Low float gapper that held VWAP premarket.
Price was holding above 20 EMA on 5m. 20 EMA was close to half dollar support, so risked $8.50 area and entered at 9.03.
Break of $9.00 fails and price slams back down through $8.50.
Price holds VWAP and continues to trend higher to $10.
Missed entry at $9.03 so left the order in, holding for a retest. Price dipped down as low at $8.52 and there were several times I considered just bailing out at break-even or small loss, but stuck to my hard stop of $8.47 and held. I sold everything on the pop to $9.17, which was the premarket pivot. I didn't sell half because there was initial weakness and followup resistance at premarket pivot.
Confident because I risked small at the open and after seeing weakness, I decided to sell the pop and walk away for the day. There was a followup SMA bounce that I wasn't prepared for, mainly as the SMA was at $7.86 and the support was $8.00.
Not immediately getting my next order ready for the SMA bounce.
Calculated my risk, entry, and target. Took the trade and didn't bail out before my stop.
Always be mindful for how close the 180 SMA is to a whole or half dollar resistance level. That should be the level played off, not the SMA itself. Also, study how the supporting bids are eaten up. Placing a bid at the whole dollar at the SMA is a great idea.
Averaging down in these setups is what I really should be working on. If I am taking small risk at the break of nine, anticipating a possible drop to $8.50 and bounce off there, I should plan on adding to my position at 8.50. I could, for example, buy 100 shares risking 10 cents. So if I'm wrong I'm out a total of $20 (initial risk was $10) which is well in my risk tolerance. This also allows me to reap profits on the recovery.
Another thing I could have done was not sell the pop, and average down on the dip to the 180 SMA. I have done this in the past.
Averaging down is good if there's a sound strategy behind it. So far these dances around the VWAP, 180 SMA, and whole/half dollar support levels are perfect candidates for averaging down while maintaining my risk.
Execution detail:
Date/time | Symbol | Side | Price | Position |
---|---|---|---|---|
2019-11-22 09:30:33 | EYEG | buy | $9.030 | long |
2019-11-22 09:32:28 | EYEG | sell | $9.170 | 0 |
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