PDD Trade on Aug 22, 2019 09:59 from MarcoG: Tradervue User Stock Trades.

Consolidation Squeeze on Second Day play above pm high on ER beats!!

Requirements:

RVOL: Possibly >1.5
pmVOL: Possibly >50 K
avg Vol: > 1M
Vol @ Day : > 1 M
Gap: If possible but not strictly needed
Long Term Chart : Possible Pocket, trend already defined and strength.
Float: > 20 M
Short Float: Possibly >40%
Institutional Ownership : Possibly > 100%
History of Gap Follower: Neutral
History of former runner: Possibly YES
Major ETF movement and strength: Possibly Trending with strength

Company Description

Sector: Consumer Cyclical
Industry: Specialty Retail

Pinduoduo Inc., through its subsidiaries, operates an e-commerce platform in the People's Republic of China. It operates Pinduoduo, a mobile platform that offers a range of products, including apparel, shoes, bags, mother and childcare products, food and beverage, fresh produce, electronic appliances, furniture and household goods, cosmetics and other personal care items, sports and fitness items, and auto accessories. The company was formerly known as Walnut Street Group Holding Limited and changed its name to Pinduoduo Inc. in July 2018. Pinduoduo Inc. was founded in 2015 and is based in Shanghai, the People's Republic of China.

Trade Scenario

Significant increase in annual active buyer base and annual spending per active buyer, which together led to the 171% increase in the last-twelve-month. The company reported an adjusted loss of 4 cents per share on revenue of $1.06 billion. Wall Street expected an adjusted loss of 19 cents on revenue of $878.8 million. Revenue jumped 169% from the year-ago period, in Chinese currency.

Trade Variables

Symbol : PDD
Gap : 2% (continuation day)
RVOL : 2 (avg last 2 days since release)
pmVOL : >100 K$
avg Vol: 2.245 M$
Float: 1.16 B$
Short Float: 3.18 M$
pm Pattern : Consolidation between yesterday low and high
Catalyst : ER Beats (continuation day)

Technical Levels

Support: 30 25.50 27.50
Resistance: 31 32

Trade Plan

PDD reported earning yesterday, I have played it today as continuation day in case price would have sat above pm high for a continuation to the 52 weeks high level!

Set-up : Up-Trend Continuation, 15min Consolidation
Side : Long
Size : 50
Entry : 30.53
Takes : 30.74
Exit :30.35

Comments

PDD was on play due to er beats yesterday. I have traded it as a continuation day above pm high. Price consolidate nicely for a continuation above 52 weeks high. I have held for it to sign support and resistance of the consolidation area and I have tried to get a nice price. The low was 30.40 and the high was 30.70. I have got the 30.53 a kind of middle price, a kind of shit price :P. After few minutes I have entered the trade price popped up getting to high of the day. I have locked half of the position with the aim of adding again at pullback. I did it but price needed to retest VWAP. Here is my doubt. Should I have closed the position once price got below 30.40, should I have closed it break even to secure some profits, should I have to give it more space considering that I had a very limited size? My thought is that the break even would have been stupid in this case and also the hold to VWAP would have been as well not the best choice. Once price started to get against me I wanted to hold the flush to give it the time to pullback as most of the times happens. It did but price confirmed that we were going to trade a lower price. I didn't have the opportunity to spot any hint by the tape. I have seen several big orders on the stocks but I haven't been able to understand if were supporting or resisting the move. 1.15 B$ shares could be quite tricky to read on the Level 2. Some many orders on the Time and Sale can get confusing.

23/08/2019
Should I have closed the position once price got below 30.40? YES
should I have closed it break even to secure some profits? NO
should I have to give it more space considering that I had a very limited size? NO

Some considerations. I see on the chart how clear is the short trend formed since ER release. I think could be expected to see bears or simply bulls (like me, I was long) taking out profits at the spike once failed the 31 break. The rejection has been relevant, back to 30.50 clearly with no hesitation. Once broke the 30.50 price had a clean pocket to 30 area that indeed filled easily. That has been a clear sign for me that I should have start to accept that the trade could just end with a pnl 1:5, half position! BTW what I really don't like here is my stop. I like the fact of giving it the time to pullback but in the end considering where I have closed the trade I didn't get so far from the consolidation at VWAP.. Thinking of hard stop order to close at break of consolidation low? I am not sure cause I prefer to intend the stop as an area of exiting the trade and many times you get stopped just in a flash. The area I have exited in the end was VWAP and this does not have to happen again.
I guess I am having fomo for the will of making it! I am trading a small size and half position at 1:5 means nothing, as well as collecting a red trade of 7$ means nothing. So it's clear I am thinking to make money rather then focus on the process! Cause 7$ are not relevant in my pocket I let the price go against. That's wrong!
The process of keeping the focus and understand what would have been the best choice to take. There will be always a different scenario I will have to adapt so I'd better start to focus on taking wise and fast choices.