Trading for Dummies, Q&A #80 & #81

Career Education, 30-minute Chart

Questions:

1) Why would you be paying attention to this stock on Monday, November 17?
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 Monday, November 17?
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) Down. You'd be looking short.
3) Short at 47.32 on a sell stop below the 11:00 up bar.
4) Initial Protective Stop: 48.51. (max. 2.51%)
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could cover half, carry half, or just close it all at once.

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The market was weak from the get-go so I was looking for opportunities on the short side.

CECO gapped down hard and gave a nice bounce into 11 AM offering a good spot to get short. Initial risk was 2.51% so 400 shares was a good size position to take. The stock traded as low as $42.56 but rallied to close at $45.83 giving a gain of 3.15% from entry for an unsatisfactory 1.25 : 1 reward to risk ratio. Again a $500+ dollar gain is not what I want to see when I risked $500 in the first place.

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Beacon Power, 30-minute Chart

Questions:

1) Why would you be paying attention to this stock on Monday, November 17?
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 Monday, November 17?
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 1.19 on a buy stop above the 10:30 inside bar.
4) Initial Protective Stop: 1.12. (max. 5.88%)
5) Right after you enter the position or lunchtime, whichever comes first.
6) End of day. Could cover half, carry half, or just close it all at once.

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I didn't play BCON (even though it was unusually active) because I didn't want to go against what I saw as a very strong broad market downdraft. I'm trying to train myself to play only one side of the market when it's clearly moving in one direction. BCON would have been a tiny winner, but a serious reward/risk loser.

These penny stocks always have large initial risk so small positions are in order -- 7000 shares here would have been good. The stock closed at $1.21 giving a gain of 1.68% from entry. Clearly not a trade worth making, which lends credence to the idea of focusing on trading only in the same direction that the broad market is moving.

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Screen capture of my intraday Watch List:

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