Hey everyone, Ross here! As a day trader, capturing a noteworthy stock movement can make or break your week. Recently, I had an engaging experience with a stock, BDRX, which skyrocketed over 35% in a single day. This remarkable surge not only highlighted my week but also stood out as a compelling case study worth sharing. Let’s dive into the details of how I approached this particular stock, navigated its volatile movements, and the strategy that led to profitable trading decisions.
How I Discovered BDRX
The day’s trading journey started with my trusty stock scanners, which are pivotal in my day trading routine. Stock scanners help me identify stocks that are making significant moves, which is crucial since I focus primarily on trading stocks that are already showing momentum. This approach saves me from jumping into stocks that aren’t showing promise, ensuring I’m not caught in unproductive trades.
A key aspect of day trading is how quickly you can react to new information. Some traders suggest investing in advanced news services like Bloomberg terminals for quicker news updates. Personally, I experimented with a costly $700/month news service aiming to capitalize on breaking news faster. However, I realized that receiving news faster was not as advantageous as it seemed. The challenge wasn’t just getting news quickly but understanding the full context of the news in relation to the specific company. Without this context, making profitable decisions was tricky. Thus, I decided to stick with my scanners that alert me to stocks already on the move, letting the market digest the news first.
Identifying the Catalyst for BDRX
Once BDRX hit my radar, showing a significant uptick, I immediately looked for the catalyst. It turned out to be a licensing deal that had just been publicized. Interestingly, despite not delving deeply into the specifics of the news, the market’s reaction (a 50% rise at the time) suggested it was perceived positively. This was all the confirmation I needed to consider an entry.
Chart Analysis and Planning the Entry
The chart revealed a typical turnaround story. BDRX had experienced a considerable drop over the years followed by some stability. Notably, the stock had gone through a couple of reverse splits, indicating past attempts to rejuvenate the stock price. Despite its beaten-down appearance, I saw potential. To me, a chart like this isn’t a deterrent but rather a sign of potential upside if the momentum was already building.
Navigating the entry on BDRX was about finding the right moment. I observed the stock primarily using the one-minute chart, which showed that BDRX was squeezing up without significant pullbacks. This kind of movement can be challenging since it offers little room for a comfortable entry. Initially, the stock rose to $1.23 before dipping to $1.04—a sharp drop that hinted at volatility. It bounced back and fluctuated, giving several potential entry points which I initially hesitated to take due to the rapid changes in price levels and the presence of large sellers, which added risk.
Executing the Trade
After some observation, I opted to enter the trade when I observed a favorable pattern on the MACD (Moving Average Convergence Divergence), a tool I use to gauge momentum changes. I entered at $1.62, seeing the pattern suggest an upward trajectory. I increased my position at $1.65, aiming for a quick push to $1.70. Shortly after, the stock peaked at $1.71 but then faced resistance, leading me to sell my position. While the profit from this trade, totaling $889, was modest, it was a fitting end to a slow trading week.
Reflections on Trading
In slower market conditions, my strategy shifts towards defense. The key is not to force trades but to wait patiently for clear opportunities. When they arise, it’s crucial to act swiftly and decisively. This cautious yet proactive approach helps in maintaining consistency in trading performance.
For anyone interested in day trading, it’s vital to remember that trading involves significant risk. It’s not just about the strategies but also about managing your capital and emotions. Always start small, learn consistently, and gradually build your confidence and portfolio.
As I look back on this trading day and ahead to future market action, I’m reminded of the dynamic nature of day trading. Each stock, like BDRX, teaches a new lesson in resilience and adaptability—traits every trader needs to succeed in the ever-changing stock market landscape. Thanks for reading, and happy trading!
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Warrior Trading was founded by Ross Cameron in 2012. Today Warrior Trading is a thriving community of thousands of day traders learning to trade under the curriculum designed by Ross.
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Disclaimer: The results shared are based on my personal trading experiences and are not typical. Trading involves significant risk, and past performance is not indicative of future results. Always practice in a simulator before trading with real money.