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Capital Raise after a huge week

Discussion in 'Trading Strategies/Systems' started by Saqeeb, Dec 3, 2019.

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  1. Saqeeb

    Saqeeb

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    I would like to post charts for STX, MSB and AVH where I entered after huge weekly up bars following which cap raises were announced. Thereafter price dropped below the SPP price and has so far not changed its course (except for AVH). I sold STX and MSB for loss upon system signals and still in AVH.

    1. I would like to hear from the experienced members of ASF's community if they would have entered after such huge weekly bars.
    2. How would you manage If you were already in a trade with decent profit and an announcement for cap raise was made.
    @peter2
    MSB.PNGSTX.PNGAVH.PNG
     
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  2. barney

    barney

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    Hi Saqeeb, There are many more experienced traders around here than me but I've done ok the last few years.

    In answer to your question … personally, buying on high range (usually high Volume as well) bars of any duration on Stocks is generally a recipe for losing money in my experience.

    I rarely chase price … if I miss … I miss and bad luck.

    For the record, I broke my own rule about a week ago for the first time in a long time, and surprise … the trade lost badly!

    Buying breakouts into new highs can be ok if the previous day/days are not wide range bars … but if a breakout follows a wide range bar, it will also likely stall/fail a high % of the time imo.

    Again personal preference, but I would much rather buy the retracement of a move after the dust settles because large moves with large "crowds" tend to create a lot of dust!:p Cheers.
     
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  3. Saqeeb

    Saqeeb

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    Thank you @barney for your valuable input. This is exactly what I am noticing in the short time i have been involved with the markets. Everytime there is a huge range bar then either the price stalls or retraces.
     
  4. peter2

    peter2

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    @Saqeeb Thank you for starting your own thread.

    I can't critic your entries because I don't know your trading plan but I am happy to tell you what I do. I don't buy after large weekly bars, especially if they contain a daily gap up after news. The reason is that the initial risk (downside exposure) is too large to provide an acceptable reward for the risk. The logical place for the iSL is below the low of the bar. If you place it in any other spot like 1/2 way down or 3/4 then you're just hoping they don't get hit. Price should never go below the low of a large bar with huge volume unless there's been a big change in sentiment. This is a clear indicator that something concerning the company has changed.

    Now, a gap up after news with high volume is bullish, but I'd rather frame my trade on the daily bar not the weekly bar. Like every trading setup they don't all work out profitably. If you work on them you should be able to use them profitably. (If you want to work on this idea then I'm happy to help.)

    We don't know when companies will raise more capital. However smaller miners seem to do it after a rally in their share prices. Larger companies can do it at any time they want more capital.

    I've mentioned my rule that instructs me to sell immediately a capital raise is announced. I think you should consider if there's any benefit for you to have a similar rule (or guideline). You would have saved money on MSB and STX.
     
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  5. Gringotts Bank

    Gringotts Bank

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    Saqueeb, stocks can be manipulated up as well as down. You need a way to ensure the drive up is real, and maybe looking at the daily TF and its volumes will help there.

    Have a look at CWN before it's takeover offer. A strong sell off was followed by the most textbook bear flag. Who would not have sold breakdown bar in Feb? Soon after comes the good news.

    x.png
     
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  6. Gringotts Bank

    Gringotts Bank

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    This is the volume profile on the daily of MSB. The VP is drawn only over those bars that create the mark up.

    You could aim to enter at the volume point of control (yellow line). Then sell if it falls below that because that would signal that those who created the run up are not committed to maintaining the move.

    If you don't have VP, just look for the previous area of high congestion or price overlap, because that's all it is.

    x.png
     
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  7. Saqeeb

    Saqeeb

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    Thanks @Gringotts Bank for the insight into VP.
    From your chart above it seems MSB is holding good to the VP.

    I have never looked into this. I am new to trading and still learning. Will investigate VP. Thanks
     
  8. Gringotts Bank

    Gringotts Bank

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    On the weekly, yes, but not the daily. I think there's more info on the daily that you're not accessing.

    On the daily, there was some support at the VPOC (yellow line), and it moved back up 15% in 2 days. But falling back below that level would be a sell. That's just one of many approaches and not necessarily the right one for you.

    x.png
     
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  9. Gringotts Bank

    Gringotts Bank

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    Posting this fwiw (ie. Everything is easy in hindsight, and everything is easy without real $ at risk).

    The run up without VP indicator. This is the 5 min, and you can see there were 3 re-absorption phases, and each provided good entry points on the retrace. So the run up was 'real' - it had insto support. The problem was the CR, but even with that you could trade it using an MR approach (same or next day gains of 5-20% available on each reversion with low risk). MSB has always been a good trading stock, even though I don't think it has any value as a business.

    x.png
     
    Last edited: Dec 6, 2019 at 12:07 PM
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