Superconductor Technologies, 30-minute Chart
Questions:
1) Why would you be paying attention to this stock on Friday, November 14?
2) Is the trend up or down? Would you be looking to get long or short this stock?
3) Where would you get long/short this stock on Friday, November 14?
4) Where would you put the initial protective stop?
5) When would you stop trading for the day?
6) Where would you exit the position?
Answers:
1) Because it was unusually active, and very volatile.
2) Up. You’d be looking long.
3) Long at 6.02 on a buy stop above the 11:30 down bar.
4) Initial Protective Stop: 5.90. (max. 1.99%)
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could sell half, carry half, or just close it all at once.
SCON was a straightforward long play. 4000 shares was a decent size to buy given the initial risk of around 2%. The stock closed at $6.41 for a gain of 6.48% from entry… reward to risk at better than 3:1.
Everybody knows the four cardinal rules of trading, but so few people follow them:
Trade with the trend
Cut losses short
Let profits run
Manage risk
Intraday sentiment started the day flattish to down then broke quite hard in the afternoon with a burst of selling. This helped the PRSF position out but was detrimental to the SCON long.
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