We had a 192% gainer on Friday which was an epic squeeze…
The stock gapped up from $5.75 and squeezed all morning making a high of $16.81!
While it’s an incredible move — it’s unrealistic to think you can ride out the entire move.
But there are certain tips, tricks, and rules you can use to help you catch a piece of it.
And that’s all we’re trying to do as traders — catch a predictable piece of the move and move on to the next trade.
We’re not swinging for home runs or sticking around too long…
I’ll show you why that can be dangerous.
Plus, I’ll show you a little trick I used to pick an entry in PainReform Ltd. (NASDAQ: PRFX) and I’ll remind you of the rule that can help you recognize when to get out.
Tips to Spot Entries and Exits
I was eyeing PainReform Ltd. (NASDAQ: PRFX) on Friday morning as my potential number one watch.
Normally I’d use the premarket high as my entry for a potential dip and rip. But on Friday I adapted my plan.
Here’s why…
You can see on the chart below that the first spike topped out at around $11.30. But look at the volume that traded around that time.
Now look at the second spike…
It topped out around $9.50. But it traded a lot more volume at that level — almost double the amount of volume than the premarket high.
PRFX chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
So that shows me there is more resistance at that level.
And since I like to use candlestick bodies rather than wicks as my key levels, I wrote down $9.15 as a potential entry…
8:34 AM $PRFX $9.15 key that’s where all the volume was, risk VWAP.
You can see that that plan played out nicely as the stock spiked to over $16…
PRFX chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
But how do you know when to get out?
Well, you can use Oracle’s support and resistance levels to guide your trades (the indicator comes standard on StocksToTrade).
Or you can use one of my key trading rules…
You get the halt, you sell out of the halt.
That means if you’re in a position when a stock halts — you get out as soon as you can when it opens again.
In the case of PRFX, if you took the entry above $9.15 and held into the halt at $10.24 you would’ve been selling as soon as it opened again around $10.55.
And even though the stock went higher after that, here’s why we have rules like that to keep us safe…
After PRFX halted again at $12.17, it opened down at $10.40.
PRFX chart: 1-day, 5-minute candle — courtesy of StocksToTrade.com
That’s why once a stock starts halting, you get out as soon as you can and you wait for the stock to calm down.
If you caught part of the move and walked away with a profitable trade — that’s a win.
There’s no reason to get back into a halting stock and take more risks.
Manage your expectations on this Money Monday. Use what the chart is showing you to plan your entries and follow your trading rules to stay safe out there.
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Have a great day everyone. See you back here tomorrow.
Tim Bohen
Lead Trainer, StocksToTrade