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:

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This post was contributed by a guest author, and does not necessarily reflect the views of Richard or MovetheMarkets.com