Hey everyone, Ross here! Today was a whirlwind in the stock market, marked by moments of high volatility and unexpected stock halts. As a day trader, these conditions are both a challenge and an opportunity to refine strategies and secure gains. Here’s a detailed account of my trading activities today, including the observations I made and the lessons learned while navigating the market’s trading action. Let’s dive in!
Today’s Market Overview
The day kicked off with an unusual scenario: four stocks I was tracking were simultaneously halted. This not only underscored the day’s volatility but also highlighted a significant issue—when too many stocks vie for attention, it dilutes the volume traded in each, affecting potential price movements. Typically, a single stock capturing the market’s focus can result in substantial price swings due to concentrated trading volume.
Exploring the Dynamics of Float and Volume
Today’s trading underscored an essential lesson about the relationship between a stock’s float—its available shares for trading—and the volume, or the total number of shares traded. Stocks with a low float can see dramatic price increases if the trading volume spikes, due to the limited supply. Conversely, stocks with a larger float require a much higher volume to achieve similar movements.
One of the stocks on my radar, MLEC, showcased a remarkable upswing of 75% in early trading, driven by news of USDA approval for its plant-grown animal proteins. However, even with a substantial trading volume of 57 million shares, the relatively high float of 37 million shares cushioned the volatility. To achieve exponential gains similar to lower float stocks, MLEC would need a trading volume vastly exceeding its current float, perhaps upwards of 200 million shares.
In stark contrast, EDBL, a stock with a minuscule float of only 300,000 shares, saw significant movement with 1.8 million shares traded, resulting in a 50% gain. This demonstrates how low float stocks are highly sensitive to trading volumes. Just a few traders focusing on a low float stock can lead to outsized gains or losses.
Picking Stocks and Monitoring Movement
Stock halts were a recurring theme today, affecting stocks like EDBL, TRSG, and NIVF. These halts, often due to high volatility, can disrupt the trading rhythm and require quick reassessment of strategies.
I encountered losses with NIVF, initially drawing my attention with news of a reverse merger. Despite the seemingly positive news, two failed trades on NIVF resulted in significant losses totaling over $800. This was a stark reminder of the unpredictable nature of day trading and the importance of quick decision-making.
On a brighter note, SMFL proved to be the day’s hero. After spotting it on my scanner and noting its recent 7:1 reverse split, I was intrigued. The stock surged from $4 to $5.40, allowing me to lock in nearly $5,000 from a well-timed trade. This trade not only highlighted the potential of reverse split stocks but also reinforced the importance of timely entries and exits.
Discipline and Consistency
Ending the day up $3,623, I feel a mix of satisfaction and relief. Today’s trading session was a real test of discipline, especially in not forcing trades when the setups weren’t obvious. Managing risk, keeping emotions in check, and adhering to a well-thought-out trading plan were crucial in turning a profit.
Final Thoughts
As a day trader, every session provides valuable lessons that refine my approach and strategy. Today emphasized the importance of understanding stock-specific dynamics like float and volume, the impact of market conditions on trading decisions, and the necessity of maintaining discipline. As we move forward, I remain committed to enhancing my trading tactics, always aiming for consistency above all else. 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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