When a volatile stock like VinFast Auto Ltd. (NASDAQ: VFS) comes along — everyone wants to know how to get in on the moves.
Well, reviewing the past is one of the best ways to prepare for the future.
So today I’m showing you how you can trade volatile runners like VFS. And the good news is, you don’t have to be perfect…
As I say, multi-day runners often offer more than one opportunity for a trade.
There were actually three potential entries in VFS yesterday…
So get ready for the next big runner by studying the past moves in this 56% gainer!
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Three Entries to Take Advantage of the VFS Day Three Surge
And when I trade a pattern, I have a specific level I look for to enter the trade. But that doesn’t mean it’s the only entry…
You can adapt the patterns to your own style. And you can adapt your trading plans based on whether you want to be more aggressive or conservative.
So here are the three potential entry points you can use going from the most aggressive to the most conservative.
#1: The Red to Green Move
The first way you could’ve jumped on board VFS is when the stock made a red-to-green move.
What does that mean?
It means the stock was trading below the previous day’s closing price. Then it ramped up and crossed above it. That’s a bullish move for a stock.
VFS went from red to green during the premarket. That’s what makes this entry more aggressive.
But just a few minutes after the open, the stock pulled back, retested the previous day’s close, and held it. That’s also a bullish sign…
So either the first move in premarket or the test and hold of the red to green level would’ve been good entries.
Why is the red-to-green level a good entry point?
Because that’s where shorts panic. The stock changed momentum from looking weak in after-hours and premarket to reclaiming a key level.
That’s a momentum shift and short sellers signal to get out. And you can get long while they’re running for the exit.
If trading the red to green level is too aggressive for you, and you didn’t want to trade in premarket or too close to the open, there was another way you could’ve gotten in VFS a little early…
The stock was on our Oracle algorithm watchlist. It gave a potential entry signal at $40.37.
That was a similar entry to a dip and rip pattern.
But again, that entry is a bit aggressive since it broke that level just a few minutes after the open.
And there were still a lot of resistance levels overhead that short sellers could use as their risk … So maybe they would hold until those levels were broken. Or maybe they would add to their positions as the stock spiked and try to push it down more….
So the most conservative plan was…
#3: The Day Three Surge Entry
The third way to jump on a stock like VFS is to wait for the day three surge entry.
This one’s a bit more conservative, which means it’s safer.
The typical way to trade a day three surge is to wait for the stock to break above the high from day one.
But on day one VFS made that high with a large wick that quickly rejected. And I like to base my trade plans on the body of the candle.
VFS also came close to breaking the day one high on day two … It broke above the candle body from day one but not the high.
So now you had a few options:
- Wait for the stock to break the candle body high from day one at $42.50.
- Wait for the stock to break above the day-one high of $46.
- Or wait for the break above the day two high of $45.
Personally, I like the $45 level. It’s a psychological half-dollar level and it’s the clear level where the majority of volume traded on day two.
Why is waiting for the day three surge entry a conservative trade? For a few reasons…
First, waiting for the day three surge pattern entry means you’re trading an actual pattern. You’re waiting for confirmation and reacting to price action.
Second, the move happened after 9:45 a.m. which gives the stock more time to prove it can spike and hold key levels.
But no matter which entry makes more sense to you, there’s something really important to remember…
Not every trade or pattern works out the way we want it to.
That’s why we always, always have a stop loss. A stop loss is like a safety net for your account.
It’s the price at which you say, “If the stock falls to this level, I’m getting out to protect my capital and my account.” So, make sure you know your stop loss before you even get into the trade.
Learn the Tools of The Trade
If you want to see how to get access to and use our Oracle algorithm — attend one of our training webinars here.
We’ll cover the patterns playing out in some of the hottest stocks in the market and show you the tools to help you trade them.
See you there!
Have a great day everyone. See you back here tomorrow.
Lead Trainer, StocksToTrade