WebMD, 30-minute Chart

Questions:

1) Why would you be paying attention to this stock on Friday, November 7?
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 7?
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 8.76 on a buy stop above the 10:30 inside bar.
4) Initial Protective Stop: 8.62. (max. 1.60%)
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.

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HLTH had an initial risk of 1.6% so 3500 shares was a good sized position. The stock closed at $9.19 giving a gain of 4.91% from entry for a 3:1 reward to risk ratio. There was a second nice entry off the 1 PM down bar which provided a tiny amount of risk as well (1.35%). Learning how to manage your risk is the #1 thing you have to concentrate on.

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