day trading.

Good luck and catch you on the next trade!

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