Introduction to Today’s Trade
This blog post dives into today’s trading strategy, focusing on BGLC, a stock that displayed rapid ascents and descents, and was impacted by several trading halts.
I made a total gain of $67, or 80 cents per share, over five trades, highlighting the potential and risks of engaging with volatile stocks.
Live trading video with commentary:
Understanding Trading Halts
A trading halt is a temporary suspension on a security across exchanges, triggered by various factors. Today, BGLC experienced halts due to its swift price movements, both upwards and downwards, presenting a unique set of challenges and opportunities for traders.
Strategy for Entry
Why I chose to trade BGLC today
At market open, BGLC had already surged by over 150%, with a volume exceeding 15 million. Noticing key levels at 1.22 and 1.65, and anticipating a rise to 2.09, set the stage for today’s trades.
Timing the Entry
I missed an early opportunity before the initial halt at 1.22 just minutes after opening. With the stock halting five more times before reaching 2.23 by 10 AM. Patience was key for me and I made sure I did not rush into a trade.
Trade Details
First Long Position
The stock pulled back within half an hour of hitting the morning high of 2.23.
As the stock reached my previously set level of 1.22 and bounced, I took my first position at 1.28. I exited the position at 1.44 with 16 cents per share profit.
This exit was based on pre-market highs set at 1.44 region and I wanted to play cautious and lock in profits and look for another entry opportunity.
Subsequent Trades
I entered another trade at 1.47 aiming for a 1.65 key support/resistance line which I was able to achieve pretty quickly. That was another 18 cents per share.
Holding Through Halts
My 4th trade was at 1.53 and this trade got caught on a halt down. It was a risky position to be in. I was ready to exit at market rate if the price fell dramatically. However, as the price was at the 50 moving average line on the 1 minute chart, I felt somewhat confident that there may be a bounce back at least in the short term. As rightly so, there was and the price turned around.
Premature entry on 4th trade:
I ended up reading too much into the price action as the price was testing the 1.65 region and broke down for a brief moment. I ended up closing my position at 1.63 with 10 cents per share profit. I didn’t want to lose my profit and became too cautious.
The exit ended up being too premature and the price ended up going up as high as 2.45 within the next few minutes. The price was halted, going up twice. It was a bit painful to sit aside and watch.
However, I reminded myself that I should not let it affect my emotions and stay away from the market.
Final Trade
As I watched the price shoot up to 2.45 and then it started to pull back down again, I was waiting for 1.65 level. Once it reached 1.65 and touched the 50 moving average line on the 1 min chart – I was thinking of jumping back in.
And rightly so, it paid off, I was able to exit at 2.13 with a profit of 40 cents per share.
Reflections and Learnings
Opportunities Amidst Volatility
Highly volatile stocks are full of opportunities especially if the volatility comes off the back of positive news. If you know how to manage your risks and read key price levels, then they can be a great opportunity to make big returns.
Focus and Discipline
The importance of undivided attention during market opens and sticking to predetermined stop loss levels to manage potential losses effectively.
Profit Taking
Balancing the act of taking profits without giving in to premature exits requires a nuanced understanding of market signals and personal discipline.
Conclusion
Today’s trading highlights the need for a delicate balance between seizing opportunities in volatile stocks and the crucial need for disciplined risk management.
