This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
I scalped a move in Generex Biotechnology Corporation (NASDAQ: GNBT) today. GNBT and I go way back. I bought it back in ‘05 as a daytrade, and it then became a swing trade and finally a 50% loss on the position. I was dumb then. I also caught some of the move from $2.50 to $3.50 in ‘06. Based on these experiences, I knew it could run if it wanted to. I also knew it could print a very tall shooting star, and probably would today. Former big runners can often run again. This type of setup is extensively followed over at Muddy’s, and they call them out in real time in his chatroom. If I didn’t have PDT restrictions, I’d trade this way more.
GNBT got on my watchlist from my Prophet.net Trader-X style gap scan, though I didn’t notice it since it was way down the list (I sort my watchlist by volume for Trader-X style trades.) It quickly moved up as the volume poured into it (analysts initiated coverage and set a $6.00 price target for 18 months from now) and when I recognized it I jumped in at $1.50, with a $0.10 stop.
I managed the trade from this PnF chart:
After the first swing low at $1.52, I removed my stop and was looking for the move to stall so I could send in a market sell order. Price reached some congestion and began to consolidate at $1.65, which corresponded to strong resistance on the daily chart (grey line):
I was burned on my GOOG trade because I didn’t sell when price reached congestion, and I wasn’t going to repeat my mistake, so I sold at $1.62, which was the right call for me. Without PDT, I would have taken a partial instead, and let the rest ride, with a stop at $1.50 (my entry point). As you can see on the PnF, I could have made about 3R if I had sold the absolute top, and if I had sold a break of the green 45° trendline, I could have made about 2R, near $1.70.
These two charts also give some context, though I didn’t manage the trade from them. The 1 min shows the consolidation that I sold into.
5 min
1 min
So while I didn’t get all of the move, I’m glad I traded it well and came away with a gain.
Trade Grade:
| Stocks Mentioned In This Article | |
|---|---|
| Stock | Links |
| GNBT |  |  |  |
This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com
June 12th, 2007 at 10:13 am
Nice work! To me, 0.01/1 is a misleading chart… Just bouncing between bid and ask would cause new columns to form, in many cases. That’s not what I personally want my chart to show me, but you may be looking for something different.
June 12th, 2007 at 10:40 am
Richard: You’re exactly right about the bid/ask printing columns; I didn’t think of that at the time. I’ll keep my PnF’s to a minimum of 0.02 box size.
If I change the chart to 0.02/1, then it looks like this:
GNBT 0.02/1 PnF Chart
Clearly there was no sell signal until $1.78-$1.76! If you trailed a stop below the columns, you would have exited about $1.80 or a little lower.
Thanks for the insight, Richard! Have a good trip.
June 12th, 2007 at 11:28 am
i’m fairly certain that as long as u open the position with one trade, u can partial out… it still only counts as one trade as far as the pdt rule is concerned…check with your broker
June 12th, 2007 at 12:08 pm
john,
Not with the brokers I’ve used. Any portion of a trade liquidated in the same day is a daytrade. Buy 10, sell 1, sell 1 more is two daytrades.
I’m the one who is dumb for trying to trade under these rules, but I figure if I can learn to make money this way, I’ll tear it up when I have enough capital to get around these issues. There’s a lot of psychological pressures I have to overcome when trying to preserve my daytrades.
June 12th, 2007 at 12:40 pm
prospectus: yeah, so much for trying to protect the little guy…u will come out stronger…btw, nice trade
June 12th, 2007 at 5:29 pm
Hey Pro,
Long time no see,congrats on GNBT,very nice.
I spotted it at 1.35 on the hod list w/vol and jumped it there then alerted
(Jun 12-10:18) Muddy: GNBT pop
Then watched it take off
(Jun 12-11:07) Muddy: 1.7
(Jun 12-11:08) Muddy: tighten stop here me
I sold out at 1.85 after it backed down from low 1.90’s
37% on a former bigtime runner when it does get going,love those risk/reward types.
I set a 3-4% initial stop and if they start to go I try to get at least 10/15% on these kind.
June 13th, 2007 at 1:08 pm
Hi, Muddy. I thought you would have got GNBT, and at a better price, too!