Today’s biggest squeeze

finance

9th February 2024 | 00:16:49

Today’s biggest squeeze

Today’s biggest squeeze

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TLDR: The trader analyzes a stock called teenx that experienced a significant surge in its value, rising from $8 to $23.39 within a short period. The trader initially hesitated to trade due to large bid-ask spreads and low volume but eventually entered the trade when the stock showed signs of strength. The trader employed a combination of dip trades and trend-following strategies to capture multiple profitable trades throughout the day, securing a total profit of $99,000. The trader highlighted the importance of managing risk and being selective in trade entries, especially when dealing with stocks exhibiting high volatility and wide spreads.
A Comprehensive Recap of Today's Trades: TeenX's Impressive Surge and Strategic Trading Approach
Market Overview and Stock Selection
The trading day commenced with a lackluster sentiment, with no apparent frontrunners emerging from the pre-market scans. As the clock approached 8:15 AM, the prevailing notion was that it might be a no-trade day. However, the landscape swiftly transformed when TeenX (TGTX) unexpectedly surged, capturing the attention of traders.
TeenX's Remarkable Ascent
TGTX's meteoric rise, catapulting from a low of $8 per share to a high of $23.39, ignited intrigue and presented a compelling trading opportunity. The stock's relentless upward trajectory, marked by a series of green candles on the 10-second chart, hinted at its potential for substantial gains.
Navigating Market Dynamics: Managing Risk and Seizing Opportunities
As a day trader, I am constantly attuned to market volatility, recognizing both its allure and inherent risks. In the case of TGTX, the initial surge was accompanied by wide spreads and low volume, creating a scenario where hasty trades could lead to significant losses.
Patience and Precision: Identifying Optimal Entry Points
Rather than jumping into the fray at the outset, I opted for a measured approach, meticulously evaluating the stock's behavior. As the price action stabilized and the spreads tightened, I identified an opportune entry point at $14.23, capitalizing on support levels and a clear buying presence.
Scaling In and Out: Adapting to Market Conditions
As TGTX continued its ascent, breaking through the $15 resistance level, I strategically added to my position, increasing my stake in the trade. However, mindful of the ever-present risk of a reversal, I maintained a conservative approach, employing smaller position sizes and exiting trades promptly to secure profits.
Navigating Market Swings: Identifying Support and Resistance Levels
TGTX's price action exhibited a series of peaks and valleys throughout the trading session. I capitalized on these fluctuations, employing a dip-buying strategy to enter trades at advantageous levels. Simultaneously, I recognized potential resistance zones and adjusted my trading plan accordingly.
Assessing Catalysts: News and Technical Factors
The impressive surge in TGTX's value was underpinned by a positive news catalyst: the granting of a Notice of Allowance for a patent by the US Patent and Trademark Office. This development instilled confidence in the stock's prospects, attracting buyers and fueling its upward momentum.
Managing Borrow Costs: Impact on Short Selling Activity
The high cost of borrowing shares of TGTX, as indicated by data from various brokerages, likely discouraged short sellers from taking significant positions. This imbalance, characterized by fewer sellers and an abundance of buyers, contributed to the stock's rapid ascent.
Trading Psychology: Embracing Missed Opportunities and Focusing on the Next Trade
While I experienced a pang of regret for missing out on a particularly lucrative green candle, I remained committed to my trading strategy, recognizing that it is impossible to capture every profitable opportunity. Instead of dwelling on missed trades, I remained focused on identifying the next potential winning trade, maintaining a positive mindset and unwavering discipline.
Market Cycle Dynamics: News-Driven Momentum and Trading Windows
The strongest trading opportunities often arise during the morning cycle, coinciding with the release of market-moving news. As the day progresses, the pace of news-driven price action tends to slow down, creating periods of relative quiet. Understanding these market cycles allows traders to optimize their trading strategies and maximize their chances of success.
Conclusion: A Rewarding Trading Day and Lessons Learned
The trading session concluded with a sense of satisfaction, having secured a substantial profit of $99,000. While I could have potentially earned more by taking on larger positions, I remained mindful of the risks associated with overtrading and the importance of preserving capital.
The key takeaways from today's trading experience underscore the significance of patience, careful trade selection, and adaptability in response to market dynamics. By adhering to these principles, traders can navigate the ever-changing landscape of the financial markets with greater confidence and consistency.
FAQ:
Frequently Asked Questions:
1. What is the trading strategy used in the video?
The trader uses a day trading strategy called "dip trading," which involves buying stocks when they experience a temporary decline in price. The trader identifies potential dip trading opportunities by monitoring stocks that are trending or have catalysts and high volatility.
2. How does the trader identify potential dip trading opportunities?
The trader primarily uses a scanner that identifies stocks that have gapped up or down significantly in pre-market trading. They also consider news catalysts and technical indicators when evaluating potential trades. The trader looks for stocks with support levels that have recently broken and then watch to see if the stock bounces off of that support level.
3. What is the trader's risk management approach?
The trader manages their risk by using various techniques, including:
  • Trading with small size: The trader typically starts with a small position size and gradually increases it as the trade progresses. This helps to manage the potential downside risk.
  • Avoiding trades with large spreads: The trader avoids trading stocks with large bid-ask spreads, as these can result in significant slippage and reduce profitability.
  • Setting stop-loss orders: The trader uses stop-loss orders to limit their potential losses. A stop-loss order automatically exits a trade if the price reaches a predetermined level.
4. What are some challenges associated with dip trading?
Dip trading can be challenging due to several factors:
  • Volatility: Dip trading involves buying stocks that are experiencing price swings. This volatility can lead to rapid changes in the stock's direction, making it difficult to predict future price movements.
  • Execution risk: When trading volatile stocks, there is an increased risk of slippage, which occurs when the price at which a trade is executed differs from the intended price.
  • Emotional trading: Dip trading can be emotionally challenging, as traders may feel pressured to make quick decisions to capitalize fully on short-lived opportunities.
5. What is the importance of news catalysts in the trader's strategy?
News catalysts play a crucial role in the trader's strategy. The trader looks for stocks that have recently released positive news or announcements, as these can trigger significant price movements and increase trading opportunities. News catalysts can also provide insights into a company's financial performance, prospects, and industry trends.

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9th February 2024

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