BBBY Trade on Jan 27, 2021 09:33 from hermanho939: Tradervue User Stock Trades.

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hermanho939

 

On the daily chart, gap up of nearly 20%. Set to challenge high of 2 days ago. Hence, long bias.

9:30, breakdown candle of 2.5%. Insufficient to displace the long bias. 9:31, doji candle with very high volume (taking into account the usual high volume of 9:30). 9:32, demand tail which is just below the low of the previous two candles, and then strong breakup candle, with 80% of volume of previous candle, closing right on the spot of the open. Decision of entry after this candle. The analysis is that this is a marginally reasonable entry (despite the hugely positive outcome). This is a breakout entry, but the volume of the breakout candlestick is even lower than the previous consolidation candle. There is a higher probability of a failed breakout. Also, risk is not particularly low, 2.5% distance from the daily low (although could use a staggered stop, exit half before a close below daily low. It is a reasonable conclusion that a single breakdown reversal to close below the daily low is unlikely). The greatest redeeming factor is the extreme anomaly in the high volume of 9:31 doji candle (if it were a tail candle, and 9:30 produces some sort of tail, close of 9:31 itself would produce a reasonable entry). There is a heightened probability that a bottom is reached. If this trade had been a loser, probably would have concluded this to be a mildly unreasonable entry.

Decision to exit half after the close of 9:33. At that time, the reasoning was, i) price is around a marked important price area; ii) danger of trading halt. In hindsight; i) is true; but ii) is not. Stock only rose around 6%, there is still a significant margin from a trading halt. Also taking into account bullish synchronicity (of both price increase and volume), and disregarding ii), based on only i), it is unreasonable to exit half. There is an issue of 'fear of giving back all the gains'. Self-reminder that hope rather than fear should be domninant when the stock is acting well. A very reaosnable half-exit (disregarding for a moment risk of trading halt) would be after 9:36. After decreasing result per effort in 9:35, immediately, significant low result per effort in 9:36, and also, demand tail in an extended uptrend is a bearish rather than bullish signal.

Exit all during 9:42, in a stop market order (which happened to be around the close of 9:42), which was a strong breakdown candle with a slight demand tail, right after a halt. At the close of 9:42, it is clear that the stock is in a downtrend. However, it cannot be said to be unreasonable to set a stop market order, and exit before the close of that candle. Trading halt warrants conservative behaviour, even in the final half of the position.


Execution detail:

Date/time Symbol Side Price Position
2021-01-27 09:33:01 BBBY buy $42.880 long
2021-01-27 09:34:02 BBBY sell $45.360 long
2021-01-27 09:42:13 BBBY sell $50.620 0


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