Trading for Dummies, Q&A #83

Ivanhoe Energy, 30-minute Chart

Questions:

1) Why would you be paying attention to this stock on Wednesday, November 19?
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 Wednesday, November 19?
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 5.05 on a sell stop below the 11:30 up bar.
4) Initial Protective Stop: 5.19. (max. 2.77%)
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 did not trade IVAN for two reasons: 1) there are no shares available to short and haven't been for months, and 2) I was busy having a root canal done yesterday afternoon. In fact I was having a failed root canal re-done, and if there's anything worse than a root canal, it's a failed root canal being re-drilled.

In any event, to sate those addicted to the Dummies lessons I thought I'd write about IVAN, which set up nicely. The stock was unusually active (it did 43,000+ trades on the day) and gave a nice narrow range up bar to execute against. Assuming you could locate 3500 shares, that would have been a nice size to get short.

The stock closed at $4.38 which would have given you a gain of 13.27% from entry for a wonderful reward to risk ratio of nearly 5 to 1.

The sentiment indicators were mixed with one saying kinda uppish and the other a blah downish. When the broad market isn't moving impulsively one way or the other you can play either side of the market.

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Screen capture of my intraday Watch List:

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