Here is an example of how trading needs to be flexible. This was a trade I entered with long term consideration (as a swing trade), but things changed.
I spelled things out on this chart to show what I focused upon.
To start, I entered because it the 5 EMA crossed over the 13 EMA. I wasn't watching this one too closely so I missed some of the move which I am okay with.
Upon entering, I was looking for a move towards the $5 range. This would provide just shy of a $1.50 profit on a $3.59 entry. Here is where we see things looking a bit different.
The stock ran, crossing the $4.00 mark in just a few hours. This got me looking closer at the chart. I highlighted what I saw.
Charts tend to have patterns. For Vuzi, it appears that huge up days are followed by down periods. This happened on the last three occasions.
For this reason, I decided that bailing at a profit might be a smart move. After all, I made 11.3% on the trade. Turning 41 cents a share in a few hours is not something to overlook.
Certainly, as we can see from the close price, over $4.30, I cut the trade a bit shot. However, it is impossible to time things properly.
Also with such an enormous move, Monday is likely to see some given back. I will certainly be watching it.
So what is my plan?
If it opens up in the green, especially big, just chalk it up to a bus that left the station and move onto something else. There is no shame in missing a stock that runs. There are always more other options out there.
Monday could see a pullback which would make the stock attractive again. From where i entered, we are halfway toward the $5 target. A down day might provide the ammunition for the stock to go on another run.
Here is how the chart looked at the close of day.
I am watching to see if there is another crossover to the down side on the EMAs. If this is the case, it might be best to sit this one out for a while.
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