Harnessing Volatility in Day Trading

Warrior Trading

What’s up trader’s, Ross Cameron here! Today was another interesting day in the markets, and I want to share a detailed look into my trading strategy with a particular focus on one of the most exciting and volatile stocks I’ve traded recently – WISA. Trading can often be a rollercoaster of highs and lows, and this session was a prime example of how dynamic day trading can be. Let’s dive right in!

Finding Stocks: The Art of the Scan

Every trading day begins with the hunt for potential stock candidates. This is crucial because the choices you make here set the stage for the day’s profits or losses. One of my key tools is the continuation scanner. WISA caught my eye here as it had shown an impressive 400%+ range in the last two weeks. Such stocks are always on my radar because they have a higher probability of continuing their momentum. Although WISA wasn’t the top runner in the scanner, its high volume made it a significant contender.

At precisely 7:28 AM, WISA popped up on my high of day momentum scanner. This was my cue to prepare for the first trade of the day, leveraging the pre-market momentum that was building up. Even though WISA wasn’t leading in percentage gains, its presence in the top gainers scanner reaffirmed its potential. It’s crucial to focus on not just the gainers but also those with substantial volume and volatility, as these elements can indicate stronger and more profitable moves.

Understanding the Catalyst: The Trigger Behind the Trade

A crucial aspect of day trading is identifying why a stock is moving. WISA had a news catalyst the previous day, which sparked initial interest. Today, it was all about watching if that interest would carry over, providing a second day of trading opportunities.

Yesterday, WISA’s price action was noteworthy. It approached a high of $9.50, which was a significant level, resembling a triple top. This area also marked the bottom of a gap, pointing upwards to around $11.60, indicating a potential $2 gap-up opportunity.

The chart this morning showed a compelling setup. After a notable run yesterday to $9.50, WISA retraced slightly but found strong support around 7:30 AM, creating a perfect scenario for an entry.

By drawing an ascending support trendline, which showed multiple touchpoints, I had a visual confirmation that WISA was maintaining its strength. Each touchpoint on this line served as a validation of ongoing momentum, increasing confidence in potential buys near these levels.

Executing Trades: Capitalizing on Momentum

Trade #1: Testing the Waters

I started conservatively with 2,500 shares at $7.37, aiming to break through the half-dollar mark at $7.50. The stock moved as anticipated, allowing me to lock in a quick $300 as it reached $7.55.

Trade #2: Gaining Confidence

With the stock holding above $7.50, it was time to increase exposure. I entered with 4,000 shares between $7.59 and $7.61, using a tight stop at $7.49. The stock pushed to $7.75 and $7.78 where I took profits, netting approximately $1,500.

Trade #3: Increasing Share Size

Feeling the momentum, I removed my 5,000 share cap, entering additional trades as the stock surged, eventually taking profits between $8.38 and $8.50, bringing my total up over $3,000 for the day.

The Peak and the Pitfall: A Rollercoaster of Profits

In a dramatic series of events, WISA hit a high of $11.50, skyrocketing my profits to over $10,000 in just 15 minutes. However, the market’s volatility giveth and the market’s volatility taketh away. I experienced a significant pullback, giving back about $3,000 from the top as the stock dipped.

Post-trading analysis is as important as pre-market preparation. Today’s session was a stark reminder of the fine line between substantial profits and significant losses. Despite the setback, finishing the day with a profit of $6,200 was fulfilling, though it underscored the vital need for disciplined risk management and the dangers of overtrading.

Final Thoughts

Today was another chapter in the continuous learning experience that is day trading. Each session provides valuable insights into not just the markets but also personal trading styles and risk tolerance. As always, I remain committed to refining my strategies, learning from each day’s trades, and preparing diligently for whatever the next trading day holds. Thanks for reading–trade smart and stay disciplined. Happy trading everyone!

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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.